June 01, 2005
More Intellectual Garbage Pickup
This is really a thankless task. But somebody needs to occasionally lay down a marker that Steve Antler writes with forked tongue.
He attempts to come to Daniel Okrent's defense:
EconoPundit: Professor Krugman says... "unemployment lasts much longer than it used to."... Daniel Okrent says: ...columnist Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults."
A plot of the BLS statistic 'average weeks unemployed' from its 1948 start to the present illustrates Okrent's point:
The first gray arrow shows upward trending from 1948 to 1983. During those years Krugman was correct. The second gray arrow shows a slight downward trend since the mid 1980's. During these years, Krugman is wrong.
So which is it? Relative to 1948, unemployment now lasts longer than it used to. Relative to 1983 recession-peak-unemployment lasts about two weeks less than it used to.
I guess the question is one of interpretation. It just has to be left to the voters. Do they share Krugman's pessimism, or do they feel optimistic about the future?
Here is Antler's figure:
What should you think of this argument?
- You should look at the duration of unemployment during business cycle peaks, and see a steady rise: 7.8, 10, 10.8, 11.9, 12.6--today's level is 19.3.
- You should look at the average duration of unemployment during entire business cycles, and see a steady rise: 12, 10.5, 12.8, 15, 15.4, 17.1.
- You should cyclically-adjust the series--after all, we know that the duration of unemployment will be relatively high whenever unemployment itself is relatively high--and calculate what the duration would be if the unemployment rate were six percent, as is shown here:
- You should reflect on the fact that of these four possible ways of calculating the trend in unemployment duration, only one way--and a relatively weak way--produces Antler's downward trend since 1983. And Antler's way produces a much stronger upward trend in unemployment duration in the 1970s and early 1980s than any of the alternatives.
- You should reflect on the fact that Krugman's "unemployment lasts much longer than it used to" is part of a tradition of analysis that contrasts the first post-World War II generation--the 50s, 60s, and early 70s--with today. There's nothing in Krugman to make anyone imagine that "used to" applies to the 1980s only.
But it really isn't economics that Steve Antler is doing here, is it?
Posted by DeLong at June 1, 2005 12:25 PM