Regular reader Barry F, following up on Sunday's post here, sends in an additional nomination for the august title of Worst Economics Writer In America. The nominee is Matthew Yglesias, head business and economics correspondent for the online magazine Slate. To support the nomination, Barry links to Yglesias's April 1 post at Slate entitled "Print Money. Mail Everybody a Check."
This is indeed a worthy nomination. Yglesias, both at this post and throughout his writing, shows a spectacular lack of understanding of literally everything about what makes an economy work, and can be consistently counted on to advocate the most destructive possible policy in any given situation. But Krugman is a very tough competitor. No sooner had Barry made his nomination than Krugman put up his own April Fools Day lollapalooza, "Lessons From a Comeback," proving that this coveted crown cannot be so easily dislodged.
In his April 1 post, Yglesias picks up on Ben Bernanke's suggestion a few years ago that a central bank as a last resort could drop cash out of helicopters. Instead, Yglesias says, the central bank should "mail checks" directly to American families. And he then proceeds to list, with an apparent straight face, the many advantages of this proposal, such as:
it makes the budget deficit go down rather than up
Children in a Native American tribe that got revenue from a new casino had much better mental health than children whose families didn’t get the unexpected bonus
It’s also really fast
And so forth. Might this kind of program undermine the structure of incentives that made the economy happen in the first place? Not part of Mr. Yglesias's concerns.
I know what you are thinking: this was an April Fools gag, not to be taken seriously. Yes, this article is so stupid that that hypothesis must be considered. However, Slate helpfully provides a listing of recent posts by Mr. Yglesias that firmly establishes his credentials among the very worst of economics writers, including, for example, a defense of new PM Shinzo Abe's plans for another round of "stimulus" in Japan (will they never notice that 25 years of "stimulus" in Japan has led to 25 years of stagnation?), the contention that a modest reduction in destructive poverty trap housing subsidies is "Sequestration's Unkindest Cut," endless advocacy of higher taxes, and on and on. No, the April Fools joke theory will not fly. This guy has fallen for every economics fallacy and then some.
But as I say, Krugman is one very tough competitor. "Lessons From a Comeback" is about the supposed comeback of California from its recent financial crisis. Mr. Krugman is prepared to declare that California is back, even before any results of its recent round of major tax increases have even been reported:
Unemployment in California remains high, but it’s coming down — and there’s a projected budget surplus, in part because the implosion of the state’s Republican Party finally gave Democrats a big enough political advantage to push through some desperately needed tax increases. Far from presiding over a Greek-style crisis, Gov. Jerry Brown is proclaiming a comeback.
OK, in Japan they've been "proclaiming" a comeback for 25 years. You'd think these guys might have the prudence to wait for even one quarter's data to come in, but that's not their style. But then we come to my favorite part:
Needless to say, the usual suspects are still predicting doom — this time from the very tax hikes that are closing the budget gap, which they say will cause millionaires and businesses to flee the state. Well, maybe — but serious studies have found very little evidence either that tax hikes cause lots of wealthy people to move or that state taxes have any significant impact on growth.
I don't know if I qualify as one of Mr. Krugman's "usual suspects," or what exactly he means by "doom." But I know what I am predicting. I am not predicting immediate default or that the whole population of California picks up and leaves tomorrow. I am predicting long term gradual relative decline. I am predicting the same thing for California that New York City experienced in the 1970s, when it allowed its combined state and city income tax rate to exceed 18% when New Jersey and Connecticut had no income tax. During that decade the City lost 1 million of its population, the Bronx was burning, Stamford and Jersey City were booming, and a new corporation announced the departure of its headquarters on about a weekly basis. California's taxes today aren't that wildly out of line, so it won't be that bad, but it will be a significant gradual relative decline. Not unlike what New York is experiencing right now relative to Texas and Florida. Sure, some new businesses open, new buildings go up, areas are gentrifying. It's just that incomes and populations are going up far faster in Texas and Florida.
And what exactly are those "serious studies" Krugman refers to that find "very little evidence" that state taxes have any significant impact on growth. Has New York's experience in the 70s just gone down the memory hole? Can they look out the window and see what is happening to New York and Illinois versus Texas and Florida. I say Krugman keeps his crown!