- Claims that the federal government can do nothing to mitigate an economic downturn.
- Claims that there is no such thing as a multiplier effect.
- Claims that modern Keynesian models provide no guidance to the current economic challenges.
- Claims that simply cutting taxes is a solution to the downturn in employment.
- Claims that "austerity" measures will actually end up being expansionary.
- Claims that we need to return to the gold standard.
One lesson is that it is one thing to play counter-intuitive intellectual parlour games in order to get tenure at a fancy university, but another thing entirely to say something about the real world. For that you need a little common sense.
Another lesson is that economists need at least some training in economic history. No-one with the slightest feeling for historical reality could believe that the Great Depression was due to supply side forces, for example. I observe that Krugman, along with such luminaries as Maurice Obstfeld and Ken Rogoff, did his graduate work in MIT, and I surmise (without having any inside knowledge on the matter) that all three were exposed to Charlie Kindleberger and Peter Temin. They are all distinguished theorists, but also have a historical sensitivity, and this makes them better economists — if your definition of a good economist includes the ability to say sensible things about our very messy real world.
I suppose I should include "attacks on Ben Bernanke and the Federal Reserve" in the list as well. Matthew O'Brien at The New Republic (see here) calls this line of attack (and some of the others) the result of intellectual Dark Ages. He says,
It is not clear if this intellectual Dark Age will pass. Bernanke has become such a persona non grata in Republican circles that it is easy to forget he is a Republican. Among these competing theories for Republican Fed-bashing, the scariest, of course, is that the attacks are not just cynical, but represent genuine belief. It’s enough to make a liberal long for Milton Friedman.
In some ways, this all makes me think about the famous article by Ron Suskind (who is in trouble with the White House again - different White House this time) in the New York Times magazine in which he recounts a meeting with a Bush aide after he published a piece they didn't like (see here).
In the summer of 2002, after I had written an article in Esquire that the White House didn't like about Bush's former communications director, Karen Hughes, I had a meeting with a senior adviser to Bush. He expressed the White House's displeasure, and then he told me something that at the time I didn't fully comprehend -- but which I now believe gets to the very heart of the Bush presidency.
The aide said that guys like me were ''in what we call the reality-based community,'' which he defined as people who ''believe that solutions emerge from your judicious study of discernible reality.'' I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ''That's not the way the world really works anymore,'' he continued. ''We're an empire now, and when we act, we create our own reality. And while you're studying that reality -- judiciously, as you will -- we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors . . . and you, all of you, will be left to just study what we do.''
Maybe I'm just longing for political types to at least take a vacation back in the "reality-based" world.
I suppose I should include "attacks on Ben Bernanke and the Federal Reserve" in the list as well. Matthew O'Brien at The New Republic (see here) calls this line of attack (and some of the others) the result of intellectual Dark Ages. He says,
It is not clear if this intellectual Dark Age will pass. Bernanke has become such a persona non grata in Republican circles that it is easy to forget he is a Republican. Among these competing theories for Republican Fed-bashing, the scariest, of course, is that the attacks are not just cynical, but represent genuine belief. It’s enough to make a liberal long for Milton Friedman.
In some ways, this all makes me think about the famous article by Ron Suskind (who is in trouble with the White House again - different White House this time) in the New York Times magazine in which he recounts a meeting with a Bush aide after he published a piece they didn't like (see here).
In the summer of 2002, after I had written an article in Esquire that the White House didn't like about Bush's former communications director, Karen Hughes, I had a meeting with a senior adviser to Bush. He expressed the White House's displeasure, and then he told me something that at the time I didn't fully comprehend -- but which I now believe gets to the very heart of the Bush presidency.
The aide said that guys like me were ''in what we call the reality-based community,'' which he defined as people who ''believe that solutions emerge from your judicious study of discernible reality.'' I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ''That's not the way the world really works anymore,'' he continued. ''We're an empire now, and when we act, we create our own reality. And while you're studying that reality -- judiciously, as you will -- we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors . . . and you, all of you, will be left to just study what we do.''
Maybe I'm just longing for political types to at least take a vacation back in the "reality-based" world.
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