I do not think anyone expected Paul Krugman to stay consistent after Trump got elected but I do not think anyone thought it would be so blatant but he was. In a span of five months, it went from a “Time to Borrow” to a time where “Deficits Matter Again”. None of this should be surprised. A 2010 study in the Journal of the American Institute for Economic Research found that of all the economies they analyzed he was the only one to change his position on deficits in a “significant way” once control of administrations changed. The change is even more dramatic when you look at his first column after the election where he continued to call for massive stimulus. Although this can be construed to mean he is consistent it is equally plausible that he did this to save face since he called for a massive collapse after the election or he thought Hillary would still win though some leftist scheme. You can see a more extensive list of his previous statements here.
What changed? Simple, the expectation of a democratic presidency fell away to the reality of a republican controlled government. Of Krugman’s defenders will point to his column and say that this was not an example of massive hypocrisy but rather a changing of the economic conditions. After all, when the facts change so does Paul Krugman (to link him to another famous Keynesian). I guess at this point the question is this: how much did the economy change in seventy-six days? Not much. Thankfully Krugman gives us a peek into his thinking. Krugman states,
“But these predictions were always conditional, applying only to an economy far from full employment. That was the kind of economy President Obama inherited; but the Trump-Putin administration will, instead, come into power at a time when full employment has been more or less restored.
How do we know that we’re close to full employment? The low official unemployment rate is just one indicator. What I find more compelling are two facts: Wages are finally rising reasonably fast, showing that workers have bargaining power again, and the rate at which workers are quitting their jobs, an indication of how confident they are of finding new jobs, is back to pre-crisis levels.”
Let us examine each of these three factors individually. The most recent unemployment number is actually a tenth of a point higher than November’s reading and two-tenths of a point below August’s reading and we have been at or below five percent this whole year. What about the quit rate? That has been dancing between two and two and two-tenths of a percent since November of 2015. Lastly, average hourly earnings averages for each quarter have been rising between six-tenths and eight-tenths of a percent since 2015.
The reality is that all the conditions which made Krugman think deficits matter again have been around since before they mattered. The facts are simple. Paul Krugman does not change his opinions to fit the facts but to fit the party in the White House.