Pundits don't like being wrong, they often don't want to admit being wrong. Niall Ferguson is a classic case of a public figure unable to admit his analytical errors. But Niall's arch-nemesis, Paul Krugman, is a great example of what a grown-up does when they're wrong: He admits it and explains how he arrived at his erroneous conclusions.
After all, if you write about current affairs and you’re never wrong, you just aren’t sticking your neck out enough. Stuff happens, and sometimes it’s not the stuff you thought would happen.
So what do you do then? Do you claim that you never said what you said? Do you lash out at your critics and play victim? Or do you try to figure out what you got wrong and why, and revise your thinking accordingly?
I’ve been wrong many times over the years, usually on minor things but sometimes on big ones. Before 1998 I didn’t think the liquidity trap was a serious concern; the example of Japan suggested that I was wrong, and I eventually concluded that it was a big concern indeed. In 2003 I thought the US was potentially vulnerable to an Asian-crisis-style loss of confidence; when it didn’t happen I rethought my models, realized that foreign-currency debt was crucial, and changed my view.
The case of the euro is a bit different: I was very pessimistic about the strategy of austerity and internal devaluation, which I thought would have a terrible cost — and I was completely right about that. I also guessed that this cost would prove politically unsustainable, leading to a crisis for the euro itself; so far, at least, I have been wrong. My economic model worked fine, my implicit political model didn’t; OK, so it goes.