Tuesday, June 21, 2011

On all this Krugman Hubub

There have been some interesting posts, particularly Bryan Caplan's on intellectual Turing tests, but I think there are a few fundamental misunderstandings of Krugman's claim that liberals know the opposition better.

1. There is no such thing as a "libertarian theory of economics". Libertarianism, like liberalism or conservatism, is a political position - an ideology even. It's not an economic theory. People are making a fuss over the fact that Krugman isn't making distinctions between conservatism and libertarianism and infering that he doesn't even know what libertarianism is. This is an absurd claim - of course he knows what libertarianism is - but it's also irrelevant. That's all politics. He is contrasting liberals with conservatives but he specifically mentions being able to describe the views of "saltwater economists", "a Keynesian economic argument", etc. etc. And of course, he specifically has in mind mainstream Keynesian vs. mainstream non-Keynesian (the so called "saltwater" vs. "freshwater"). In that face-off I think Krugman may actually have a point. Exhibit A is Casey Mulligan, Exhibit B is John Taylor. Smart guys by all means, but they have been a little disappointing through the crisis. A good example of what Krugman is getting at is when Krugman has to walk Taylor through his own Taylor Rule and explain why some economists have a slightly different view of what makes sense for the Taylor Rule even if it's not the "original Taylor Rule".

2. And then there are the Austrians. I just don't think he has them in mind here. It's simply not a rival school in any meaningful sense. I think it's interesting and I think it's worth talking to you guys, but not everything Krugman posts is a challenge to you. I think he mostly has other people in mind. So what about the Austrians? Krugman has definitely botched the theory in the past, and most other Keynesians couldn't explain it either. But when you look at guys like Don Boudreaux, Russ Roberts, John Papola, and even better Austrians than them it's pretty clear they do no better. They are probably more broadly familiar with Keynesianism than vice versa. I would agree with that. But there's still considerable ignorance on both sides. I think this has a different origin on each side. Most Keynesians generally ignore the Austrian school, which is the source of their ignorance. Most Austrians actually hold a distorted understanding of Keynesianism, and many (not all) attribute very bizarre ideas to Keynesians (like that they think the government can plan the economy, etc.). So this is a mess all around IMO, but ultimately I think not even what Krugman had in mind.

3. Caplan's Turing test idea is interesting. I think I'd do decently well posing as someone else. I think calling out someone who is posing is much more difficult. After all, there are really bad Austrian expositors of Austrianism and really bad Keynesian expositors of Keynesianism out there. A great idea, nevertheless.

4. As I said in the comments of David Henderson's post, I think it's inevitable that each side is overconfident, and there are a few good reasons to expect that.

5. This is also one of those questions where not only is it hard to find an answer to, but there might not be an answer to the question. Who belongs on either side, for one thing? And the distribution of knowledge is going to look really weird it's not like you're going to have two clean normal distributions with a clear winner, on average. You're going to have people like Bruce Caldwell and Barkley Rosser perform great, and you're going to have a huge group of people that do poorly. Ultimately this sort of test will be driven by the shape of the tails of the distribution, not by any center of gravity of knowledge. So what does that really tell us.

6. There's also a lot of disagreement! I don't agree with all the post-Keynesians. Are they "with me"? I would rule out a lot of Austrian explanations of Keynesianism as being absurd, but clearly they hold those views for a reason and they're going to challenge that. This is sort of where the Turing test comes in, of course, but even within a school of thought there are differences. If I talk like a Rothbardian, what will a Hayekian think? If someone talks like a Hicksian what will a New Keynesian think?

7. Finally, I think monetary disequilibrium theorists on both sides of the aisle will do comparatively well at Bryan's test.


  1. It's incredible how much thought is given to worthless comments on a tabloid interview made by an economist, when people should be looking at everything else the economist discusses on...well...economics!

  2. Krugman is like catnip to some people. I don't understand it either. At least they're reading him. Only Milton Friedman rivals him for the amount of popular attention received by a Nobel laureate.

    It's his politics, obviously. It's incredibly annoying that people discount him because his politics rubs them the wrong way. That's a terrible way to go engage other minds. But like I said - at least they're reading him.

  3. Paul Krugman's own mistake was writing a political manifesto. A man who was an apolitical for most of his life tries to force himself into political philosophy? He was punching out of his weight class. He is not James Burnham. Krugman is unlearned in classical thought and tradition, and can not outdo Machiavelli or Aristotle through pure economics background overnight.

    Arguably, the same mistake was made by Hayek. Neither should have wasted their time on a subject in which they had no qualification.

  4. 1. I'm not sure he's trying to outdo Aristotle and Machiavelli.

    2. I'm not sure why people should feel like they need to hide their politics.

    To the extent that he or Hayek veers into political science, clearly they need to be careful. But I don't see anything wrong with being open about your politics.

  5. Of course it is okay to be openly political. But to write a book?

    Example. Ron Paul is not trained in monetary theory. But he writes a book on the Federal Reserve.

    It's one thing for Paul to be explicit about his views on money, but writing a book is a signal that he is challenging other monetary economists in their own sphere.

    I was being hyperbolic about Krugman outdoing Machiavelli or Aristotle, but I just feel he should remember what his position is with regards to the world of political thought. His prime focus in Conscience of a Liberal was income inequality. He cares about our - other people's - incomes, way more than we do and does not consider such is a weakness that has been called pleonaxia in classical thought. Many of us are okay with what we have and do not want more. Many Chestertonian communitarian philosophers have said that there is no point in sending money to Africa if it will not make them happier.

    When I look at what serious political philosophers say, I find some aims of the liberalism of either Hayek or Krugman to be worthless. What is to discuss liberalisation or regulation if it won't make anyone happier?

  6. A good sign that someone doesn't understand or isn't really interested in the views of opponents is when he calls all of their arguments bad -- they never have a good but wrong argument.

    The fact is that most intelligent people make good arguments most of the time, whether they happen to be right or not. Given the degree of disagreement among such people, most good arguments for any position must be wrong.

    What makes me suspect Krugman would fail at his own test is that he (like DeLong) tends to ridicule opponents for making what he believes are obviously bad arguments. That's part of his polemical style, of course, but it still suggests that he doesn't understand the other side.

  7. re: "What makes me suspect Krugman would fail at his own test is that he (like DeLong) tends to ridicule opponents for making what he believes are obviously bad arguments. That's part of his polemical style, of course, but it still suggests that he doesn't understand the other side."

    I think this is likely right. They tend to pick the low-hanging fruit and generalize.

    What I doubt, though, is that they distinguish themselves in doing this.

  8. "A good sign that someone doesn't understand or isn't really interested in the views of opponents is when he calls all of their arguments bad -- they never have a good but wrong argument."

    Good one, Lee.

  9. The simple truth is that a member of any contrarian school of thought will likely be better able to elucidate the tenets of "the mainstream", than the other way around. If you spend your life swimming against the tide, you need to know which way the currents flow.

    Interestingly though, switch the Turing Test to a contest between contrarian schools, and witness a dramatic decline in the respective abilities of either side to pass.... Just take a look at the (literally) aimless mud-slinging between the Austrians and the MMT guys on Bob Murphy's blog and elsewhere to get an idea of what I'm getting at...

    Any school of thought or ideology has it's insularity biases. One of my best friends is a staunch Austrian (and, indeed, it's one reasons why I personally pay as much attention to the school as I do). He has very sincerely talked up Ron Paul's chances for the US Presidential nomination in both this election and the previous one. However, as much as RP may perfectly fit his own ideological beliefs, I'm astounded that he could be so confident in the man's chances. The insularity of libertarian thought would, I propose, dramatically overhype notions of someone like Ron Paul's standing among the general populace.

  10. Something else I wanted to add:

    Of course, contrarian arguments generally have an early advantage, to the extent that someone does engage them. They will not likely have been heard before and it's always harder to come up with compelling counterarguments at first touch. (See David Friedman's comment underneath Bryan's post.)

    Naturally though, that's no indication that a compelling counterargument doesn't exist. [Warning: Another climate change analogy coming up...] I wrote this in response to a comment on my blog recently: "My own belief is that people's position on climate change will undergo something of a U-shaped curve. You likely start off believing that man-made warming is happening after hearing the basic results of the IPCC and so on. However, you then start to question all of this after coming across seemingly endless lines of (apparently valid) criticism. Nevertheless, if you persist and scratch a little deeper, you find that this criticism is largely bogus and/or already accounted for... And that brings you up for fresh air on the other side :)"

    PS - I'm not saying that all heterodox economic thought is "bogus". (I'm more an institutional/behavioural kind of economist at any rate.) However, I am making the point that it's normally a lot more complex than "Peter Schiff was right!" I don't think anyone should simply genuflect before the alter of orthodoxy, but there may also be legitimate reasons why certain schools of thought achieve ascendancy in the first place.

  11. Daniel,

    The guy comes off a preening, pompous jackass in the article, and the reason he comes off that way is, well, obvious.

  12. How do liberals think?


  13. You do realize Welch (the author of your linked post) is citing a suite of liberals in his response to the Slate article, don't you?

  14. Daniel,

    No, Welch is citing a suite of classical liberals or libertarians; he isn't citing a suite of liberals. As much as you try to lump modern liberals and classical liberals together they just don't, well, lump.

    "There is no such thing as a 'libertarian theory of economics.'"

    Sure there is. It is part of a cluster of ideas, but there is assuredly a libertarian theory of economics.

  15. Well, except for DeLong - another modern liberal. Even a broken clock can be sort of right from time to time.


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