Krugman's response in a letter to Business Insider. Business Insider was asking him about that quote and about his recent commentary on Bitcoin.
Well, two things.
First, look at the whole piece. It was a thing for the Times magazine's 100th anniversary, written as if by someone looking back from 2098, so the point was to be fun and provocative, not to engage in careful forecasting; I mean, there are lines in there about St. Petersburg having more skyscrapers than New York, which was not a prediction, just a thought-provoker.
But the main point is that I don't claim any special expertise in technology -- I almost never make technological forecasts, and the only reason there was stuff like that in the 98 piece was because the assignment required that I do that sort of thing. The issues about Bitcoin, however, are not technological! Everyone agrees that it's technically very sweet. But does it work as money? That's a very different kind of question.
And the fact that people are throwing around my 98 quote actually shows that they don't get this point -- that they're confusing technology with monetary economics. -- Krugman, Business Insider Letter [http://www.businessinsider.com/paul-krugman-responds-to-inte...]
I read that before I posted the quote. I think it's worth reading, so I'm glad you posted it.
I'm not trying to prove Krugman is bad with the quote; I simply added it because I find it amusing.
His excuse says: "I was writing in print about something I'm not an expert in, and I wasn't being serious anyway." Fine. That is how I would interpret things even without the excuse. It still says something about Krugman, but no, the quote is not overly damning by itself. (Krugman's entire body of non-academic work, on the other hand....)
While politicians who like to defer responsibility to economists would want their electorate to believe otherwise, economists are not soothsayers. They are familiar with some ideal models for modeling economic systems of a few variables that may or may not hold up depending on the actual market conditions.
Economic forecasts are a bit like really bad weather forecasts - given a few variables and that nothing changes they may hold up.
But they cannot predict what will change and what effects it will have. Like the long term implications of internet.
For small systems with stable technologies like markets for a limited set of products some macroeconomic rules may hold up pretty well. But for large scale economies the economic decisions are as much political as fiscal, and the soundness of the decisions can be found out only in retrospect...
Well, two things.
First, look at the whole piece. It was a thing for the Times magazine's 100th anniversary, written as if by someone looking back from 2098, so the point was to be fun and provocative, not to engage in careful forecasting; I mean, there are lines in there about St. Petersburg having more skyscrapers than New York, which was not a prediction, just a thought-provoker.
But the main point is that I don't claim any special expertise in technology -- I almost never make technological forecasts, and the only reason there was stuff like that in the 98 piece was because the assignment required that I do that sort of thing. The issues about Bitcoin, however, are not technological! Everyone agrees that it's technically very sweet. But does it work as money? That's a very different kind of question.
And the fact that people are throwing around my 98 quote actually shows that they don't get this point -- that they're confusing technology with monetary economics. -- Krugman, Business Insider Letter [http://www.businessinsider.com/paul-krugman-responds-to-inte...]