Lies, Damned Lies and Krugman Graphics
A while back, Ross posted a graph taken from a Paul Krugman article, and used this as a stick to beat up on the Bush administration. I have nothing in principle against beating up on the administration, but at the time I read Ross' post, it didn't seem quite right to me. Not being a super economic wiz, I couldn't put my finger on it, nor did I have to hand the references that would have helped. But, coming belatedly to the rescue are the economic genii at Marginal Revolution. (Of course, the belatedness of the rescue is entirely my fault for falling behind on my blog reading.)
This is the original graph, from Krugman:
Ross claimed that this must be evidence of gross incompetance, or of lying. There is a third option, though. Marginal Revolution gives another chart, with a larger timeframe:
MR contributor Alex Tabarrok says:
With this graph it becomes clear that the CEA has in essence been predicting a return to trend. Obviously, the CEA has been wrong, employment has not returned to trend, but that surely tells us more about the peculiar nature of this recession than it does about corruption at the CEA.
Has political progaganda taken the place of professional analysis? Indeed.
Remember to go to Marginal Revolution for all your economic needs.
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Please. Choose the best five
Please. Choose the best five years of job growth in decades, numbers that are driven by the internet phenomenon, and then "extrapolate" a "return to trend" from that?
You can't seriously be making the argument that a simplistic prediction is based on a linear projection of prior data is somehow honest.
That is the very nature of incompetence. Was there a perception on the part of the CEA and the Bush Administration that their tax cuts were somehow going to be a more powerful force than the entire internet economy?
The entire point of Krugman's graph is that PREDICTIONS are made by this administration and their stooges that have nothing whatsoever to do with any reality other than Karl Rove's head. Let me make is extremely simple:
GOP dogma holds that dramatic cuts in taxes to the wealthy produce massive economic stimulation. Their job predictions were based on this idea. It was wrong. It's been wrong for twenty years.
This administration has a pattern. They select one of their party planks, hold it up to the heavens and shout about how wonderful and perfect the world would be if only it could be passed, rave about the effects of it for the common man, bitch about the "liberal elite" who are "blocking" them, then lie about the cost to get it passed.
Then it falls flat on its face, and they move on. Example: tax cuts, economic development, education, WMD/war in Iraq. Bush is running as the "war president" because he's got no other accomplishment to run on.
Krugman's professional analysis is entirely intact, and no serious economist or mathematician would make the excuses that "Marginal Review" is making.
Political propaganda, indeed.
The point of the Marginal
The point of the Marginal Revolution post is that you can't cherry pick the other way either. Krugman's graph ignores the part of the line that gives context to the CEA figures. Sure, they're wrong, but not wrong the way Krugman claims, and not as outrageous as both of you say.
Predicting a return to trend is not always right, but it is not exactly the kind of wild ass guess that you posit comes from Karl Rove's head.
Focusing only on jobs gives a distorted picture as well. Else why are we wondering about a "jobless recovery?" If you read the link to the Jobless recovery post, also by MR, you will see that there are many economists wondering why, in light of all the other good economic news, the job recovery is so slow. There *is* a recovery going on, and we're all perplexed why one aspect is lagging.
And GOP dogma is not tax cuts for the wealthy. That is a tired liberal canard. The dogma is tax cuts for everyone, which results in economic growth, which we have seen.
I think that many serious economists might be bothered by your calling them unserious.
sorry guys. You know... I
sorry guys. You know... I wasn't the best economics student in college, but here's what I see, which is nothing... I can't read either of those graphs because the fonts are too small to tell me anything. I can't read either one to tell what's scale and what is not.
On the 'jobless recovery' front, try that it's still doing more with less. The people who are working are working like dogs. The people who aren't working, can't find a job anywhere. Heck, I can't even find a second job on the weekends.
Though now I found a lead on
Though now I found a lead on a job where all I have to do is 'sit and look pretty.' I think I could get used to that job!
I address this extensively
I address this extensively here: [url=http://bigpicture.typepad.com/comments/2004/03/why_the_jobs_fo.html]htt…]
The CEA projections cannot be excused by merely claiming a "return to trend" prediction.
That was the excuse of the Perma-Bull when the Bear market began in 2000. "Hey, we were only forecasting a return to the previous trend." Duh.
The entire point of doing economic analysis is recognizing that not everything "returns to trend" -- Otherwise, we would not need a CEA. We could just look at a chart of any phenomena, track the prior trend, assume a reversion.
It takes skills and perceptiveness to know when not to default to a "return to prior trend." Obviously, this is an intellectually foolish excuse, failing as it does to recognize changing market and economic conditions in the post-bubble environment.