Saturday, September 11, 2010

Milbank on Keynes

Dana Milbank has a great article on Keynes in the Washington Post this morning. Here's a selection:

"I called Harvard's Greg Mankiw, a former chairman of George W. Bush's Council of Economic Advisors, to ask about the GOP assault on Keynes. "I don't think it's useful to frame it as Keynesian and anti-Keynesian," Mankiw said of the attack on the long-dead Briton. Bush, he said, used "Keynesian logic" in designing his tax cuts. "The idea that demand is an important driver of the economic cycle" -- that's Keynesian -- "is uncontroversial," he said.

Here's what Mankiw wrote about Keynes in November 2008 in the New York Times: "If you were going to turn to only one economist to understand the problems facing the economy, there is little doubt that the economist would be John Maynard Keynes. Although Keynes died more than a half-century ago, his diagnosis of recessions and depressions remains the foundation of modern macroeconomics."

With so much of Keynesian theory universally embraced, Republican denunciation of him has a flat-earth feel to it. Will they next demand the abolition of NASA because it's "Galileo on steroids?" Shut down the National Institutes of Health for being a "Hippocratic mistake?" Strip funding for those "Einsteinian experiments" at Los Alamos? Demand a halt to public schools teaching from the "failed Darwinian playbook?" (Oh, wait. They did that last part already.)

Keynes's place in economics is similarly unassailable, and the assault on him lends credibility to the charge that the Republicans lack ideas of their own and are merely generating opposition for its own sake. There's a cogent argument to be made that Obama's stimulus was ill-designed and ineffective, but dismissing the most important figure in economic thought in the last century says less about Obama than about his accusers."


  1. "Keynes's place in economics is similarly unassailable..."

    Lots of people of course beg to differ. This is an interesting tactic though ... trying to compare Keynesianism to Darwinism or, rather, the "Darwinian playbook" (of course an actual evolutionary biologist would never use language like that - "Darwinism" is sort of dated after all - it is a bit like calling modern physics "Newtonism"). There isn't anything like near the level of evidence for Keynesianism as there is for evolution.

    "Although Keynes died more than a half-century ago, his diagnosis of recessions and depressions remains the foundation of modern macroeconomics."

    For many ...

    That's a big part of the problem I'd say.

  2. Yes and no.

    I think the biggest controversy is over his fiscal policy recommendations, which are entirely based on an empirical finding: the fiscal multiplier.

    Very few in the economics profession object to his basic approach to economics. Austrians and Marxists are the only ones I can really think of, and both are quite marginal (albeit the former you know I think has some things to offer - they haven't made any argument sufficient to overthrow Keynes).

    I think Darwin is quite like Keynes - we don't do economics out of the General Theory like we do out of The Origin of Species, but it does offer some formational material that shapes the innovations that have come after it. Keynes didn't send quite the shock-waves in the discipline that Darwin and Newton did, I would agree with that. Because there were comparatively more precedents for what Keynes would say.

    "For many ..."

    For many and for the vast majority. As much as I engage Austrians on here, that doesn't mean it makes up a substantial position. We can't pretend it's 50/50 because there may be two sides to the question.

  3. Well, no one really does biology out of the Origin of Species ... the book is basically for historians of science these days. Same with the work of Newton and physics. I get the feeling things are quite different with Keynesians. They have their good book.

    "For many and for the vast majority."

    Well, mere majority voting isn't science.

  4. Xenophon -
    Again, Yes and no.

    Nobody "does economics out of" the General Theory - find me a technical article that cites it. You won't. You'll only find it in history of thought papers, just like the Origin of Species. Find me an example if you disagree.

    You will find it quoted on blogs and stuff like that because it simply communicates the concept, and it's honestly good witty writing which people like a lot too.

    I was only ever assigned to read it in a history of thought class.

    Well, mere majority voting isn't science.

    A common refrain of creationists. You sit and think about how you would respond to one of them if they said that to you, and you can bet it's pretty close to what I would say to you on this point.

    Majority voting isn't science, but peer review is.

  5. And by the way - compare Keynesians' use of The General Theory to Austrians' use of Human Action - there's quite a discrepancy. We got our start and our general push in the right direction, but that's about it.

    Probably the oldest thing that is actively used by Keynesians is Hicks's "Mr. Keynes and the Classics" - and I'd even use "actively used" there loosely.

    You may get a skewed view of Keynesians by being on my blog so much - I'm considerably more interested in history of thought stuff and "Keynes the man" stuff than most Keynesians, so ya - I go to the General Theory a lot.


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