There’s no reason you should be following this silly little fight between Paul Krugman and Amity Shlaes. It centers around a false distinction but has wandered into a grudge match between two very different personalities. Krugman is abrasive but brilliant. Shlaes is plodding and tendentious. The funny thing is that they agree but neither wants to admit it.
First, a quick re-cap of the tit-for-tat: Shlaes first came to prominence with her book on the Depression, The Forgotten Man, which rode the usual conservative hobby horses about government interference. Even before the financial crisis, the book had strong following among the troglodyte right.
Intoxicated with her increasingly influential voice, Shlaes tried in her muddled way, to have a voice in the Obama stimulus plan. Here in a Bloomberg opinion piece, she got one thing right: the stimulus should focus on meaningful infrastructure like Eisenhower’s National Highway system. This is the point that she and Krugman agree upon but both would be loathe to admit it.
Krugman pounced on Shlaes here in his Times blog where he points out the difference between Keynesian spending and the Great Society (a favorite conservative target.)
You don’t have to take Krugman’s word that Shlaes’s work is lopsided and poorly argue. Even a friendly citation of her work has The Atlantic’s Megan McArdle tap dancing away from Shlaes:
The problem is that Shlaes way, way, way overstates her case. There is an academic argument that the National Recovery Administration prolonged the Great Depression [ . . . ] But the Great Depression is complicated, and it’s hard to make the case that government intervention was the main problem with the economy. As economic history, the book is interesting if one sided. But as an argument, it leaves a lot to be desired.
All of that sets up today’s Wall Street Journal Opinion piece where Shlaes is still stinging from Krugman’s rebuke. And she continues to flail around for a reason to oppose a stimulus plan that all sides agree must be focused on creating jobs and spurring private sector spending:
Because lawmakers are considering new labor legislation containing “card check,” which would strengthen organized labor and so its wage demands. Because employees continue to pressure firms to spend on health care, without considering they may be making the company unable to hire an unemployed friend. Piling on public-sector jobs or raising wages may take away jobs in the private sector, directly or indirectly. [emphasis added]
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Editors note: We previously took issue with Shlaes’ defense of Phil Gramm’s mental recession/nation of whiners comments. She did so by using a definition of recession — 2 consec Qs negative GDP — that was outdated centuries ago. Either she is economically clueless, in which case she should be dismissed as a no-nothing. Or, perhaps she knew better, but used it anyway, making her a hypocrite.
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Sources:
The Krugman Recipe for Depression
Massive government spending is no solution to unemployment.
AMITY SHLAES
WSJ, NOVEMBER 29, 2008
http://online.wsj.com/article/SB122792327402265913.html
Amity Shlaes Strikes Again
PAUL KRUGMAN
NYT, November 19, 2008
Amity Shlaes Does Not Know What a Recession Is (July 12th, 2008)
http://www.ritholtz.com/blog/2008/07/amity-shlaes-does-not-know-what-a-recession-is/
Obama Will Take Us Backward By Channeling Keynes: Amity Shlaes
AMITY SHLAES
Bloomberg, Nov. 19 2008
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1CNR7igi8KU
Shlaes and the Depression
MEGAN MCARDLE
The Atlantic, 10 Nov 2008
http://meganmcardle.theatlantic.com/archives/2008/11/shlaes_and_the_depression.php
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