Bryan Caplan  

Deregulation, Voodoo, and Krugman

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Many of my friends wistfully contrast the great neoliberal Krugman of the 90s with the leftist ideologue Krugman of today.  But both Krugmans are alive and well in 2016.  A stark case:

In "Notes on Brexit" (June 12, 2016), Krugman scoffs at the pro-growth power of deregulation:
Pay no attention to claims that Britain, freed from EU rules, could achieve spectacular growth via deregulation. You say to-mah-to, I say voodoo, and it's no better than the US version.
In "Cities for Everyone" (April 4, 2016) however, Krugman sings an utterly different tune:
Our big cities, even New York, could comfortably hold quite a few more families than they do. The reason they don't is that rules and regulations block construction. Limits on building height, in particular, prevent us from making more use of the most efficient public transit system yet invented - the elevator.

Now, I'm not calling for an end to urban zoning...

But building policies in our major cities, especially on the coasts, are almost surely too restrictive. And that restrictiveness brings major economic costs. At a national level, workers are on average moving, not to regions that offer higher wages, but to low-wage areas that also have cheap housing. That makes America as a whole poorer than it would be if workers moved freely to their most productive locations, with some estimates of the lost income running as high as 10 percent.
I expect that Paul will protest, "Leaving the EU won't deregulate British housing."  That's probably right.  But then Paul shouldn't dismiss deregulation in general as "voodoo."  Instead, he should declare, "Some deregulation has enormous growth potential, but Britain can pursue this deregulation just as well within the EU as without."

So why not say that, Paul?  You could even blame the Republicans while you do it: "Republicans are great fans of deregulation as a slogan, but when specific deregulation promises enormous economic gains - especially for the poor - Republicans lack the attention span and follow-through to make deregulation a reality.  Even when they're right, they're wrong."

COMMENTS (9 to date)
Jon Murphy writes:

He may be trying to say that the idea that deregulation would "achieve spectacular growth," is voodoo (whatever "spectacular" means).

kevin grier writes:

But what if we deregulate the Ems? That would be spectacular for sure!

ThaomasH writes:

The message is clearly that the greater freedom to improve regulation that could be obtained outside the EU would not be spectacular and would pale beside the costs of decreased access to the single market.

Jon Murphy writes:


Your interpretation doesn't make sense in the context of his last sentence, namely "You say to-mah-to, I say voodoo, and it's no better than the US version."

Nick Wernicke writes:

[Comment removed. Please consult our comment policies and check your email for explanation.--Econlib Ed.]

Thomas B writes:

I have long assumed that, as you put it, "both Krugmans" are alive and well. As in, there's a prizewinning economist, Paul Krugman; and there's a pseudonymous New York Times byline, "Paul Krugman".

It seems to me that the latter, who frequently contradicts both the economist Paul Krugman and other postings by "Paul Krugman", is at least one and more likely several authors (who don't read - or remember - what the others wrote).

Clearly Paul Krugman, for whatever reasons, does not object to the postings of "Paul Krugman," but - assuming he is still in command of a great intelligence and has a sound memory - it seems unlikely to me that he actually composes them.

Bob McGrew writes:

Best criticism of the Republican establishment I've ever heard. (Too bad the party is being taken over by something even worse.)

JacK writes:

I don't think it's a good idea to use the word "neoliberal". It's purely a smear word coined by people on the left in order to make classically liberal policies appear old and outdated. It's a form of thought terminating cliche created as a tool against libertarians.

Jerry Hough writes:

Both Krugmans are very close to Hayek except on monetary policy. This means de-regulation and social welfare.

The Krugman in the New York Times is simply a total partisan of the Robert Rubin wing of the New Democratic Party. Read what he wrote both in columns and the blog on Sanders. His measures are impossible. The only possible is Hillary's do-nothing. He thinks Obama is a truly great President for one achievement--passing Mitt Romney's health plan. Hillary was a Goldwaterite activist and behind the rhetoric has changed little since then on economic and foreign policy.

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