Friday, October 7, 2011

Assault of Thoughts - complaining about how pro-austerity people, John Taylor, and Nobel sour grapes see and talk about the world edition - 10/7/2011

"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" - JMK

- More wisdom from Gene Callahan. I've commented on this rhetoric of stimulus in the past. What really baffles me is that we haven't seen any fiscal stimulus since 2009 (and that was underwhelming)... at what point do Bob and others start saying things like "for the last two years we've tried a spending freeze and that hasn't worked - let's try stimulus!". I'm not holding my breath.

- In John Taylor's world, liberals are free spirits who like to make policy erratically and conservatives are the ones who like to operate on the basis of rules. In the real world, liberals propose monetary and fiscal policy rules too, John Taylor knows this, and John Taylor pretends he doesn't know this for God knows what reason. There's a large literature on the importance of rule-based policy that recognizes there are a lot of problems with the original Taylor rule. That's to be expected, right? Since when has science been right the first time? Taylor, you would think, would recognize this - perhaps register his disagreements with alternative versions of his rule - and be comfortable with the knowledge that he initiated the discussion. Instead, he's chosen this nasty route of pretending that no one else knows what they're talking about and that they don't favor rule-based policy because they don't favor his version of rule-based policy.

- The blogs I cite here dispute economics Nobel prizes a lot, and often act as if the mere existence of disputes in certain prizes (Hayek and Myrdal most prominently) somehow is a black mark on economics. It turns out prize controversies are not unique to economics. For the most part, these things bore me. 99% of the time people who complain about the prize are whining about someone that they don't like and completely neglecting the scientific contributions of the winners. Paul Krugman's richly deserved award brought out a lot of ugliness in this vein - same with Stiglitz. I was equally put off by the reaction to the Ostrom/Williamson prize as if it was some kind of refutation of the Krugman prize - as if economists who read and use Krugman's work don't read Ostrom or don't read Williamson, or as if Ostrom and Williamson somehow contradict Krugman!!! The politicization of science can be ugly, but we're not unique in that regard. Perhaps we are politicized to a different degree because of subject matter - but we're not unique.


  1. What do you feel about the view that any amount of fiscal stimulus may fail in the face of high household debt?

    People who temporarily earn a little more money from a public works program job would simply save more to prevent their financial situation from deteriorating further, as the proposal goes.

    Households can't sell assets or "lay off" their children as businesses do with equipment and workers, and there is no way for them to prevent a worsening of a financial situation even with a jobs program, when the value of their house is falling and their ability to renew their loans is decreasing.

    Basically, in such a case, the size of the stimulus may not be the real problem.

    PS: I don't know if it is "courageous" to be able to say a stimulus was not enough, but I certainly am never able to speak to other everyday people and suggest the same without swallowing my words and qualifying them. "What do you mean all that runaway spending across Europe, North America, and China was not enough?"

  2. There is a certain amount of irony associated with complaints about science being "politicized" (whatever the heck that means) when it comes to Paul Krugman. Whether Krugman deserved the Nobel or not (I'm sure he did), he is more than simply some apolitical economist - and his foray into politics came about long before he was awarded the Nobel. Now I guess one could argue that one should separate his work in "economic science" from his politics, but that seems, well, silly at best. You can no more separate Hayek or Keynes or Friedman from their politics this way than can one Krugman. I prefer to have adult conversations where I talk about people as well, real people, in other words.

    As for the whole theory of stimulus, Keynes stated on a number of occasions that those who raise the sort of objections to it that exist today would have faded from society by now (in his own political context he was referring basically to those he hated the most - the Tories). If your economic theory can't account for the actions of those who disagree with you it isn't much of a theory. We have lots of veto points in American politics for very good reasons:

  3. I like Taylor, but I too am disappointed when he exhibits his political loyalties. Usually he'll just ignore the short-comings of conservative policy, but it's extra unfortunate when he goes out of his way to criticize liberals. What really bothers me is the framing of economics as conservative or liberal. Like Milton Friedman said, "There's good economics and there's bad economics." It cheapens the science when some of our brightest economists talk in terms of liberal and conservative. I really wish everyone would cut it out. Blogs would be a lot more boring, but I think economics would be better off.

  4. Brian,

    I'd rather economists talk about their politics - whatever they may be.

    "It cheapens the science when some of our brightest economists talk in terms of liberal and conservative."

    I disagree. I'd rather people be open about their viewpoints.

  5. Gary -
    I don't think the point is that economists don't or shouldn't have personal politics. I think the point is that the economics they do isn't political. This has been pointed out numerous times with conservatives and liberals in the Keynesian tradition. You can see it with "quasi monetarists" today and with Friedman in the past as well. It's not a conservative or a liberal view. What Brian is saying is that forcing that square peg into a round hole is not just unhelpful, but wrong.

  6. Daniel,

    "I think the point is that the economics they do isn't political."

    Right, and I disagree.

    "It's not a conservative or a liberal view."

    Yeah, you're not going to find binary opposites like that sure; the politics is going to have a lot more fine tuning to it.

  7. re: "Right, and I disagree."

    I know. My point is don't say "I disagree. I'd rather people be open about their viewpoints." as if the claim has been that they SHOULDN'T talk about their viewpoints. That is not the claim as I read Brian, and it's certainly not my claim.

    I'm glad Krugman talks about his viewpoint. What is wrong is to think that Keynesianism is a "leftist" idea or something like that (however much nuance you want to pile on that).


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