Tuesday, February 19, 2013

What drives disagreement - Klein, Krugman, minimum wage, and stimulus

I got some push back for my criticism of Dan Klein's comments on Krugman the other day, including from Dan Klein himself. I stand by the criticism. I think it's obvious that the people who say the minimum wage doesn't have a big negative effect are doing so for objective and scientific reasons, and claiming otherwise is indeed disheartening for me.

Now Krugman makes a very similar point about stimulus, and I expect people will think I have a double standard if I don't treat him with equal vigor (indeed - I've been told as much!).

The tough thing about the minimum wage is that there are excellent, standard economic arguments for thinking it will reduce employment and excellent, standard economic arguments for thinking it will not reduce employment. Maybe it's my empirical bias, but my reaction to that situation is to say "it's an empirical question".

The same goes for claims that people assert things because of their ideology and not because of science. There are excellent psychological arguments for why people would base their claims on their ideology. There are also excellent psychological arguments for why people would base their claims on evidence. And it gets even more messy if we align politically based on what we observe in the world.

So it's ultimately an empirical question (and a squishy, anecdotal empirical question at that).

I don't have time to go on at any more length than I have already - maybe later. Suffice it to say:

1. I think it has less to do with ideology than Krugman suggests, which is not to say that Krugman is wrong to say it has something to do with ideology.

2. Among economists, I think a lot more people hold their positions on stimulus because of ideology than hold their positions on the minimum wage because of ideology.

3. I absolutely don't think Krugman holds his views on stimulus because of his ideology. As far as other people, I've got more suspicions than evidence on where they fall.


  1. Ah... Memories...

    Back in 2008-9, IIRC, there were people saying that stimulus was likely to be fiscal effective, and people saying that fiscal stimulus was likely to be ineffective because as the forecast trajectory of the debt rose long-term bond rates would rise and crowd-out private investment and interest-sensitive consumption spending.

    Didn't happen. And you would expect people to react to the fact that the interest rate increases did not happen and the crowding-out channel was not there to say: "oh, I guess this time it is different: this time fiscal stimulus looks to be effective".

    Didn't happen, did it?


    Brad DeLong

    1. Yep.

      Empirical thinking in macro is a lot tougher than on something like the minimum wage and I depart from Krugman in that I think people are sincerely focused on other indicators because of the theoretical frameworks they're working from, and that drives a lot of the disagreements. But I do feel like many are missing the elephant in the room. Part of that is because the empirical work is harder. But part of that is also ideology.

  2. So if I'm reading you correctly, you're saying that there is no such thing as "excellent, standard economic arguments for...thinking stimulus is not such a great idea".

    As an aside, why is "strikethrough" not allowed? Tried 3 different codes, none of which worked.

    1. Not sure about the strike through - I can use it in the posts so I'm not sure what's up with the comments.

      I hesitate to say that you're not reading me correctly or that you are. Let's just say I wrote what I wrote for a reason.

      Let me also say that I think the arguments for a negative employment effect for the minimum wage are stronger than the arguments against stimulus (which aren't awful). Still, one can make a non-ideological argument and it may not be a great argument. So the point still stands - the extent to which any particular claim is driven by ideology is an empirical one, and I personally don't like it when people who are answering a question with science get falsely accused of answering it with ideology.

  3. Daniel wrote: "I absolutely don't think Krugman holds his views on stimulus because of his ideology."
    If you can say more about this, please do, because as it stands this seems like a bizarre remark to me. Although admittedly, like you re other people ("As far as other people, I've got more suspicions than evidence on where they fall."), I've got more (strong, strong) suspicions than evidence re Krugman, which makes me wonder all the more what kind of evidence you have re Krugman (I take it you have not just suspicions but also evidence because you seem to be making a contrast not just in terms of the role of ideology in their views on stimulus but also on your reasons for thinking so).

  4. I mean, his blog is titled "Conscience of a liberal" for crying out loud. (yes, yes, I realize that the title is multi-interpretable and also that it need not mean that his economic views on stimulus are influenced by his liberal ideology, but, but...)

  5. It is a very bizarre remark.

    Since we're gazing into Krugman's head, let's note as Krugman readily admits, his initial inspiration comes from Asimov's awful "Foundation" series: http://www.guardian.co.uk/books/2012/dec/04/paul-krugman-asimov-economics Frankly that says a great deal about what one would expect out of how he views the world.

    I myself am inspired by entirely different sort of science fiction - namely Dick, Herbert and Heinlein (they aren't always compatible but they present futures radically at odds with Asimov's notion of Platonic wise men - and they are almost entirely men - predicting, etc. the future with only the occasional hiccup that is more or less easily dealt with, that is like the Mule). Upon finishing the Foundation series I mostly remember wanting to throw the thing against the wall it was so insulting to my intelligence and so based on rather outdated notions of the collapse of the Roman Empire and the like.


All anonymous comments will be deleted. Consistent pseudonyms are fine.