I coined the term “Krugman Kontradiction” to refer to the Nobel laureate’s tendency to lead his readers in one direction on an issue, then do a total about-face when circumstances make that convenient, while whipping up a new set of assumptions and emphases in his economic analysis so as to reconcile the switch.
I’ve got a great new illustration of that when it comes to tax hikes and how our Keynesian pundit incorporates them into his model of the world.
First, on November 13, Krugman had a post called “Why the One Percent Hates Obama.” He had the following commentary and graph:
A peculiar aspect of the Obama years has been the disconnect between the rage of Obama’s enemies and the yawns of his sort-of allies…
The latest case in point: taxes on the one percent. I keep hearing that Obama has done nothing to make the one percent pay more; the Congressional Budget Office does not agree:
According to CBO, the effective tax rate on the one percent — reflecting the end of the Bush tax cuts at the top end, plus additional taxes associated with Obamacare — is now back to pre-Reagan levels. You could argue that we should have raised taxes at the top much more, to lean against the widening of market inequality, and I would agree. But it’s still a much bigger change than I think anyone on the left seems to realize.
Notice that in the above graph, everybody saw an income tax hike, not just the “one percent.” Yet Krugman didn’t even bother to mention that; his single-minded focus was on the fact that Obama hadn’t gotten enough fist-bumps from progressives on taking more money away from rich people.
Four days later, on November 17, when the bad news of Japan’s GDP contraction came out, Krugman wrote:
Terrible numbers from Japan. Probably the drop was overstated — I don’t have any special knowledge here, but other indicators didn’t look quite this bad. But still, no question that the ill-considered sales tax hike of the spring is still doing major damage.
Fairly clear now that Abe won’t go through with round two, which is good news.
So contractionary policy is contractionary. I could have told you that, and in fact have told you that again and again. But some people still don’t get the message.
So now all of a sudden Krugman can’t believe these idiots who would raise taxes in the midst of a weak economy. Why haven’t they been listening to guys like him?!
(For the rest of the article, click the link.)