On CNBC’s Squawk Box this morning, co-host Joe Kernen came prepared to fire back at Nobel prize winning economist Paul Krugman.If you know the story, you can jump to the bottom of this post.
Krugman was on CNBC yesterday morning to, among other things, talk about his book.
Unfortunately for Krugman, the hosts were less interested in his book and more interested in what he had to say about the government’s role in the economy.
CNBC host Joe Kernen asked Krugman what he thought would be an acceptable amount of government spending as a percentage of GDP.
But before he asked that question, Kernen opened with this:
I was excited when you were coming in because I view you almost like a unicorn, almost, that you really exist in real life…I’m confounded when I read your pieces.
Perhaps that’s what got them off on the wrong foot.
But after persistent and aggressive questioning from both Kernen and CNBC’s Michelle Caruso-Cabrera, Krugman seemed offer 50 per cent as a number that would be an acceptable amount of government spending as a percentage of GDP.
After leaving the set, an unhappy Krugman headed straight to the blogosphere and went on the attack (emphasis ours):
…I just did Squawk Box — allegedly about my book, but we never got there. Instead it was one zombie idea after another — Europe is collapsing because of big government, health care is terribly rationed in France, we can save lots of money by denying Medicare to billionaires, on and on.
Among other things, people getting their news from sources like that are probably getting terrible advice about any kind of investment that depends on macroeconomics. But it’s amazing just how skewed the policy views are too….
Minutes after Krugman’s blog went up, Kernen tweeted:
Kernen came to the Squawk Box set this morning, guns loaded.
He read a 1998 quote from Krugman from a print out:
“The growth of the Internet will slow drastically, as the flaw in “Metcalfe’s law”–which states that the number of potential connections in a network is proportional to the square of the number of participants–becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.“
He also wasn’t too happy with the media’s handling of the whole matter (from a CNBC transcript):
The other thing, and Andrew [CNBC host and NYT reporter], the mainstream media for some reason always looks for some weird angle and their whole angle on this was that Krugman blogged about CNBC Zombies and somehow that it was an argument between “New York Times” columnists….
…On Bloomberg, zombie is the word you use whenever anyone says something that is, I guess, antithetical.
And it didn’t stop there. CNBC also had Warren Buffett, Alan Simpson, and Erskine Bowles on. Kernen gave them some background and asked them how they felt about government spending at 50 per cent of GDP.
Collectively, Buffett, Simpson, and Bowles snickered.
“I know! It’s laughable!” exclaimed Kernen.
CNBC reporter Michelle Caruso-Cabrera said it best yesterday in a tweet: “I guess Prof. Krugman isn’t coming back.”