Krugman and DeLong Gang Up on Murphy

You guys know Bob Murphy and I are friends. (Not many people would portray a zombie in an Internet video to promote someone else’s book, as Bob did.)

Well, the other day, Brad DeLong of Berkeley, along with Paul Krugman, ganged up on Bob because he made what turned out to be an incorrect forecast of inflation rates. Bob expected price inflation to be considerably greater than it has been. He has admitted his mistake, noted that he is not infallible, and and in general behaved the way we would expect from any scholar, who will inevitably make a mistake somewhere along the line.

DeLong and Krugman, meanwhile, are pretending that an incorrect inflation forecast invalidates the entire apparatus of the Austrian business cycle, when in fact such predictions have nothing whatever to do with Austrian business cycle theory and next to nothing to do with the Austrian School in general. These men are likewise claiming that it’s perfectly all right and no embarrassment at all for Keynesian Christina Romer to have been completely wrong in her predictions regarding how low the unemployment rate would fall in the wake of the Obama stimulus package, but Bob should hang his head in shame forevermore.

Now Bob is a gentleman almost to a fault, and you will notice a difference in tone between Bob’s blog and those of DeLong and Krugman. Bob can be very critical of other scholars, but he is never childish or uncharitable, he never attacks straw men, and he is quite prepared to concede good points his opponents may have. This is not exactly Paul Krugman’s modus operandi, needless to say.

So I was thrilled to see Bob’s take-no-prisoners response. You will enjoy this. Bob’s command of his opponents’ views, and not just his own, serves him well.

Luke Sunderland

This is almost always my reaction when Krugman is discussed.
Anonymous

Hey Tom, this has absolutely nothing to do with the topic but with such a flurry of new posts, I don’t know where to mention the following.

I’ve been told from a couple of sources now that America is on the verge of a shale gas revolution, which could potentially cancel the coming depression. Have you heard of any such thing?
http://TheInterventionistParadox.wordpress.com/ Bharat

Murphy obviously decided to make this losing bet on purpose. He knew that Krugman would not recognize him for getting anything correct. Krugman would only recognize him openly for getting something wrong. And that was the trap Murphy put into motion when he made the bet with Henderson. It was a ploy to make Krugman give attention to the Austrians and then allow Murphy to respond with his usual wit.

But seriously, with a response like that (Murphy’s), it’s almost as if we can say it’s a good thing he lost the bet.
http://twitter.com/Gameodactyl Patrick Gann

An interesting theory, and I’m sure you were being humorous.

But I think we all know, Bob would never act in such a deceptive or wily manner. He was wrong about this one thing, and I hope it will prove to be to his benefit.

I have so many words for Krugman and his ilk, but they are too vitriolic and not nearly as worth speaking as the words Murphy and Woods has.
Bob Murphy

Thanks Tom. Two corrections though, to Tom’s post and commenter “Bharat”:

(1) I did the Zombie video to promote my career. It’s fun to have strangers come up to me at conferences and say, “Neo-confederate!”

(2) I didn’t lose the inflation bet on purpose, but the idea is not foreign to me.
Anonymous

Now that Krugman has acknowledged Murphy’s existence, and is so clearly the superior in the matching (/sarc), Krugman will be accepting Murphy’s challenge to a debate, yes?
http://twitter.com/Gameodactyl Patrick Gann

LOL, Murphy throws the match so he has an excuse to pimp his teeny-bopping karaoke skills. AWESOME.
Bob Murphy

One last thing, everybody: If you read my post before the UPDATE, I encourage you to check it out again. I explain how Krugman will get out of it, if I happen to win the pending bet with Bryan Caplan. I think we can all agree that this is exactly the route Krugman would take, which makes his scientificer-than-though stance so absurd.
dennis

If this were the French Revolution Krugman’s economic authoritarianism would make him an Hebertist, but then his groveling worship of power would put him in Robespierre’s corner right before the purge took place. He is a truly odious human being and I feel sorry for his cats because you know he dresses them up in little outfits and has them perform Victorian era stage plays for his amusement.
Anonymous

It was precisely Bob’s honesty in admitting his own errors (often being the first to point out the error) and his conceding of good points from his opponents, that made me a fan of his work. He’s an honest guy that seeks to have a clear conscience. He just should probably steer clear of prediction bets.

(At the time that the bet was made, I also thought that inflation would be higher. However, what this has to do with Austrian theory and methodology is beyond me, I wasn’t even using a purely Austrian framework to come to that conclusion, I was using pretty standard monetary and price theory. There was no way that I could know that the banks wouldn’t lend the new money, that they’d instead add it to excess reserves.)
Jeremy

I wish Austrian economists would stop trying to place predictions. It really hurts their credibility. They know darn well that things like this can’t be predicted down to what day, month, or year it will happen..
http://twitter.com/DWMFtweets DWMF

Tom,

I’ve already been harassing you on Facebook about this, so why not here too? When can we get Dr. Murphy to teach a class on Liberty Classroom?
Anonymous

Probably when he’s no longer in a contract with the Mises Academy. I don’t know anything first hand, but I would assume that he does indeed have a contract, and I would imagine that his contract with LvMI has an exclusivity clause. That would be pretty standard, anyway.

Also, Bob’s not an academic economist, he’s essentially freelance, so he has a far different availability of time than, say, a tenured professor. I mean, a tenured professor knows when every check is going to hit his account, his schedule is pretty consistent, and he already has lesson plans drawn out and has practiced them. Bob has to seek out every check without knowing when the next will come, his schedule is never constant, and he’d have to prepare lesson plans (as well as film videos and powerpoints, and all that that entails) just to get started. Once you start factoring these differences (as well as many more) it is easy to see why he wouldn’t have already done it– opportunity cost.

I’m sure that he’d love to and that Tom would happily agree, but some things aren’t so easy.
devo

Bob’s reply is an absolute massacre, a spectacle of a blog post. his thoroughness, articulation, and approach to the whole situation is just fantastic. ok so maybe im bias, but then again krugman cant say anything valid really until he debates murphy :/
http://www.TomWoods.com Tom Woods

Well, Bob has his own gig, and I don’t fancy being a poacher. We just support each other’s projects.
P_drum

Just because he makes a particular prediction of something and gets it wrong doesn’t disprove the theory, notice we are talking about uncertainty here.
http://twitter.com/DWMFtweets DWMF

Makes sense. For some reason I was under the impression that Mises Academy was a per-course deal rather than a contracted thing. Looking at it now, I suppose it’s kind of odd that Tom is now in a sense in direct competition with the LVMI in this area. Hopefully Lew Rockwell doesn’t throw a brick through your window or something

Anyway, I’m currently paying for both. Maybe you should merge or something!
http://www.TomWoods.com Tom Woods

It is a per-course thing.
Nick

5 years the call of hyperinflation yet nothing but inflation below 2%, I’m sorry but the Austrians really have no upstanding left, they fail to understand that money is now debt, and is more determined by capital spending rather than printing money, interest rates are low because the animal spirits driving the markets are low.
http://www.TomWoods.com Tom Woods

Nick, at least read the article for heaven’s sake. Who’s talking about hyperinflation here?