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Beating dead horse?

from Peter Radford

I am not sure I understand the point of Alexander Kaufman’s column in the Huffington Post. In it he takes Paul Krugman to task for being repetitive and talking about just there things: austerity is bad, inflation fears are overblown, and Keynes was right.

Well now.

Whether or not we have disagreements with Krugman – and I know many of you do – those disagreements pale in comparison with those we all have with the arguments of the people Krugman is targeting in his columns. Yes Krugman can be annoying with his emphasis on his version of the Hicks version of Keynes. But if it serves to get a vital message across to a public largely unaware of the internecine struggles within economics, so what? I don’t care. Nor should you.

And if he sounds repetitive, then we should ponder the reason: far too many policy makers are still stubbornly clinging to disproven theories. Yes, disproven. So are far too many academics.

Policy makers, I think, may be less culpable because they are trapped within the political whirl that constrains rapid movement. That is, by the way, as far as I would go. Professional ethics have to come into play sometime. In a profession unique for its disavowal for the adoption of any formal ethical standards – the market will sort out the unethical? – we have to rely on the personal standards of the people involved in policy making. We thus remove from the public’s arsenal one very important weapon in ensuring that the economics profession serves it well.

And we are left with a more public version of the academic bun fight that characterizes economics more generally.

Economics doesn’t exist in any coherent form. It is simply a long established and ongoing discussion about various ideas many of which have been kicking around for centuries. Indeed many of the profession’s core ideas were established long before our contemporary economy emerged, and sometimes they have to be bashed into shape to remain relevant.

Given the enormous egos involved it is thus hardly surprising that economists whose ideas have suffered defeat in the real world don’t abandon them, but simply crank up the volume and shout loudly about those ideas they don’t like.

Worse, since economics supports many and often diametrically opposed narratives, and since we appear to be stuck in a long war of deep ideological significance, it cannot shock anyone that the many sides of economics are played and replayed many times. These the repetition that Krugman is accused of.

I have often used World War I trench warfare metaphorically when talking about economics. The entire enterprise seems stuck in trenches lobbing diatribe back and forth determinedly with no side going much ground if any at all.

But perhaps a better version would be that economic ideas are part of the ammunition being flung across the field from trench to trench. Economics is just one aspect of the great ideological battle. And economists are driven, not by a sense of science, but by their own ideological perspectives.

Thus the quaint libertarian refrain: “markets good, governments bad”. Or the willingness of the Marxists to see the world in terms of a teleological historical narrative despite the modern emergence of democracy and the apparent error at the center of their vision.

Pragmatists will always be squeezed from either side by their more zealous peers. They don’t, after all, subscribe as deeply to the various utopias that so motivate the zealots, and they can be called craven for daring to change their minds periodically. I put Krugman in this more pragmatic category. He seems quite comfortable with slipping from idea to idea depending on the circumstances. That’s his strength. Quite a few people don’t like it because it smacks of a lack of ideal or principle. But flexibility is a principle. One that I quite like.

So when someone like Krugman gets stuck in a rut and appears to be repetitive in his commentary, I think it quite likely that it is because the context for his thinking remains similarly stuck.

And so it is.

Even after all these years since the great crisis, and even after the evident failure of so much policy, we are still mired in the same debate.

It is juvenile to think that we need to stop saying the same things just because the public might get tired of listening. What else are we supposed to do?

When we are stuck in the trenches we have to keep slogging away. Because to stop is be defeated. Yes I would prefer more movement and progress. But given the stubborn and committed nature of our opponents all we can do is match their stubbornness with ours.

And so it goes.

Austerity is still wrong. Inflation fears are still overblown. And Keynes is still right.

So why not keep repeating that?

  1. Marko
    September 24, 2015 at 7:54 pm

    Krugman deserves the criticism. He’s the “good cop” half of the famous scheme designed to get the suspect to sign off on a bad deal. The “suspect” is , of course , us.

    Krugman thinks all we need is a “kinder, gentler” form of the neo-Keynesianism ( neo = not ) that got us into this mess. Tweaks to monetary policy can’t fix what ails us – a higher inflation target or an ngdp target will be as unachievable as the 2% target has proven to be in the EU , Japan , and here – and will be everywhere else when the credit limit takes its last bite. Deficit-driven fiscal policy , absent substantial distributional changes , will simply be a rerun of Japan’s can-kicking.

    Another neo-Keynesian good cop , Roger Farmer , wants the Fed to buy his stock portfolio at inflated prices – another failed Japanese innovation – arguing , bizarro-world fashion , that “wealth” drives productive activity. The CEOs pushing out stock buybacks are happy to have Farmer on their team , I’m sure. This is what I call cargo cult monetary policy , but here’s a more respected authority that advances the same idea , under the designation “Perpetual Money Machine” :

    1980–2008: The Illusion of the Perpetual Money Machine and What It Bodes for the Future


    Yes , Krugman is better than the right-wing crackpots , just as Hillary is better than Trump or Cruz , but they’re both just “good cops”.

    Don’t sign any papers until you talk to a trusted attorney.

  2. graccibros
    September 25, 2015 at 8:43 pm

    Thanks Peter, for defending Krugman. His columns do get repetitious. However, if you watched the Republican debate, they are all (with the exception on certain issues of Rand Paul) playing within the Repub. Right’s ideological boundaries, once described by cognitive linguist/psychologist George Lakoff as these four corner posts: less government, lower taxes, strong defense and family values. No one has been able to put the Democratic Party’s six major constituencies’ objectives into such a succinct form, eight words. Greater equality and deeper democracy are surely part of it…

    I want to call economists’ attention to the most recent work of Sheldon Wolin, “Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism.” The title describes the threat in just six paired words, and Specter indicates the status, haunting but perhaps not quite there yet… almost. This is political economy at its best. I’ve just told Bill Greider he should take a look because Wolin, who has been at Princeton University for a very long time, has come out close to journalist Greider in lamenting the state of “participatory democracy”…although it seems to me Wolin more clearly sees the toll earning a living takes for the middle class on down, what it subtracts in time and energy from citizens participating in the struggle to claw back control of the policy mechanisms that today give them poor choices by the time they get to vote in congressional or presidential election.

    Wolin’s handling of our lamentable state is also very close to the essay that Yanis Varoufakis wrote at Naked Capitalism – “Can the Internet Democratize Capitalism” which appeared in Feb. of 2014, just about a year before he was elected and appointed to his formal roles for Syriza.

    Here’s a quick bio of Wolin from Wikipedia:


  3. September 26, 2015 at 12:54 pm

    Doomed and Damned
    Comment on Peter Radford on ‘Beating dead horse?’

    There is political and theoretical economics and the differences between the two are crystal-clear.

    (i) The goal of political economics is to push an agenda, the goal of theoretical economics is to explain how the actual economy works.
    (ii) In political economics anything goes; in theoretical economics scientific standards are observed.
    (iii) Science is methodologically well-defined by the criteria of material and formal consistency.
    (iv) Political economics is a honey-pot for morons and accordingly defined by the rules of Circus Maximus.

    Almost all of economics is political economics or what Feynman aptly called cargo cult science.*

    You argue: “Yes Krugman can be annoying with his emphasis on his version of the Hicks version of Keynes. But if it serves to get a vital message across to a public largely unaware of the internecine struggles within economics, so what?” (See intro)

    Annoyance is not exactly a scientific criterion. The real problem is that Krugman’s arguments have no valid theoretical foundation (2014b; 2014a). The difference between a run-of-the-mill journalist and Krugman is that the latter seemingly speaks in the name of science. Because economics is a failed science this is a flagrant abuse of the authority of genuine science which depends since more than 2.000 years on rigorous logical and empirical proof. It has never been the task of science to ‘get a vital message across.’

    The ethics of science implies the acceptance of logical/empirical falsification. No such thing ever happened in economics.

    “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941, pp. 369-370)

    “… suppose they [the economists] did reject all theories that were empirically falsified … Nothing would be left standing; there would be no economics.” (Hands, 2001, p. 404)

    What is the result of manifest scientific incompetence: “The entire enterprise seems stuck in trenches lobbing diatribe back and forth determinedly with no side going much ground if any at all.” And what is the best thing to do next? “When we are stuck in the trenches we have to keep slogging away. Because to stop is be defeated.” (See intro)

    This, in a nutshell, is the perverted methodology of political economics: never accept logical/empirical refutation because it is tantamount to political defeat. And this fully explains the ridiculous performance of economics since more than 200 years.

    In political economics it suffices to repeat auto-suggestive mantras: “Austerity is still wrong. Inflation fears are still overblown. And Keynes is still right.” (See intro)

    Neither falsification nor annoyance has ever stopped economists from promoting their junk: “It is juvenile to think that we need to stop saying the same things just because the public might get tired of listening.” (See intro)

    Who cares that the same things have always been false?

    Because of proven scientific incompetence there is no future for Orthodoxy and traditional Heterodoxy. Krugman, Keynes (2011), Radford and all the rest have been refuted. These people are not merely annoying, they are wrong on all counts. What can and must be done is to save science from the doomed and damned dead horse economists. Scientists of the world unite!

    Egmont Kakarot-Handtke

    Hands, D.W. (2001). Reflection without Rules. Economic Methodology and Contemporary
    Science Theory. Cambridge, New York, NY, etc: Cambridge University Press.
    Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN
    Working Paper Series, 1966438: 1–20. URL http://ssrn.com/abstract=1966438.
    Kakarot-Handtke, E. (2014a). Loanable Funds vs. Endogenous Money: Krugman
    is Wrong, Keen is Right. SSRN Working Paper Series, 2389341: 1–17. URL
    Kakarot-Handtke, E. (2014b). Mr. Keynes, Prof. Krugman, IS-LM, and the End of
    Economics as We Know It. SSRN Working Paper Series, 2392856: 1–19. URL
    Morgenstern, O. (1941). Professor Hicks on Value and Capital. Journal of Political Economy, 49(3): 361–393. URL http://www.jstor.org/stable/1824735.

    * For details see Wikipedia

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