By Paul Krugman
What Richard Hofstadter called the paranoid style in American politics is no longer a fringe phenomenon: Bizarre conspiracy theories are now mainstream on the American right. And one manifestation of this paranoia is the persistent dismissal of positive economic data as fake when a Democrat occupies the White House.
During the Obama years, there was a large faction of “inflation truthers,” who insisted that deficit spending and monetary expansion must surely be causing runaway inflation and that if official numbers failed to match that prediction, it was only because the government was cooking the books.
With inflation falling rapidly over the past year, we’ve seen some resurgence of inflation trutherism. But the more notable development has been the emergence of what we might call recession truthers — a significant faction that seems frustrated by the Biden economy’s refusal, at least so far, to enter the recession they have repeatedly predicted or insisted is already underway.
Now, there are some sociological differences between the old inflation truthers and the new recession truthers. The former group tended to be old-school reactionaries still pining for a return to the gold standard. The new group is dominated by tech bros, billionaires who imagine themselves focused on the future rather than the golden past, more likely to be crypto cultists than gold bugs.
Indeed, the most prominent recession truther right now is none other than Elon Musk.
But the new truthers are, if anything, even sillier than the old truthers.
You might have expected technology billionaires to be well-informed about the world; someone like Musk could, if he chose, easily maintain a large research department for his personal edification. The annual budget for the whole Bureau of Labor Statistics is less than $US700 million ($1.04 billion). Yet they are often, in practice, easy marks for grifters and con men. I’ll talk later about why.
But first, let’s ask how we know that the recession truthers are wrong.
It’s not as if governments never fake economic data; authoritarian regimes do it all the time, and if America eventually turns authoritarian — a disturbingly likely event — it could happen there, too.
For now, however, America’s statistical agencies remain highly professional. They’re staffed and to a large extent led by civil servants who care a lot about their reputations for integrity. We can be pretty sure that if political appointees were cooking the books, we’d be hearing about it from multiple whistleblowers.
[The technology billionaires’] belief in their own genius makes them highly gullible, easy marks for grifters claiming that the experts are all wrong.
Beyond that, while official data is still the best way to track the US economy — no private organisation can currently match the resources and expertise of the Bureau of Labor Statistics or the Bureau of Economic Analysis — there are, in fact, many independent sources of evidence on the economic state of the world’s largest economy. And they all more or less confirm what the official data says.
Consider, for example, how a National Federation of Independent Business survey of small businesses still shows that many of them intend to expand their work orces.
Or consider surveys of purchasing managers, which are often used as early warning indicators of economic change. These surveys look a bit less favourable than either the official data or small-business indicators, but still aren’t signalling anything that looks like a recession.
Claims for unemployment insurance — which represent data collected by states, not the federal government — also point to a still-solid US labour market.
Oh, and since inflation trutherism is, as I said, also experiencing something of a revival, it’s probably worth noting that private surveys confirm official reports of rapidly declining inflation as well.
So why do we see tech bros indulging in conspiracy theories, often citing random Twitter accounts to justify their views?
The answer, I believe, is that technology billionaires are especially susceptible to the belief that they’re uniquely brilliant, able to instantly master any subject, from COVID to the war in Ukraine.
They could afford to hire experts to brief them on world affairs, but that would only work if they were willing to listen when the experts told them things they didn’t want to hear.
So what happens instead, all too often, is that they go down the rabbit hole: Their belief in their own genius makes them highly gullible, easy marks for grifters claiming that the experts are all wrong.
What you need to know, then, is that the economic data isn’t fake. A recession might eventually happen in America, but it isn’t happening now. And the wealthy men claiming to know better are actually less well-informed than, say, the average reader of this masthead — because they don’t know what they don’t know, and nobody is in a position to enlighten them.
This article originally appeared in The New York Times.
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