Expectation vs. Presumption
Rajiv Sethi Misses a Point...

A Bad Habit Inherited from "Journalism": Edmund Andrews Plays "Balance"

Jay Rosen to the white courtesy phone please...

At Capital Gains and Games, Edmund Andrews wants to write:

  • Alan Greenspan is flat-out wrong in his demand for immediate fiscal contraction.
  • Alan Greenspan cannot find even a shred of evidence to support his claims.
  • In fact, we need not less but more fiscal stimulus--Andrews does write: "If I were king, the plan would allow for another round of stimulus spending but call for real belt-tightening around 2015..."
  • And then, sometime between 2015 and 2020, we need to focus on starting the process of gradually raising taxes and capping spending in order to deal with America's federal health program spending-driven large long-run fiscal imbalance.

This is a smart thing to write. This is what I believe. This is what Paul Krugman believes.

But it turns out, it is not what Ed Andrews writes.

What he writes is, instead:

Alan Greenspan v. Paul Krugman: Paul Krugman and Alan Greenspan came out with dueling op-eds Friday about budget deficits gone wild. Krugman: we're slitting our wrists by trying to slash our deficits now. Greenspan: cut spending now, right now, and don't worry your pretty little head about a double-dip recession. Neither was convincing... the fiscal debate has become so polarized that combatants on both sides are glossing over what they don't know...

And so my reaction is "Huh?!"

Why does Andrews say Krugman was not convincing? Krugman was completely convincing--Andrews agrees with him.

Indeed, compare Andrews's assessment of Greenspan:

Greenspan's one piece of empirical evidence about a looming panic over deficits is incredibly thin. He can't cite any flight from Treasuries.... He can't point to inflation.... And he sure can't cite evidence of an overheated economy. So he cites a really obscure derivative indicator called the "swap spread"... that tells you... investors expect interest rates to climb.... Well, duh.... Pricing that assumption into swap spreads hardly makes them a sign of panic over government spending. Greenspan is fear-mongering.... Greenspan is flat wrong about the need to slam the brakes on spending right now...

To Krugman's--significantly more polite--assessment of arguments similar to Greenspan's made by Germans in Berlin:

What’s the economic logic behind the government’s moves? The answer, as far as I can tell, is that there isn’t any. Press German officials to explain why they need to impose austerity on a depressed economy, and you get rationales that don’t add up. Point this out, and they come up with different rationales, which also don’t add up. Arguing with German deficit hawks feels more than a bit like arguing with U.S. Iraq hawks back in 2002: They know what they want to do, and every time you refute one argument, they just come up with another...

Same thing. Except where Andrews says "flat wrong" Krugman says "don't add up."

But Andrews writes, of Krugman's version of Andrews's own argument:

Krugman isn't convincing either.... [H]e can't believe that those fusty German deficit hawks are so frightened of a market rebellion that they're cutting spending and raising taxes.... German fiscal hawks aren't crazy. The markets can panic.... No one knows where the tipping point between acceptance stops and panic kicks in...

Why is Andrews's argument that Greenspan is off-base no longer right but "not convincing" when Krugman makes it? Andrews tries to explain:

We need to plan for the possibility of getting our next move wrong.... [W]e need to recognize that there's a non-trival risk of a bond-market rebellion.... [T]he U.S. is much vulnerable than most people think to a ratings downgrade... a move that would probably cause a long-term spike in interest rates...

But this recognition isn't a substantive difference with Krugman, who has written:

[W]hat about the possibility of a [bond market] squeeze, in which rising rates for whatever reason produce a vicious circle of collapsing balance sheets among the carry traders, higher rates, and so on? Well, we’ve seen enough of that sort of thing not to dismiss the possibility. But if it does happen, it’s a financial system problem — not a deficit problem. It would basically be saying not that the government is borrowing too much, but that the people conveying funds from savers, who want short-term assets, to the government, which borrows long, are undercapitalized. And the remedy should be financial, not fiscal.... Whatever you do, don’t undermine recovery by calling off jobs creation...

And so I say "huh?!" once again.

Perhaps Andrews has a difference with Krugman on policy? Andrews does go on:

What would an insurance plan look like?... a credible plan for reducing long-term deficits... agreements to limit future entitlements, limit our military ambition, rein in health care costs and increase tax revenues... back-up options, triggers to shift policy in case the economy performs better or worse than expected...

To which I cannot help but remember Paul Krugman:

Even a full economic recovery wouldn’t balance the budget.... So once the economic crisis is past, the U.S. government will have to increase its revenue and control its costs. And in the long run there’s no way to make the budget math work unless something is done about health care costs...

And say, once again, "huh?!" I really don't see a substantive difference between Andrews and Krugman.

So what is going on here?

I think what is going on here is that Edmund Andrews acquired bad habits working for the New York Times that he has not yet managed to shed.

Andrews thinks that he is not a serious person if he writes:

  • Alan Greenspan is flat-out wrong in his demand for immediate fiscal contraction.
  • Paul Krugman is quite right in his urging more fiscal expansion.
  • And then, sometime between 2015 and 2020, we need to focus on raising taxes and capping spending in order to deal with the federal health program spending-driven long-run fiscal imbalance.

That wouldn't be neutral, that wouldn't be balanced, that wouldn't be something a serious person would say, that would be ideological.

So, Andrews thinks, if he is going to agree with Krugman on everything substantive--which he is--he must first kick Krugman in the teeth. And he must never say that he is, on the substance, agreeing with Krugman.

That wouldn't be balanced.

Now perhaps this is a sound rhetorical strategy on Andrews's part. Perhaps it gets him a reputation as a Serious Person who Does Not Agree with Hippies and Who Can Be Trusted.

I think not. I think that this type of piece tends to get two types of readers:

  1. The ones who skim the beginning--and who take away the lesson "Andrews says that neither Greenspan nor Krugman was convincing" and then things got too complicated to remember. Andrews has served this fraction of his readership badly: they leave thinking that the equities are balanced between Greenspan and Krugman, which they are definitely not.

  2. The ones who read to the end--and who say: wait a minute: Andrews agrees with Krugman that (i) we need more expansionary fiscal policy now and (ii) we need to tackle our long-run health spending-driven budget problems. They then ask themselves: why did he confuse us and make us work harder than we had to to get to his bottom line? They leave somewhat annoyed, feeling as if they have been the victims of a game of hide-the-ball.