Krugman’s Blog, 2/21/13

There were 2 posts yesterday.  The first was “Alan Simpson and Bernie Madoff:”

As I’ve written on previous occasions, the Bernie Madoff phenomenon helped me understand a lot about the persistence of bad economics. Madoff flourished through “affinity fraud”; his investors thought he was their kind of guy, so they didn’t look hard at how he was allegedly making money. And I realized that a similar phenomenon explains the enduring popularity of goldbugs and fiscal doomsayers — including, say, the Wall Street Journal editorial page — despite years of being wrong about everything; their devotees, who consist in large part of cranky old white men, see kindred spirits and can’t see past that to the consistently terrible analysis.

But it’s not just the goldbugs who benefit from affinity fraud, a point driven home by Ezra Klein’s piece on Alan Simpson. Simpson is, demonstrably, grossly ignorant on precisely the subjects on which he is treated as a guru, not understanding the finances of Social Security, the truth about life expectancy, and much more. He is also a reliably terrible forecaster, having predicted an imminent fiscal crisis — within two years — um, two years ago. Yet he remains not only respectable among the Beltway crowd; as Ezra says, he’s lionized in a way that looks from the outside like a clear violation of journalistic norms:

For reasons I’ve never quite understood, the rules of reportorial neutrality don’t apply when it comes to the deficit. On this one issue, reporters are permitted to openly cheer a particular set of highly controversial policy solutions. At Tuesday’s Playbook breakfast, for instance, Mike Allen, as a straightforward and fair a reporter as you’ll find, asked Simpson and Bowles whether they believed Obama would do “the right thing” on entitlements — with “the right thing” clearly meaning “cut entitlements.”

So what is it that makes Simpson the figure he is? Clearly, it’s an affinity thing: never mind his obvious lack of knowledge, his ludicrous track record, reporters trust and idolize Simpson because he’s their kind of guy.

And think about what it says about them that their kind of guy is this cantankerous, potty-mouthed individual, who evidently feels not a bit of empathy for those less fortunate.

The second post was “Swiss Myths:”

Oh, my. Aaron Carroll is rightly very, very annoyed at Douglas Holtz-Eakin and Arik Roy for saying that Obamacare should be replaced with a free-market system, like Switzerland’s. As he points out, the Swiss system is nothing like their description. In particular, they denounce community rating — but Switzerland has community rating!

Actually, though, it’s even worse than Carroll lets on, for two reasons.

One is that Obamacare in fact looks a lot like, you guessed it, the Swiss system — so much so that back in 2009 I described it as a plan to Swissfy America. After all the screaming about the awfulness of Obamacare, it’s pretty rich to hold up as a role model a very similar system.

But wait, there’s more: the Swiss system is more privatized than other European systems — and guess what, it has higher costs, indeed second only to America’s:

Maybe Holtz-Eakin doesn’t know anything about this — but wasn’t Roy supposed to be a conservative expert in this field? Are they really unaware of the basics here? Or do they just expect their readers to be easily fooled?



One Response to “Krugman’s Blog, 2/21/13”

  1. For Naught Says:

    The Simpsons are not just enjoying fame for their likeness to the crowd, they are employed because they have no skills. With Beavis and Butthead the clash of Titans goes on irrevocably. Let’s face it. Give congress enough time and they’ll inevitably choose the worst course of action. Don’t address the sequester and before u know it they’ll latch onto something else. Are apples red or merely ungreen? When I conjure Wall Street CEO’s for instance I imagine thieves. So naturally I know they will rob me. But America expects their profits to be so great there will be enough gravy for my retirement. They will won’t they?

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