August 22, 2003

#116: Like a night bug circling a candle ...

P. Krugman

What is it about the Krugster and California? Like a night bug circling a candle�he can't seem to stay away from the place. He shipwrecked what was left of his credentials as a economist with nearly a dozen absurd columns in 2001/2002 on the CA electricity crisis and today he returns with Conan the Deceiver ((08/22/03)�an attempt to trash Arnold Schwarzennegger's gubernatorial campaign. So what's going on with this California obsession? Actually we think it is pretty simple and that it has nothing to do directly with anything in today's column directly. If you want to read it go ahead, but here's the way we see the big picture.

First of all, it is a fact of life that state governors are often buffeted by national trends, particularly economic trends, that are largely beyond their control. Hence their "success" or "failure" in office frequently comes down to the luck of timing. When things go well nationally, they get a lot of credit in their state�George W. Bush of Texas comes to mind� and when things go badly nationally, they get blamed in their state no matter what they do. In good times, the smart governors manage to keep their heads on straight and do not "confuse genius with a bull market." In other words, they don't blow the budget on spending programs. Gray Davis was not among the smart ones and now is in deep do-do.

But here is the second part of the picture. The U.S. economy is about to roar. It is probably roaring already, but it will certainly be roaring in the fourth quarter and into 2004. This will provide tremendous relief for beleaguered state budgets and to the governors who managed to hang on to their jobs. Hence for Democrats the prospect of losing the governorship of California in October is a disaster beyond calculation. Davis will get the blame for all the down side and the new Republican governor, probably Schwarzennegger, will get credit for a "miracle" recovery. We hope Arnold keeps his head and puts a lid on spending, but it almost doesn't matter. To paraphrase Woody Allen, about all he will have to do every day is "just show up." The rising economic tide nationally will do much of the rest.

It gets even worse for Democrats in 2004. If losing the governorship means they will have to fight for California in the presidential election they may as well not put up a candidate. It's that simple.

We suspect Krugman realizes all of this and in today's column he is simply doing his small part (peeing into the wind, actually) to stave off the inevitable. What we are wondering though is whether this is IT for Krugman on California? Will he cut his losses and ride off into the sunset or somewhere. Most of us doubt it. Rather than a sunset rider he reminds us more of the cowboy on horseback in those western movies shooting frantically over his shoulder as he flees from a losing battle with rustlers to round up a posse.


[The Truth Squad is a group of economists who have long marveled at the writings of Paul Krugman. The Squad Reports are synopses of their discussions. ]

Posted by John Weidner at August 22, 2003 7:32 AM
Weblog by John Weidner