The New Republic

Can I cry now?

- GSpinks

February 8, 2012 at 11:49am

Wait. I want to cry too.

- Nusholtz

February 8, 2012 at 12:15pm

assclowns. how can they say this with a straight face? OK Tim Griffin, lets roll back your salary to the level it was when you got into office if you are so keen on cuts. (oh, wait, that means his salary would never really be cut since it would be at the level when he started)

- blackton

February 8, 2012 at 12:37pm

As I read through this excellent post, it struck me once again that numerous mushers out here prefer the ranting, foul-mouthed roid to the fine mind and cool cat that is T. Noah. Utterly amazing. It is most depressing that you don't even have to glance to the starboard to find people who prefer dreck to quality. For those who participated in what I shall call the "Nietzsche thread" late last week, I wish to commend to you an excellent book that I began reading last night, American Nietzsche: A History Of An Icon And His Ideas, by Jennifer Ratner-Rosenhagen. Ms. Ratner- Rosenhagen has beavered through a huge number of books and articles to write a magnificent account of Nietzsche's reception in America for over a century. Your opening sentence is pure eloquence, blackton. And you teach English at the college level, I believe? Why is it that so many people here prefer to emote than to think? We are much closer to out ancestors' savannah days than we would like to acknowledge. Further, it is depressing to contemplate that the fierce eloquence and courtly good manners of the likes of T. Noah, J. Cohn and L. Wieseltier do not rub off on the commenters one little bit, often enough.

- liberalref

February 8, 2012 at 1:26pm

Ah. King of The Comment Thread Has Spoken. How about commenting on the issue sir instead of just chastising us? Blackton is in a real bind. He isn't alone. Meanwhile I think I will cry too, just to keep y'all company.

- Sophia

February 8, 2012 at 1:53pm

Here is an example of what I was writing about yesterday beneath the article by Scott Winship concerning Paul Krugman and the straw men that he sometimes puts up in order to easily beat down (From Marginal Revolution): Why Old Keynesianism is looking worse these days, and other thoughts by Tyler Cowen on February 6, 2012 at 11:23 am in Economics, Uncategorized | Permalink I am happy to report that I heard another Paul Krugman talk a few nights ago. Krugman had just flown in from Moscow, switching in Houston to a flight to Austin, with little time to spare. Presumably he was very tired, he had a bad cold, he had to speak in a loud barbecue joint and bar, and yet he was entirely lucid and he charmed and instructed the crowd. He even had praise for MarginalRevolution. It was better and better received than if he had given a more traditional lecture. The same Krugman has a recent blog post, or two, in which he is unhappy with me. I will put some thoughts on that under the fold… Krugman attacks me for being an anti-Keynesian when in fact I very much prefer New Keynesianism over Old, so the entirety of his critique is boxing at shadows. As an aside, my first published article was in the Journal of Post Keynesian Economics, and as long ago as 1989 I wrote an essay arguing that Keynesian economics explained the Great Depression better than did alternative views; some of my libertarian and Austrian acquaintances still hold that piece against me. Some MR readers also will recall the 12-part symposium I did on Keynes’s General Theory, full of praise for the book, though of course with some criticisms too. I don’t expect Krugman to be an expert in the history of thought of me, but a) he has linked to previous posts of mine making clear my affinity for sticky price reasoning and other new Keynesian ideas, b) it is a rather simple proof that he has rather drastically misread me, as has DeLong, and c) if Krugman doesn’t know my views perhaps he should not attack them in such strident language. By the way, to the extent I like Old Keynesianism, it is for the Shackle-Lachmann-Minsky strand, not IS-LM and the liquidity trap. Moving on to substance, let’s start with a few reasons why I think the course of the recovery discriminates against Old Keynesianism, though not against new Keynesianism (definitions and contrast here). 1. New Keynesianism has a more optimistic attitude toward mean reversion than does Old Keynesianism. Things are looking a bit better than expected half a year ago, so New Keynesianism gains in status over the Old. Q.E.D. That’s actually enough to establish the entire point. 2. Brad DeLong suggested not long ago that the short-run model, rather than the long-run model, will apply for a minimum of five years, and possibly up to fifteen years. That claim is looking weaker these days and I am happy to admit that I am revising my own previous views on speed of adjustment. It’s one thing to predict we won’t get to four percent unemployment for a long time, but I am now much more skeptical that the short-run model will apply for so many years. (Since the labor force is not a homogeneous aggregate, the long-run model still can be more relevant than the short-run model even when there is residual unemployment.) That is the view I am arguing against and Brad is not made of straw. 3. Krugman’s own writings show he is less worried about the particular perverse consequences of one version of the liquidity trap argument than say a year or six months ago. Remember all the talk of the upward-sloping aggregate demand curve? That would imply more output and the expectation of further output gains can make the liquidity trap worse. Yet how does Krugman respond to the good job market report? He claims, correctly, that it is good news. Full stop. There is no response like “it’s great those people have jobs but I’m worried that the extra output will worsen the liquidity trap.” Common sense rules, as it should, though now it’s time to admit we have moved onto a different and better model. 3. Frankly, it is a bit of an embarrassment for many commentators that the (admittedly weak) recovery is coming right after the end of the fiscal stimulus. Of course this does not refute the standard account of fiscal policy, namely that it can work but is hard to pull off politically in a manner which contributes to sustainable growth. The correct answer for the timing of recovery, relative to the end of stimulus, is “confounding factors,” but that is exactly the point. The confounding factors are more important than we had thought, and the fiscal stimulus not quite as important as we had been led to believe. That is another point against the Old Keynesian view. 4. The Old Keynesian focus on the paradox of savings may have been relevant during the most dire points of the crisis, but it does not seem to be panning out in the recent data. 5. Liquidity trap models of unemployment stand in tension with Mortensen-Pissarides search models, as Krugman himself has noted in the past. The notion that employer (and worker) expected profit influences search behavior and thus employment, seems to be showing up in the data. That’s a real business cycle mechanism. 6. Corporate profits are strong. Quite possibly the prevalence of labor-saving innovations helps explain why labor market recovery has been slower. That too is a real business cycle mechanism. The persistence of long-term unemployment, even in light of an improving labor market, suggests those particular workers face structural unemployment. That too is a real business cycle mechanism. 7. A lot of people get upset when one praises “real business cycle” models, perhaps having in mind some overly simplified one-person contraption from the early 1980s. The reality is that most economic phenomena and mechanisms fall under this heading, and that the objectionable simple models have been left behind a long time ago in favor of synthetic treatments. I’m the one in the mainstream here (which doesn’t mean I am right), but it does make it odder to be pilloried and insulted for holding those views, as if it were some inexplicable tomfoolery not worthy of professional economists. 8. The old Keynesian view really does have trouble explaining turning points, unless there is a major fiscal or monetary policy action to account for the change. This was well-known as long ago as the 1930s. Brad DeLong cites a passage from Keynes about the depreciation of capital (see my previous coverage here, I am very familiar with this argument), but of course Keynes thought that mechanism was too weak and unreliable and thus he favored a mix of planning and nationalized investment. In any case that mechanism explains only one chunk of the current recovery and furthermore I call a rising MPK a real factor too. 9. Krugman sometimes writes as if new and old Keynesian approaches are simply more and less rigorous versions of the same thing, but they clash on a number of important issues, a few of which I’ve mentioned above. You don’t have to agree with Stephen Williamson on everything, or approve of his tone, to notice that many of his blog posts illuminate significant differences between New and Old Keynesianism. Read through his archives. There’s a lot of very smart stuff in there, even though it has become unstylish to respond to him very much. He knows a lot about macroeconomics, usually more than the people he is criticizing, even if I often disagree with him on methodology. 10. Finally, it’s worth going through Krugman’s citations of his own successful predictions: We said that as long as the economy remained deeply depressed, even a huge rise in the monetary base would not be inflationary, and that even huge budget deficits would not send interest rates soaring. And we said that fiscal austerity would be contractionary, not expansionary. Funny enough, I also got those first two predictions right too, and on the third I have argued we haven’t seen real austerity yet. I also was never very proud of myself for getting those predictions right, because I thought it did not show any particular acumen on my part, nor did I think it elevated me to an especially prophetic stature. I actually prefer to think more about all the predictions I got wrong. Here is Scott Sumner on the predictions he got right, an excellent record. Perhaps Krugman’s successful predictions have come from a broader framework and not from Old Keynesianism per se? In sum, one constructive response to the new data, and my post, would have been: “The Old Keynesian fortress actually is looking weaker these days.” Another constructive response would have been to try to patch up the growing holes in the Old Keynesian approach, as applied to 2011-12, and try to salvage it vis-a-vis New Keynesianism and/or market monetarism. No need to waste so much time on views which aren’t even in the running. We didn’t get either of those. This unfortunate outcome relates back to my earlier, broader point about focusing on the stronger arguments of the other point of view. If one spends too much time knocking down and polemicizing against weak arguments, sooner or later all opposing arguments start looking weak. Addendum: Mark Thoma adds comment. And Ezra Klein comments. Here is Krugman’s response. There is no Orwellian move on my part, I’ve long been fine with new Keynesian ideas and there is a long paper trail to that effect, stretching back many years; to cite “real business cycle theory” in 2012 is in fact to refer to a bunch of them as part of the theory. When it comes to RBC, Krugman is still living in 1983, a point which Stephen Williamson has made a few times as well.

- liberalref

February 8, 2012 at 2:20pm

When my wife and I got married in the late 70's, our grocery budget was $25/ week. We had plenty of food. Our budget is still the same, but for some reason we can't quite figure out, we're coming back from the supermarket with less and less food. Man, it sucks. Particularly since we've turned down every raise offered to either of us during that time because we aren't class warriors and don't like to piss off job-creators and our social betters. If we could just rein in our out of control spending, we'd be eating like kings!

- GeoffG

February 8, 2012 at 2:34pm

We could reset their salaries back to what they were when Congress first voted to pay themselves! That's the real out-of-control spending; or is that spending by the out-of-control?

Does anyone else see those weird, jibberish blocks between some of the reader comments?

- GSpinks

February 8, 2012 at 3:06pm

Geoff: If it's any consolation, I hear soylent green will be going for $.50 a pound.

- Tristan

February 8, 2012 at 3:12pm

You have mistaken me for roid, Sophia, and that is extremely hard to do. He is the self-appointed king out here, attempting to read heretics out of polite company. I am the good-looking one, and the nice one, too. Oh I know, I am polemical and cranky and uppity, but I have extended fraternal greetings to everyone out here, just recently again, even to dro and roid and their like, whom I have crossed swords with. Would they ever do the same in a billion years? If you answer in the affirmative, I have some property on the moon that I want to sell you. I am in a tiny minority here because I am taking on groupthink of the kind that has all the heft of that of a high school clique. Now ordinarily, minorities, are revered here, but only the pc ones, those defined by race or sexual orientation or ideology. You join the ranks of the hypocrites, overwhelming male, but obviously not solely, who call me down without saying one word about roid and his foul mouth; he has sworn at opponents out here for years when they really get under his skin. Where are the lectures for roid for not sticking to the matters at hand? You exhibit all the honesty of the Tea Party, which formed only after BHO was elected, neglecting as they do to note that G.W. Bush was responsible for over $5 trillion of the deficit and BHO, only around $1.4 trillion of it. I know, I know, standards are only for the other side. That is how an enormous slab of the right operates these days. And not only them, unfortunately. Thought experiment: If I treated you liked roid treats those who get the best of him, swearing and fulminating, would you remain silent, or even praise me? Again, an affirmative answer will get you a real estate pitch. But standards are only for the other side, most certainly not for the ideologues with whom you agree. The great Bob Dylan once wrote, "There ain't no right wing or left wing, there's only one up wing an' down wing." You belong with roid and Ann Coulter and Sick Rantorum (who was grinning like a Cheshire Cat after his short-lived moment in the sun last night) and Michael Moore in the down wing, against the likes of the late journalist, William F. Buckley Jr., and the late philosopher, Richard Rorty, and The New Republic (its writers, but certainly not its commenters.) in the up wing. Lastly, I have praised numerous of your posts, including a very touching personal one just the other day. But that isn't good enough for you. Well, I suppose you need to establish your bona fides by having at me. Your use of "us" in your post is extremely telling, as in "siege mentality." But all the best to you and to everyone and I promise never to swear at you, and I have even taken down people whom I have agreed with who do this sort of thing. No double standards for me, only for thee.

- liberalref

February 8, 2012 at 3:42pm

Liberalref: Let me second your recommendation of Jennifer Ratner-Rosenhagen's American Nietzsche. The book is very well done.

- rmutt

February 8, 2012 at 3:57pm

First they came for roi. Fine, I said, I'm sure he can handle a little criticism. Then they came for Dro. Well, he gets under my skin too from time to time, but still, it's a free country and all that, so I'm not sure he deserves abuse simply for expressing an opinion. Even so, he can dish it out, so I'm pretty sure he can take it. Then they came for Sophia. In this case, Sophia is the target of abuse that, on its own terms, applies only to roi and dro, since the alleged crimes mentioned in the post were committed by them and not Sophia. Sophia's only offense was criticizing a schoolmarmy post - if you want to criticize her, criticize her for that. Don't criticize her because you have a bug up your ass about something someone else wrote. Sophia has always been a model of civility here, and has frequently been wise as well. She deserves to be treated civilly in return.

- GeoffG

February 8, 2012 at 4:07pm

Feeding the troll is optional. I know I'm guilty of it from time to time, but the above is just plain attention getting behaviour. Starve the beast! Or at least, the sanctimonious jerk.

- Nari224

February 8, 2012 at 5:56pm

Excuse me. I am the troll. Our chickens laid two eggs today, but they don't regard me as a troll because we don't throw them into the stew pot. Please flame me, as long as you index the flames for inflation (which means, I guess, that the number of flames and insults should increase at the same percentage as the rate of inflation).

- skahn

February 8, 2012 at 7:26pm

Methinks we could all use a sense of humor here:) Meanwhile, we have real problems, lots of Americans are hurting; we are told to stop eating so much and/or to move to a smaller domicile if we don't have enough money; and also, to work harder, since being a 9 year old non-union janitor will lift us out of poverty! Our work ethic will improve; this is doubly true if we live in Post-Modern Disorganized Neighborhoods! But, birth control is wrong! Religious freedom is right! Especially the freedom of the religious to be bossy. Sigh. PS I love Paul Krugman.

- Sophia

February 8, 2012 at 8:30pm

PS: Apologies to roid, if he wants to be King of the Comment Threads, it is ok with me:) I didn't mean to depose him!

- Sophia

February 8, 2012 at 8:31pm

My wife Sheena will tell you that I have a rollicking sense of humor. Also, this "humor" comment comes from someone who seriously called me down. But my points above are lost on those such as yourself who are so self-unaware. And "blank you" is not actually a humorous response, which is a routine recourse for roid. But you will not call him on this, nor will anyone else here, except those who have been his targets. Are you afraid of him? So you take on the jokester here and fellate Mr. Foul Mouth, who has no sense of humor. Lastly, he truly is the would-be king. A number of weeks back he advised me to depart the scene here. I have not and never would write that to anybody. But then, I don't have Tourette's and I am not an authoritarian.

- liberalref

February 8, 2012 at 11:24pm

What a weird, discomfiting thread.

- basman

February 9, 2012 at 12:12am

Indeed it is, especially since the whole point of my initial comment was to try and get people to focus on the issue, which is serious. What's up guys?

- Sophia

February 9, 2012 at 2:27am

Bruce Bartlett former Reagan official had a similar piece about how the GOP in Congress essentially tries to re-write the laws of gravity: http://economix.blogs.nytimes.com/2012/02/07/tilting-the-budget-process-to-the-g-o-p/ Give me the tissues, I will cry too.

- MikeB.

February 9, 2012 at 7:56am