Posted 5:28 PM by Robert

The Two Ivory Towers

Deep within Ostelfenbeinturm Kraugaman settled into the comfy chair before his eerily glowing monitor and reviewed a few news items that caught his eye. Fodder. Fodder. Must find fodder. Oil futures were up! A thought crossed his mind, new to him. So Kraugaman brooded in his stronghold: "I hadn't thought about that!" It was December 26 and there was need for a December 27 column. So Kraugaman wrote:

Oil futures are already above $32 per barrel. Donald Rumsfeld assures us that we can fight two wars at once, but nobody seems to have thought about the state of oil markets if there is simultaneous turmoil in the Persian Gulf and Venezuela.

And Kraugaman thought: "This is good, so good. I hadn't thought about the state of oil markets if there is simultaneous turmoil in the Persian Gulf and Venezuela, and I am a genius. Rumsfeld and the rest of them are idiots. They won't have thought about it either." It was the holidays, after all, so little time for research and fact checking.

Meanwhile, days prior to Kraugaman's holiday offensive, Forbes.com - working from a Reuters item titled "UPDATE 1-Oil prices shoot higher on war and strike woes" and available to Kraugaman at the drop of a Google - had reported:

"The turmoil in Venezuela and the tension in Iraq is keeping traders at their desks over the Christmas week," said Lawrence Eagles at GNI Research. ... OPEC exporters sought to tame soaring prices on Saturday by pledging to fill any supply gap left by the strike in Venezuela or a possible war on Iraq. Ministers said they saw no signs of a real shortage on world markets yet, but they agreed to partially reverse a recently agreed output curb if prices stayed high. "Shortages, when determined, will be made up. We want to have no imbalances in the market," Saudi Oil Minister Ali al-Naimi told reporters on the sidelines of a meeting of Arab oil ministers in Cairo.

The remainder of the column is an empty box. There is vague but apparently exaggerated moaning ('apparently" because it is so vague) about retail sales: "Retailers found lumps of coal in their stockings this Christmas; the holiday shopping season was disappointing." There is dwelling on unemployment - but no mention that the unemployment rate never got very high in the first place. That, in most people's books, is a cup of joy indeed - but here the recovery is "jobless" and "joyless," and no mention that jobless claims recently fell. There is an unfocused, elagaic mention that the stock market is down - but no mention why a decline from prior bubbled stock prices is necessarily a bad thing. There are musings over state deficits (and a short but nasty exploitation of children) - but no mention that those deficits are largely caused by massive, imprudent spending increases. Future state spending cuts are lamented - but there is no mention of the pernicious effects a constantly growing government encroachment on the economy would eventually have on overall efficiency and wealth production - and the welfare of children. Notice is taken that the Fed can't push interest rates much lower - "So don't expect Uncle Alan to bail us out anytime soon" - but no mention that "uncle Alan" and the Fed don't seem to think it necessary to push interest rates down further. There's a dig at the tentative Administration plan to eliminate double taxation on dividends - a modest proposal which most sensible economists support. Mickey Kaus even finds a bit of false humility in the admission that the prior Bush tax cuts have helped (despite Kraugaman's violent protests against them) and another admission of error in the past Kraugamanian predictions of imminent consumer spending collapse. But such flecks of intellectual honesty are very small compared to the huge intellectual house cleaning that's needed.

[Dec. 30 UPDATE: With respect to Kraugaman's "lumps of coal" - he gives no indication that he understands that retail dynamics have changed in recent years. For example, the week after Christmas is now as important as the week after Thanksgiving. And there has been a huge increase in the popularity of gift "certificates" and "cards", which are not accounted for until they are redeemed for merchandise. That all means that the holiday retail season now runs well into January. Nobody will know if there was a "lump of coal" left for the retailers this year until around February 1. And some major retailers, such as Penney's (which expects to beat estimates) and Walmart, seem to be doing rather well. But, heck, does one look to a full Princeton Professor of Economics for subtlety of analysis or an awareness of the relevant factors in making an economic projection?]

In short, the column is another incoherent, unscientific mess. It is apparently supposed to pass for a kind of prediction for the coming year - but the language is so deliberately vague and inconsistent that it's almost impossible to find anything that might be tested against future facts. The main prediction? "I hope I'm wrong, but this doesn't look like a happy new year." Jeane Dixon's visions were usually more testable and precise. Kraugaman seems to be taking lessons in style from Nostradamus.

Kraugaman's rejection of economic science and his embrace of the cargo cult superstitions of partisan advocacy had long been established beyond peradventure. Once considered by some to be a potentially significant economist, albeit one whose narrow expertise of international trade did not generalize easily - he now holds forth from his Ostelfenbeinturm near great ancient groves of academe, including the famous Institute Woods, groves which Kraugaman willfully plunders, casting entire branches of economic science to immolation to feed his hungry demons.

Yes, There is a union now! The Two Ivory Towers have joined forces! Has all hope forsaken these lands? The forces of Westelfenbeinturm will be angry now that Kraugaman has again burned so much of his own credibility for want of Googling. "Credibility"- for so long the only thing Kraugaman has to sell!

Yes, it is true that with each Kraugaman foray a fellowship of the ring of Kraugaman watchers sallies forth to flood the zone with Kraugaman-corrective critiques. But where is the powerful if slow moving leader to arouse the Ecs - the ancient shepherds of economic intellectual growth! Do they think this is not their battle?

What will it take to stir them to flood the zone at Ostelfenbeinturm as Treebeard led the Ents to flood the zone at Isengard!

Or will the Ecs hold off indefinitely? As one Ec remarked about an advocate of dangerous market and price regulation fulsomely praised by Kraugaman: "I think we have better things to do than beat up a straw man."

MORE and MORE.