By this stage, if you still accept Keynesian economics as a legitimate approach to understanding how an economy works, or how to find our way out of recession, you are basing everything on authority and simple faith. It’s in all the texts, but you would think that by now there would be a growing level of dissatisfaction about the irrelevance of textbook theory for making sense of the actual events of an economy. Kevin Williamson has written an article, Economics may be dismal, but it’s not a science, which refers back to an article written by Niall Ferguson, The Rise and Fall of Krugmania in the UK. So we have a journalist quoting an historian on the uselessness of economic theory.
Economists have never in all their endeavors managed to deliver a truly useful and broadly applicable model to policymakers, which is to say a model that is prospective, connecting policy changes to real-world outcomes in a predictable, accurate, and reliable manner. Given the complexity at work, that probably is an impossible task, and the record of economists for making predictions is not good; Krugman’s record is arguably worse than average, despite his straight-faced insistence: “I (and those of like mind) have been right about everything.” Right about everything would be a very high standard for a marine biologist or an astronomer — but for an economist?
Krugman is trying to set a kind of standard of sorts, for being able to deny reality longer than anyone else. You know that Keynesian inanity about changing one’s mind when the facts change. Keynesian economics will disappear around the same time that the left gives up on socialism and we all know how long that will take. These people will just have to be ignored, in the way they are in the UK.
Economics does provide useful models, ones that really do work and you can use to frame policy. But all such models start on the supply side and revolve around the specific efforts of entrepreneurs living in a world of innovation and uncertainty. In that sense, economics is quite simple and straightforward. The trick is to get 50%-plus-one to vote for policies that make everyone prosperous by making some people quite well off.