Paul Krugman’s predictions have matched reality to an unnerving degree

The particular synthesis of economic principles espoused on this site are not mine. They are those of the Nobel-price-winning economist, Paul Krugman, and a number of other heavy-weight economists who have reached the same conclusions. I do not agree with all of Krugman’s politics. But his economic analysis of the current downturn has passed enough tests to persuade any fair-minded person that he has been right about the causes and cure for the current crisis.

One of the best ways to distinguish between “correct economics” and “incorrect  economics” is to compare how well each model predicts the future. Krugman’s view, which I’ve summarized herehere and here, has matched reality to a remarkable degree. On his blog this morning, Krugman compares his key predictions to those of his conservative critics who have been advocating austerity. Bottom line: Krugman’s been right, and they’ve been wrong, about, well, everything, for three years. Remarkable.

UPDATE: He’s also been right in predicting: (i) that commodity prices surges were due to temporary factors and did not foreshadow a secular inflationary trend (see, e.g., here, here, and here) and (ii) that the recovery would be so close to jobless that it would feel like no recovery at all (see here and here).

Note: Search this blog for “Krugman and predictions” for other posts.

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About Guy N. Texas

Guy N. Texas is the pen name of a lawyer living in Dallas, who is now a liberal. He was once conservative, but this word has so morphed in meaning that he can no longer call himself that in good conscience. Guy has no political aspirations. He speaks only for himself.
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One Response to Paul Krugman’s predictions have matched reality to an unnerving degree

  1. Joshua says:

    My favorite Krugman prediction from 1998..

    “* The growth of the Internet will slow drastically, as the flaw in “Metcalfe’s law”–which states that the number of potential connections in a network is proportional to the square of the number of participants–becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”

    Yep the guy is a genius, the stupid internetz is stupid…lol, 2012 and most people never heard of that “Interweb” thing.

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