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April 01, 2005

A Proper April Fools Day!

Yep. It's time for Donald Luskin:

Donald Luskin: Click here to read a draft (typos and all) of the 'paper' that 'economists' Dean Baker, Brad DeLong and Paul Krugman will 'present' today at the Brookings Institution (this is a leaked copy obtained at great personal hazard -- as of this posting, Brookings has taken down its link to the final paper on its web site).

But it's not "leaked": it's freely accessible. The Brookings link is active: http://apps49.brookings.edu/dybdocroot/es/commentary/journals/bpea_macro/forum/bpea2005_baker.pdf. And the link from my website is active: http://delong.typepad.com/sdj/2005/03/asset_returns_a.html

Don't be fooled by the academic veneer. This is just more propaganda aimed at blocking Social Security modernization. It's basically just a tarted up version of Paul Krugman's February 1 New York Times column (which I debunked thoroughly here)...

But Luskin didn't debunk it. He agreed with it. Our main point is that stock returns in the neighborhood of 6.5 percent will not be possible over the coming 75 years if economic growth is as low as the 1.9 percent rate used by the actuaries of the Social Security Administration in their solvency estimates. And what did Luskin write? He wrote:

Krugman does make one good point... stock returns in the neighborhood of 6.5 percent will not be possible over the coming 75 years if economic growth is as low as the 1.9 percent rate used by the actuaries of the Social Security Administration in their solvency estimates...

Why say that you debunked it when you agree with it--as anyone who can click on a link can see? Why say it was hard to obtain when it was easy--as anyone who can click on a link can see? What's the upside for Luskin here?

Posted by DeLong at April 1, 2005 07:01 AM