1. They reject endogeneity and simultaneity problems - they don't think they are important at all in economics, or
2. They think endogeneity and simultaneity are important problems to think of in empirical economics and they just don't think we do a good job addressing the problems.
The first one seems highly unlikely to me. Russ likes to talk a lot about Bastiat (and presumably Bob shares his admiration), and Bastiat was deeply concerned with these issues. That's the whole point of the seen and the unseen, after all. In that sense Bastiat very much has the sensibilities of a modern, mainstream macroeconomist. It also seems unlikely because despite my differences with both Russ and Bob, I don't think either of them are dummies - and you honestly don't need that much economic sense to agree that these are critical problems for economics.
So I assume it's the second issue - they don't like how economists deal with endogeneity and simultaneity.
The trouble is, if this is the problem then they really need to give their readers more before they start throwing around terms like "intellectually bankrupt" (particularly given how they tend to pout when others make accusations like that). What fault do Russ and Bob find in the way these estimates are generated? I have no idea.
This bothers me a lot because although I'm not really an empirical macroeconomist, I am principally an empirical economist. Everything I've ever written on economic history, history of thought, Keynes, Hayek, etc. I've written for free. What I do for a living and a career is empirical economics and I spend a lot of time worrying about precisely these problems that Bastiat raised - how to parse out the seen and the unseen in a non-experimental setting.
We've talked about multiplier estimates here (although again - it's not my expertise). I've come out strongly against estimates that use cross-state and cross-county variation, for example. Some "windfall revenue" studies are nice, but they still have demand leakage issues. I've also come out against war spending estimates because we're not dealing with depressed situations in many cases, and because war spending is not exogenous.
We've talked on this blog about the pros and cons of different minimum wage studies too.
We've talked on this blog about why I am skeptical of most instrumental variable papers.
We've talked on this blog about where you need to be careful using propensity score matching.
We've talked on this blog about why I love natural experiments and regression discontinuity designs.
We've even talked a little on this blog about the pitfalls of random assignment if there are general equilibrium effects.
So if I express skepticism about some kind of empirical finding I hope at least I've expressed why or that my history of blogging could give you a clue about why I'm skeptical.
But with Russ and Bob, I come up empty. They like Bastiat so they have to agree with me that counterfactuals and endogeneity are important. They obviously don't like the methods to deal with it. But what I don't understand is why they don't like it - what the issues are - why Russ is happy to cite Ramey or Barro and Redlick or Selgin, Lastrapes, and White favorably but calls a Krugman claim "intellectually bankrupt" when the estimates he cites are struggling with the same goddamn empirical head-scratchers that Ramey/Barro/Redlick are.
I think I have a right to expect a little more detail on what the concern is with these estimates for a couple reasons:
1. Russ went to Chicago and Bob went to NYU (ranked second and tenth respectively). I am currently attending American University (ranked 205th). Despite some peoples' complaints about these rankings, they fall out how they do for a reason. If I can provide detailed justifications for my thumbs ups and thumbs downs on empirical economics, they certainly should be up to the task.
2. Ramey, Barro, Redlick, Selgin, Lastrapes, and White all come down with conclusions that Russ likes. Feel free to name others that Russ has linked to favorably on Café Hayek and whom he has not called "intellectually bankrupt" for using modern empirical methods too. I can't recall a single case - in the years following the blog - that Russ has praised an empirical analysis that goes against his political views. This is troubling. It does not mean he is biased, but it is an AWFULLY good reason to expect more details on what he does and doesn't like about the analyses.
3. The other reasons they give are really bad. Stop complaining about how mainstream economists are copying physicists. Physicists don't use these methods. Economists INVENTED several of these methods after all. And if they did use them, who cares? In what universe is the unique usage of a method by one group of scientists anything like a standard for judging the validity of the method?
On behalf of all of us who actually do and care about empirical economics, I just think we deserve a little more than this.