Thursday, December 12, 2019

Paul Krugman gets Ireland as Perfectly Wrong as Humanly Possible

Click here to read the original Cautious Optimism Facebook post with comments

2 MIN READ - The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff unearths Paul Krugman flubs, errors, and gaffes even when he’s not looking for them.

CO readers may recall last month the Cautious Optimism Economics Correspondent ran a column about the spectacular economic recovery in Ireland. It’s worth repeating that Ireland was one of the original PIIGS countries (which also included Portugal, Italy, Greece, and Spain), all of which endured double-digit unemployment after major financial and fiscal crises.

Today the other PIIGS are still suffering from 14% (Spain), 17% (Greece), and 9.5% (Italy) unemployment more than a decade after the global financial crisis, yet Ireland has achieved full employment; i.e. joblessness under 5%. And the Irish economy, ranked the freest in the Eurozone with the lowest taxes in Europe, has nearly doubled in size over the last eight years (+91%) all while slashing government spending, overall an incredible achievement.

Meanwhile over the same interval the heavily taxed and regulated Italian economy has contracted by 1%, and Greece—rated less free than even the Marxist-Leninist Communist Party governed Nepal—has shrunk by 12%.

So while searching for economic statistics for his column the Economics Correspondent stumbled across New York Times columnist and Nobel Prize-winning economist Paul Krugman’s multiple opinion pieces on Ireland from 2013. Needless to say Krugman was dead wrong (yet again) as he wrote at least three scathing columns over five months mocking Ireland’s budget austerity and economic performance:

1) “The repeated invocation of Ireland as a role model has gotten to be a sick joke.”

-“Ireland is the Success Story of the Future, and Always Will Be” (August, 2013)

2) “This is a ‘bright spot’? …True, [European economist Jean] Pisani-Ferry doesn’t actually say that Ireland is recovering, only that it is ‘set to recover’. But we’ve heard that before, and before, and before.”

-“The Neverending Irish Success Story” (May 2013)

3) “…according to the austerians, it [Ireland] should be a success story. And they keep on seizing on any bit of good news as proof that austerity is working. Now, sooner or later Ireland will recover. But guys, we’re already four years into this story.”

-“Ireland Recovers, and Recovers, and Recovers” (March 2013)

(for the record, Ireland’s austerity “story” was not four years old when Krugman wrote his column as Irish federal spending was cut from €109.2B in FY2010 to €79.7B in FY2011, and FY2011 ended in December 2011 or just fifteen months prior to his March 2013 column)

Still, Krugman's timing couldn’t have been more perfect, and he went dead silent on Ireland after 2013.

No wonder. Since Krugman’s barrage of critical articles the Irish economy has grown 91% in real terms (yes, nearly doubled) or 11.4% per year. And unemployment has fallen from 14.4% to 4.9%... ie. full employment, down nearly 10 points in six years (source: St. Louis Federal Reserve Electronic Database).

Which raises the question: can Krugman ever get anything right? I’m asking seriously.

At nearly the exact moment he decided to ridicule Ireland its economy turned straight up and grew at double-digit rates for six years. The magnitude of such a fail rivals his “stock market will never recover” call on Trump’s election night victory. It seems Krugman could do better letting a cereal box Magic 8-Ball predict the directions of national economies than applying his economics training.

However the bright spot for him is he may soon win a second Nobel Prize—this time for disproving the broken clock theory.

To read the Economics Correspondent’s original story on Ireland’s dizzying success go to:

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