Friday, February 4, 2011

The lesson of Cassandra -- sometimes it's no fun being right

Mark Thoma has taken Paul Krugman's one-day hiatus from his column as an opportunity to pull from the archives an extraordinary piece by Krugman from back in the late Nineties. I limited myself to one paragraph but the whole thing merits a careful reading when you get the chance. You'll find that in 1998, Krugman was saying most of the same things he'd be saying in 2011:
I don't know what provoked [Robert] Samuelson's outburst. But if one of our most well informed economic journalists has come to disdain macroeconomics, this may be because he has been listening to economists themselves. Over the past 30 years, macroeconomics--and especially that part of macroeconomics that concerns itself with recessions and depressions, in which the economy as a whole is less than the sum of its parts--has fallen steadily into disfavor within the economics profession. As late as the mid-1970s, many textbooks still followed the lead of Paul (no relation to Robert) Samuelson's classic 1948 Economics, beginning with the macroeconomics of booms and slumps and turning to microeconomics only in their second half. Nowadays, however, every textbook (yes, even the one I'm writing) relegates macro to the second half. Even within the macroeconomics half, more and more books (like the much-hyped new text by Harvard's N. Gregory Mankiw) dwell on "safe" issues like growth and inflation as long as possible, introducing the question of recessions and what to do about them almost as a footnote.

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