Thursday, November 01, 2007

She Stands by Her Man

Anna J Schwartz and Edward Nelson take Paul Krugman to the woodshed over his disingenuous treatment of Milton Friedman's legacy in the New York Review of Books last Spring. He compounded his errors with a flippant response to their letter to the editor in March:

...the letter from Anna Schwartz and Edward Nelson actually illustrates Friedman's slippery treatment of the Fed's role in the Depression even better than the examples I used in the article. On one side the letter says, as Friedman did, that the problem was that the Fed did too little—that it failed to exercise its power to rescue the banks. But on the other side the letter approvingly quotes Friedman saying that the Fed did too much—that in the absence of the Fed, with its "enormous power," we wouldn't have had a downturn on "anything like the scale we experienced." I'm sorry, but those are contradictory positions. If there's doubletalk here, it's not on my part.

....And it is, by the way, very strange to imply that only monetarists thought that Nixon's wage and price controls were a mistake.

Regarding that last sentence, Schwartz and Nelson quote chapter and verse from the most prominent neo-Keynesians--Samuelson, Okun, Tobin, Heller--of the time agreeing with Nixon's policy. As well as illustrating that Krugman's claim about 'contradictory positions' is similarly malarkey. Their concluding paragraph is:

Paul Krugman is a respected trade theorist. But he does not speak authoritatively on subjects on which he has no expertise. Monetary economics is not his field of expertise.
Krugman’s research background does not qualify him as an authority on Milton Friedman’s
work. Krugman’s scholarly publications rarely mentioned Friedman and, when they did, they
acknowledged the contributions of Friedman and monetarism in a way that contradicts his
(2007a) essay on Friedman. Friedman’s reputation is intact despite Krugman’s deplorable
efforts to denigrate him and his contributions.

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