Paul Krugman: The Doctrine of Trumpal Infallibility

“What happens to economists who never admit mistakes, and never change their views in the light of experience?”:

The Doctrine of Trumpal Infallibility, by Paul Krugman, NY Times: …we are living in the age of Trumpal infallibility: We are ruled by men who never admit error, never apologize and, crucially, never learn from their mistakes. Needless to say, men who think admitting error makes you look weak just keep making bigger mistakes; delusions of infallibility eventually lead to disaster, and one can only hope that the disasters ahead don’t bring catastrophe…

Which brings me to the subject of the Federal Reserve. …

You see, when the 2008 financial crisis struck, the Federal Reserve … cut interest rates to zero and “printed money” on a huge scale — not literally, but it bought trillions of dollars’ worth of bonds by creating new bank reserves.

Many conservatives were aghast. … In 2010 a who’s who of conservative economists and pundits published an open letter warning that the Fed’s policies would cause inflation and “debase the dollar.”

But it never happened…, the Fed’s preferred measure of inflation has consistently fallen short of its target of 2 percent… Four years after that open letter…, Bloomberg tracked down many of the signatories to ask what they had learned…, not one … was even willing to admit having been wrong.

So what happens to economists who never admit mistakes, and never change their views in the light of experience? The answer, apparently, is that they get put on the short list to be the new Fed chair.

Consider, for example, the case of Stanford’s John Taylor (one of the signatories of that open letter). …

Since the financial crisis … he has repeatedly demanded that the Fed raise interest rates in line with a policy rule he devised a quarter-century ago. Failing to follow that rule was supposed to cause inflation… — but seven years of being consistently wrong hasn’t inspired any rethinking on his part.

What it has inspired is a descent into increasingly strange reasons the Fed should raise rates despite low inflation. … And never, ever, an admission that maybe something was wrong with his initial analysis.

Again, everyone makes forecast errors. … But it’s much worse if you can never bring yourself to admit past errors and learn from them.

That kind of behavior makes it all too likely that you’ll keep making the same mistakes; but more than that, it shows something wrong with your character. And men with that character flaw should never be placed in positions of policy responsibility.