Economic Jargon

Paul Krugman is capable of engaging in some extraordinarily muddy thinking. I’m sure it will come as no surprise to you that I think that of him, unless you are a new reader here, and even then it might not surprise you.

Krugman wrote a blog post Sunday berating the Obama Administration for having an internal debate over whether or not current unemployment is or is not structural in nature. In it he claimed that anyone with the intelligence of a turnip would know that unemployment since 2007 has been cyclical in nature, so he rhetorically asked why is the Obama Crowd even having such an idiotic debate.

I thought he was sort of shooting off his gun without aiming at the time, but I let it go because, what the hell, I can’t go blasting off at Paul Krugman every time he says something stupid. People would get bored.

My point was, and is, that much of our unemployment is due to jobs being shipped overseas. For that to be cyclical we would have to be waiting for them to be coming back when our wage structure “cycles back down” to the $1/day range. Those jobs are not coming back, and I’d say that is pretty much the definition of “structural unemployment.”

Well, it turns out I’d be wrong in my definition of the term.

Krugman writes another blog post Monday in which he says that “I know you think you know what I meant, but what you think you know is not what I meant because I was speaking in tongues jargon.”

It turns out that “structural” in this case does not mean part of the structure of our society, as in permanent or long-lasting, which would make sense; but rather is an economic code word for the level or type of unemployment that causes inflation to occur when unemployment starts to drop, which is an idiotic use of the word.

So, what they are actually arguing is not what unemployment is, but what will happen when it starts to drop, and they do that by putting a funky "type" label on the present unemployment. Krugman and his happy band of economists are certain that inflation will not occur when unemployment drops (unemployment is not structural), while the White House crew is concerned that it might and is considering what to do if it does. Which group do we want leading us?

And Paul Krugman was therefor, according to him, absolutely correct in
his first post; but that's assuming that the White House gang was also speaking in tongues jargon. Trust me that I am not speaking in tongues when I say that economists are idiots; I am using the term “idiots” with precisely the meaning that you think I am.