Krugman’s Anti-Cameron Contradiction
In recent months, the Nobel laureate Paul Krugman has repeatedly praised the US economic recovery under President Barack Obama, while attacking the United Kingdom’s record. But when we compare the two economies side by side, Krugman’s argument turns out to rest on a distinction without a difference.
NEW YORK – It is truly odd to read Paul Krugman rail, time and again, against the British government. His latest screed begins with the claim that “Britain’s economic performance since the financial crisis struck has been startlingly bad.” He excoriates Prime Minister David Cameron’s government for its “poor economic record,” and wonders how he and his cabinet can possibly pose “as the guardians of prosperity.”
Hmm. In recent months, Krugman has repeatedly praised the US economic recovery under President Barack Obama, while attacking the United Kingdom’s record. But when we compare the two economies side by side, their trajectories are broadly similar, with the UK outperforming the United States on certain indicators.
Consider, first, the unemployment rate. In the fourth quarter of 2007, the UK’s rate was 5.2%. When Cameron’s government took office in May 2010, it was 7.9%. In the most recent reporting period (November 2014-January 2015), it was 5.7%. In the US, the unemployment rate in the fourth quarter of 2007 was 4.8%, 9.8% in March-May 2010, and 5.7% in November 2014-January 2015. In both countries, the unemployment rate is therefore slightly above the pre-crisis (end-2007) level, with no significant net difference over the business cycle from the end of 2007 until now.