Monday, October 24, 2011

Croaking our way to progress

Brad DeLong, speaking of Paul Krugman, quotes the preface to Keynes's Essays in Persuasion. Keynes called the essays the "The croakings of a Cassandra who could never influence the course of events in time." Brad revises "I would not, however, say "never"--I would say "sometimes, and we all hope more in the future than in the past"."

The point that you slowly improve the state of society is an important one, and one that I think is often ignored by people who say "if politicians will never do exactly what you're happy with, then you have to abandon the whole Keynesian project as unworkable". First, that doesn't make any sense because Keynesianism is an approach to macroeconomic science. If it's right, it's right regardless of whether politicians pay attention to its rightness. This dependence on what politicians do is a non-sequitor.

But even if we think about policy suggestions that may emerge from Keynesian macroeconomics, it still doesn't make sense to abandon the whole thing just because of resistance. As Brad suggests, we can still make progress. Although there was only a weak, early Keynesian response to this crisis it was still better than the catastrophe of the 1930s which took several years for an adequate monetary response and even longer for a substantial fiscal response. Some people talk as if it should be obvious that a policy we think would have a negative impact should be prefered to an inadequately implemented policy that we think would have a positive impact. This makes no sense at all, but you see the argument all over the place as if it's some deep wisdom.

We could turn the tables as a demonstration here. Politicians - even ones that talk sorta like true blue libertarians - have not embraced "true" libertarianism, and they aren't going to embrace it any time soon. So should libertarians just drop their views because they are unworkable in the real world? They apparently don't think so. So why is this considered such an ace-in-the-hole argument against a timid, un-followed-through-on Keynesianism?

I like Keynes at the end of that preface too (the whole book is very good):

"I have thought it convenient to choose this date of publication, because we are standing at a point of transition. It is called a National Crisis. But that is not correct - for Great Britain the main crisis is over. There is a lull in our affairs. We are, in the autumn of 1931, resting ourselves in a quiet pool between two waterfalls. The main point is that we have regained our freedom of choice. Scarcely any one in England now believes in the Treaty of Versailles or in the pre-war Gold Standard, or in the Policy of Deflation. These battles have been won - mainly by the irresistable pressure of events and only secondarily by the slow undermining of old prejudices. But most of us have, as yet, only a vague idea of what we are going to do next, of how we are going to use our regained freedom of choice."

12 comments:

  1. "The point that you slowly improve the state of society is an important one..."

    Accident rules the fates of people as much as anything; it would be better perhaps if things worked differently, but regularity in human affairs is fairly bounded (ask the dead knights from the Battle of the Golden Spurs if you don't believe me). So slowness is important more because it guards against experiments that go terribly wrong than anything. Then again, bad experiments tend to be swiftly (in comparison to the course of change in human history) swept away.

    "If it's right, it's right regardless of whether politicians pay attention to its rightness."

    If it doesn't work within a social circumstance then - to parrot Hume's main critique of this way of thinking - its "rightness" doesn't really matter. Of course there is a big debate about how "right" it is in the first place; according to the person recently interviewed on Econtalk a stimulus leads to a multiplier between 0.8 and 1.2 historically (with all the caveats associated with such numbers). They go on to discuss the wide variance in the field regarding such things. Highly illuminating discussion for me at least; since I'm never going to read the papers, etc. behind the discussion.

    "We could turn the tables as a demonstration here. Politicians - even ones that talk sorta like true blue libertarians - have not embraced 'true' libertarianism, and they aren't going to embrace it any time soon. So should libertarians just drop their views because they are unworkable in the real world? They apparently don't think so. So why is this considered such an ace-in-the-hole argument against a timid, un-followed-through-on Keynesianism?"

    That is one of the the mains critique against libertarianism by non-libertarians actually; it is "unworkable" and "naive" in the "real world." I hear it all the time, so I'm not quite what you mean by turning the tables. For myself I'm glad to see the "progress" that we've seen in peeling back much of the progressive era, etc. state since the 1970s - during which same time we've seen a lot of erosion of liberty as well - but you celebrate where you can.

    As for it being an ace-in-the-hole, I'd call it a significant chink in the armor.

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  2. re: "If it doesn't work within a social circumstance then - to parrot Hume's main critique of this way of thinking - its "rightness" doesn't really matter."

    I'm not sure what this is supposed to mean Gary. My whole point is that Keynesian macroeconomics is going to be right or wrong whether or not politicians design policies with Keynesian macroeconomics in mind. I don't know what you imagine my "way of thinking" to be other than or why you think Hume is opposed to it. Could you elaborate a little on both of those things?

    re: "Highly illuminating discussion for me at least; since I'm never going to read the papers, etc. behind the discussion."

    This is a line of reasoning I would caution you against. If you choose not to read the papers (which is your choice), you have to know that EconTalk is going to present the papers in a very different light than a lot of people would. If you choose not to learn the literature you should at least seek out other interpreters before declaring the discussion on EconTalk "illuminating".

    re: "As for it being an ace-in-the-hole, I'd call it a significant chink in the armor."

    How can you say this immediately after repeating my logic for libertarianism? How can you agree with me in one paragraph and then decide you want to disagree with me in the next paragraph????

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  3. re: "If it doesn't work within a social circumstance then - to parrot Hume's main critique of this way of thinking - its "rightness" doesn't really matter."

    Think of it this way, Gary. My position is that Keynesian macroeconomics works within all relevant social circumstances (I say relevant because obviously it's a theory of a modern economy and less relevant perhaps to others). Keynesian macroeconomics works in all social circumstances. Newtonian physics works in all physical circumstances. If politicians decide not to build a bridge on the basis of Newtonian physics, it doesn't mean Newtonian physics will stop working. If politicians decide not to make policy on the basis of Keynesian macroeconomics it doesn't mean Keynesian macroeconomics stops working.

    I am no Hume expert, from what I do know about Hume I don't think he would take issue with an of that, and I don't think you should be hiding your disagreement with me behind him as you have been for the last two or three weeks.

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  4. "My whole point is that Keynesian macroeconomics is going to be right or wrong whether or not politicians design policies with Keynesian macroeconomics in mind."

    My suggestion is to read Hume then.

    "If you choose not to read the papers (which is your choice), you have to know that EconTalk is going to present the papers in a very different light than a lot of people would."

    I know that already Daniel (duh!). It is called division of labor. It is same way I approach Egyptology - I read the big, overarching monographs and don't read every paper on the subject. Seems to serve me well enough there. Anyway, when I say Econtalk I mean the people Roberts is interviewing; you on the other hand appear to focus on Roberts (why I can't say). His interviewee this time (like last week) had a lot of interesting things to say, and most of the people he interviews clearly aren't libertarians or people who have his view of things.

    "How can you say this immediately after repeating my logic for libertarianism?"

    Easily, because it is a good argument.

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  5. re: "My suggestion is to read Hume then."

    How about you explain how you were using Hume.

    re: "Easily, because it is a good argument."

    But you seem to be responding that it's a bad argument against libertarianism but a good argument against Keynesianism. You have to realize how opportunistic that sounds, Gary. You can't be oblivious to the inconsistency.

    Why do you think it's a "substantial chink in the armor" for Keynesianism if you and I agree it's clearly not a "substantial chink in the armor" of libertarianism???

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  6. You can't attribute a bizarre swipe to Hume and then insist everyone go on a wild goose chase to figure out what the hell you're talking about this time. Explain it a little Gary. My guess is if you explain it we'll realize you're putting a strange spin on my claim rather than correctly applying Hume.

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  7. Gary I don't just want to take digs at people but your writing is quite opaque - I'm never really sure what you're trying to say.

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  8. "How about you explain how you were using Hume."

    I've already quoted Hume to you on this point on a number of occasions. It might be easier to access this way of thinking via Donald Livingston's _Hume's Philosophy of Common Life_ (1984). He talks about the autonomy principle a lot in it (indeed, he was the first person to notice it as I recall).

    "But you seem to be responding that it's a bad argument against libertarianism..."

    Actually, it is definitely an argument that any libertarian would have to answer; so in that sense it is a good argument; if can't be answered or is only partially or what have you then that would also be a chink, so to speak. I'm not really a sports bar sort of person (or at least that's what I am far - probably fall short often enough). So no, it isn't necessarily a bad argument against libertarianism - it could be a very good argument against libertarianism. That's for other people to decide.

    Cahal,

    To me I am always very clear. :)

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  9. @Gary

    You really should have your own blog, and try and attract visitors. That way you won't be pissing off everyone else who is trying to watch the movie.

    Invisible Backhand
    http://www.reddit.com/r/CafeHayek/

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  10. Anonymous:

    I do have my own blog: http://pacificcresttrail.wordpress.com/

    I'm just about to publish a very long piece that I've written on Chaucer (well one of his tales).

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  11. "If it's right, it's right regardless of whether politicians pay attention to its rightness"

    Our view of Public Choice is exactly the same. It's true regardless of what people think. Public Choice isn't about campaigning for various libertarian viewpoints as you try to characterise it.

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  12. Hold on Current - I've never characterized public choice theory that way. I've characterized the approach of some people who talk about public choice theory that way. Don't paint me as someone that is opposed to or critical of public choice theory.

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