Krugman Caricature under creative commons license from DonkeyHotey

Originally posted on Monday, July 14th, 2014

On July 6th, Nobel economics laureate and Princeton Professor launched, in the New York Times, one of his occasional polemics, entitled Conservative Delusions About Inflation, against proponents of the gold standard.

As usual, Prof. Krugman is, conveniently for the position he takes, beyond lopsided in his presentation of the facts.

It is quite amusing to see what psychiatrists call “projection” (“in which humans defend themselves against unpleasant impulses by denying their existence in themselves, while attributing them to others“) so vividly at work.  Prof. Krugman virulently berates others for the selective use of data he obsessively practices:

On Sunday The Times published an article by the political scientist Brendan Nyhan about a troubling aspect of the current American scene — the stark partisan divide over issues that should be simply factual, like whether the planet is warming or evolution happened. It’s common to attribute such divisions to ignorance, but as Mr. Nyhan points out, the divide is actually worse among those who are seemingly better informed about the issues.

The problem, in other words, isn’t ignorance; it’s wishful thinking. Confronted with a conflict between evidence and what they want to believe for political and/or religious reasons, many people reject the evidence. And knowing more about the issues widens the divide, because the well informed have a clearer view of which evidence they need to reject to sustain their belief system.

In particular, Prof. Krugman berates “a virtual Who’s Who of conservative economists and pundits sent an open letter to Ben Bernanke warning that his policies risked ‘currency debasement and inflation.’”  He obstinately, and perhaps borderline dishonestly, fails to note that only one of these close to two dozen signers is a noteworthy gold standard proponent, and only perhaps two others appear to be sympathizers.

Nor does Krugman make the distinction between those gold proponents who were predicting inflation, based upon Fed policy, and those who were not, like Lewis E. Lehrman — founder and chairman of the Lehrman Institute, sponsor of this website — and other followers of Prof. Jacques Rueff.

Krugman’s misstatement is unsurprising.  As previously noted here, Prof. Krugman forthrightly admits to a certain kind of intellectual incuriosity, rising to the laziness of a polemicist and well below what is expected of a Princeton professor:  “Some have asked if there aren’t conservative sites I read regularly. Well, no.”  He presents as feeling impunity about making claims unsupported by facts simply to suit whatever his polemical purpose.

Hence, his distorted — and, in key respects, outright factually wrong — description of the gold standard proponents:

let’s not forget that quite a few influential conservatives, including Mr. [Paul] Ryan, draw their inspiration from Ayn Rand novels in which the gold standard takes on essentially sacred status.

And if you look at the internal dynamics of the Republican Party, it’s obvious that the currency-debasement, return-to-gold faction has been gaining strength even as its predictions keep failing.

Of course, if Prof. Krugman were not engaging in the kind of “descent into dogma” which he claims to deplore he would have noted that the novelist Ayn Rand is not a significant factor in the monetary policy discourse on the right.  Paul Ryan by no means is among the proponents of the gold standard.

The “return-to-gold faction” of the Republican party indeed has been gaining strength. It has done so on the basis of its observations that the real world performance of the managed fiduciary currency system that Prof. Krugman theologically reveres correlates closely with poor to mediocre economic growth, lousy job creation, and a dramatic upsurge in income inequality.