Paul Krugman is known for saying some very odd things. The neo-Keynesian economist has firmly planted himself as a hack for President Barack Obama and the Democratic Party, even if it means going back on policies he once supported.
For example, Krugman once spoke strongly against the idea of monetizing debt. But when the Federal Reserve decided roll out “quantitative easing” — a nice name for debt monetization, shifted gears and defended the program. Krugman, who often cherry-picks data to come to predetermined conclusions, has written fondly of death and destruction because he believes it will drive economic output. He’s also a big fan of death panels to deal with the unfunded liabilities of entitlement programs.
Krugman was also one of the loudest voices calling for economic stimulus in 2009. After President Obama’s stimulus failed to boost the economy, Krugman, who had advocated for a stimulus bill that exceeded the $833 billion price tag that the Obama Administration requested, complained that it wasn’t large enough.
Krugman chastized those who were pushing for spending cuts and later claimed victory. “Intellectually it was, I think I can say without false modesty, a huge win,” he wrote last year. “I (and those of like mind) have been right about everything.”
Let’s travel back in time for a moment. Back in 1998, then an economic professor at MIT, Krugman predicted that the Internet wouldn’t be such a big deal by the mid-2000s and that its economic impact “would be no greater than the fax machine’s”:
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.
Tell that to Larry Page and Sergey Brin, the founders of Google, whose company has alone has an $80 billion economic impact in the United States. Traditional telephones and faxes are a thing of the past now that there are some three billion Internet users in the world who now connect via a variety of social media sites — including Facebook and Twitter — and web-based services, such as Skype and GChat.
According to the OCED, the Internet was responsible for “up to 7.21% of US gross domestic product” in 2010. And here’s the kicker — there is still plenty of room for the Internet-based economy to grow.
In the same column, Krugman also wrote:
As the rate of technological change in computing slows, the number of jobs for IT specialists will decelerate, then actually turn down; ten years from now, the phrase information economy will sound silly.
There may have been a time when the job market was oversaturated with IT specialists. But interestingly, IT jobs have outpaced overall job growth and could approach record highs this year.
Too bad Krugman didn’t have the foresight to see the trends at the time. Maybe he was out of touch; maybe his view was guided by some uber-Keynesian economic model that just got it wrong. Either way, it’s ironic that Krugman now gets paid to write columns and blog posts at The New York Times’ website, which erected a paywall a few years ago because of the decline in traditional subscriptions.