I am in New York at present so I did not see the Newsnight confrontation between Paul Krugman, Jon Moulton and Andrea Leadsom MP. But a combination of my blog post on Krugman’s LSE lecture and the Newsnight piece created an unusually large number of comments on my blog so I thought I would post a response now that I have seen the programme on BBC iPlayer. You can view the interview here (starts 31mins in).
Alcuin asked me for my impressions of the debate. I thought that Moulton and Leadsom more than held their own. I hope that Jeremy Paxman’s remarks that you can’t disagree with a Nobel prize winning economist was, as it seemed, tongue-in-cheek. Jon is a very sensible financier. I have not come across Andrea Leadsom before but I agree with DarwenLad - she is one of the few MPs whom I have heard say anything sensible about the financial crisis and depression we are in. I know this - I would rather have the economy, government, and/or my money run by Jon Moulton than I would by Paul Krugman or any other economist.
I found Krugman condescending and dismissive, for example, when Moulton cited Antonio Afonso’s research showing that the size of the state is negatively correlated with economic growth, saying he could disprove it but it would require ‘some equations and charts’. Translation - “I need pictures in order for me to be able to explain this to mere mortals like you”. In my view if you are good, you can explain your arguments and a concept.
Krugman was almost a case study of accusing others of committing the sin he himself could be accused of being guilty of when he accused Moulton and Leadsom of wanting to cut the size of public spending for doctrinaire political reasons and using the crisis as an excuse to do so. Perhaps what has sensitised him to such concealed motivations is that he is a left wing economist who wants to pursue a big state and public spending for social engineering and who distrusts the private sector?
I was disappointed that Krugman was allowed to get away with the assertion that we have experienced two years of austerity already when there has been very little austerity in the sense of cuts in government spending, particularly in the UK, and none at all in places such as the United States.
To answer John Healy no one is engaging with me from government. I have made numerous offers to work with politicians from any party who want to try to fix this situation and my approaches have been universally ignored or rejected. This does not improve my view of the motivation and perspicacity of those in power.
Keith Price I will let you know where I think the cuts should fall. I have already promised to post on this blog on that for an earlier Commenter on my Austerity v Growth piece and will do so.
Ken Charman - what a good idea. You are right. All ministers should be taught a litany which they should deliver at the start of any media interview which spells out the reality of this situation. I would add that any debate on austerity should be preceded by the simple statement “There hasn’t been any yet”.
Dropsopkcin: I don’t have a chart of tax v GDP but since tax is to fund the state I suggest you may get what you want from the study which Jon Moulton was referring to which I believe is by Antonio Afonso and Davide Furceri “Government, Composition, Volatility and Economic Growth” January 2008 available online here. Ironically it’s a European Central Bank research paper!