Friday, August 5, 2011

Reply to Paul Krugman and other Rabble-Rousers

Well, the blogosphere is a strange place, full of funny people. Sometimes people ignore me. Sometimes I hit a nerve and an organized mob goes to work. I wrote this, John Quiggin replied with this, and Paul Krugman felt the need to stand up for his comrade with this.

Like everything I've done in this blog, I've learned from this. People have come back with interesting comments, and we've worked through some ideas. I learned something about some work that exists out there, and about some interesting people.

Krugman seems to think that I'm somehow "pulling rank" on John Quiggin. Well, the story of my life is being misunderstood, so I'm accustomed to this. In my original post, I'm just giving you a factual account of how I happened to be reading Quiggin's book. If I tell you that, previous to getting the book in the mail, I had never heard of John Quiggin, that's certainly not his fault, nor does that mean that I think the guy is a dope, or that I'm somehow better than he is. Holy crap! Who am I anyway? I have not worked at any institution (save perhaps the Minneapolis Fed) that anyone would rank in the top 20 in the world. I typically work on things that people find somewhat esoteric and cultish. I grew up in small-town Ontario and was educated in public schools. My parents were well-educated, but basically lived hand-to-mouth.

Quiggin is a very interesting case. He has a strong technical background, and has an enormous number of citations for a paper published in 1982 that seems to have been written when he was an undergraduate. That paper is in decision theory, which I find hard, and he has published other work in that vein. The man writes, and has written, an enormous amount. His keyboard must be on fire.

The bone I have to pick is with his damn book. There are some theorists that see modern macroeconomics and like it. It fits together like things they already know, the language is similar, and one can see how standard economics can be put to work to understand aggregate phenomena. Quiggin is not like that though. If you read Zombie Economics and this paper, with names redacted, you would not know it was the same person, as Zombie Economics reads like fringe economics (Austrians, Post-Keynesians, etc.). In fringe economics, the game is dismissing things you know little about, and offering little that is actually constructive.

Quiggin and Krugman indeed have a lot in common. They are smart people, with demonstrated success in particular branches of economics, but with little or no knowledge of what makes modern macroeconomics tick. In part, they seem to think that modern macro is a tool of right wing conservatives and therefore needs to be destroyed. Let me assure you that modern macro is not inherently a tool of any particular ideology. It just forces you to work harder to find the appropriate role for government. But the result is better policy.


  1. Well one externality from your little episode with the Antipodean is it got me looking at his blog and some other Aussie econ blogs. I did note one commenter said that Quiggin is a ruthless suppressor of people who express views on his blog that he disapproves of. Sounds a bit like our very own American bloviating jackass Mr de Long.
    You are to be commended for not suppressing the dissidents in your comments, even though a good number of them are total idiots who must give you sore temptation to send to Siberia.

  2. Actually, things are much better than they used to be. Mostly people are polite, and there are plenty of people who have figured me out and want to contribute something useful. I run into problems sometimes though. I delete purely abusive comments. "You are a moron" goes in the trash.

  3. SW,

    On first brush I too thought you were pulling rank too. But, I patiently read the rest of your post and realized it was a thoughtful critique (even if I disagreed with a few things) . It goes to show more than anything else that:
    a) there is no benefit of the doubt in blogosphere
    b) People react to posts after the most cursory of readings.

    Maybe the rule should be, read a post twice before commenting and three times before attacking it with a post of your own.

  4. I try to be careful about my use of words, but you can see how hazardous this is. Not only is there no benefit of the doubt, but people with an agenda will go out of their way to put words in your mouth. Thanks for taking time to read carefully.

  5. Economists are not obsessed enough with providing sound causal mechanisms & explanations ..

    .. and they are overly obsessed with rank.

    This tells us most of what we need to know about the scholastic guild of academic economists.

    The concern is with maintaining and advancing ones place of rank within the guild.

    Sound & coherent causal explanations for problems in our experience? Not so much.

  6. "The most rapid progress toward a coherent and useful aggregate economic theory will result from the acceptance of the problem statement as advanced by Hayek" — Robert Lucas

  7. "The ideas of Hayek have played a major role in influencing my thinking and have been so acknowledged.” -- Leonid Hurwicz

  8. "Q: Who is your favorite economist? A: I think it must be Hayek." -- Edmund Phelps

  9. The AEA Committee on Graduate Education showed that "math jocks" like Williamson where coming out of the grad schools as what they called "idiot savants" -- adapt at math equations but ignorant of most all of the literature of their profession, ignorant of the real world of businesses, production and consumption, etc.

    David Colander has documented the same pathologies.

    The consequences of this mindless "rocket science" can be seen on Wall Street, looking at the massive pathologies of the Quants, who were "math jocks" with little or no understanding of the relation of their math formulas to the real world.

    McCloskey has shown similar pathologies in the econometrics profession, as has Leamer.

    It's a never ending project, however. The math and econometrics is an end in itself for purposes of publication and rank -- and sound causal understanding and explanation counts for nothing in the profession.

  10. There's no evidence you've read a word of Hayek -- your competence to pass judgment of work of which you know nothing is zero, and it's pathological for you to embarrass yourself pretending to have competence where you have none.

  11. A non macroeconomist trying to do macro in a popular forum some 20+ years after their prime? Well I never...

  12. Also, good god did Williamson get linked on some Austrian blog? How the hell does this stuff even happen? He made like a passing mention of Austrian economics when 90%+ of it was attacking a kooky/crank popular book on macroeconomics written by a decision theorist.

    Austrians and MMT people are like bees- one sting and the entire swarm is alerted and comes buzzing.

  13. Theory, no matter how neat, or personally fulfilling, is nothing but a game. Or perhaps a form or religion.

    One isn't in a position to use economics to determine the proper role of government, when one can't relate one's economic theory to reality.

    So, you and your catty friends can attempt a better argument against Zombie Economics, than heretofore offered.

    One suspects, however, that it seems unlikely that you'll succeed at anything like a logical and fact-based rebuttal to Mr. Quiggin. And hence continue to bash personalities rather than address addressing knowledge.

  14. As you say, the real question is about Quiggin's book. I started reading from a random spot on Amazon's Look Inside and found this on page 145:

    "Under standard assumptions about the way the economy works, all the benefits of additional investment go to those whose savings finance that investment. That is, cutting taxes for the rich may lead them to save and invest more, thereby making themselves still richer, but there is no reason to expect any benefit for the rest of the community."

    No reason at all? Under standard assumptions, isn't it possible that additional capital raises the marginal product of labor, raising wages?

    Quiggin backs up his claim using Andrews, Jencks, and Leigh, saying that (p. 159)

    "Even assuming that the increased inequality in the United States produced permanently higher economic growth, they found that households outside the top 10 percent of the income distribution would not have gained enough to offset their smaller share of total income over the 30 years to 2000."

    But the abstract of the AJ&L paper says:

    "If the increase in inequality is permanent, the increase in growth appears to be permanent, but it takes 13 years for the cumulative positive effect of faster growth on the mean income of the bottom nine deciles to offset the negative effect of reducing their share of total income."

    I admit I am far from being an expert on this literature, but it looks like Quiggin has it wrong. If the initial loss can be made up in 13 years, and we get permanently higher growth after than, inequality might not be so bad.

    Am I getting this wrong? Is this a representative sample of the book?

  15. Whatever you may have learned from this episode, you seem to have missed the most important lesson: don't throw stones from glass houses.

    When you accuse someone like Krugman or Quiggan of having "little or no knowledge of what makes modern macroeconomics tick," you ARE trying to pull rank. In Krugman's case, you're not relying on credentials but on your supposed greater expertise. In essence, you are saying that you are right and Krugman is wrong because you're an expert and he's an ignoramus.

    It's your blog and your life, but I wouldn't recommend this rhetorical strategy to anyone. It leaves you highly vulnerable in the event that you make a mistake or say something silly, as you clearly did in your Quiggin review. If I were you, I would have responded to Noah Smith by saying something like "You're right; I wrote that in a hurry and it came out as jibberish. Here's what I was trying to say:" Note that I'm giving you the benefit of the doubt that you did write it in a hurry. It certainly has that tone.

    But that's not what you said. You went down swinging, trying to defend the indefensible. And I wonder if that's because you're committed yourself to that position with your dismissive rhetoric toward others. Because if Krugman or Quiggan catches you in a mistake, then maybe that means that they DO know something about macro after all, and maybe can't be dismissed as cranks or wacky socialists (yes, I noticed your use of "comrade"; don't plead ignorance because you said you choose your words carefully).

    Yes, Krugman plays this game too: to listen to him, you'd think Cochrane is a naif who knows nothing about macroeconomics. That doesn't make it right or wise for either of you. In the recent past, Krugman has been right about most things (as he never tires of reminding us), but his mistake day will come. His comments about Greenspan's recent FT piece come close. And when it comes, Cochrane et al will be chortling.

    Generally speaking, the "my opponent knows nothing at all" trope is unnecessary and counterproductive.

    That should have been the lesson you learned.

  16. A commenter says : Who is your favorite economist ? Hayek.

    This confirms my earlier contention on another blog post that economics is more like music or art than science. One simply picks ones favorite on aesthetic grounds. You like Bach: I like Stravinsky. You like Lucas: I like Keynes.
    There is no science here and I think we'd all get on a lot better if we recognized that econ is more like art criticism than physics. Contending Hayek is a better economist than Cochrane is just silly. There's no metric: de gustibus non est disputandum you silly kids!

  17. ^90% of the time it's only heterodox people (PKs/Austrians) and orthodox economists writing for the general public that do that. You're unlikely to get orthodox economists publishing things with titles like "The genius of Mises and the brilliance of

    And pointing out the massive gulf between actual published economics (and especially macroeconomics) and what the people on them internets say is a running theme on Stephen's blog.

  18. The depiction of macroeconomics as some kind of depraved mathematical Frankenstein is incredibly inaccurate. Yes, sometimes we have to use sophisticated quantitative techniques to better understand problems, but what should one expect; the macro economy is a complex beast. Just because the analysis is sophisticated however does not imply that economists are oblivious to the "real world", that they don't appreciate the work of nontechnical economists, or that they engage in the techniques to gloat about how smart they are. Suggesting "math jock" economists no nothing about the world outside the ivory tower is both insulting and factually inaccurate. For instance, Bob Lucas was a history major. Moreover, if you read or listen to macroeconomists who won Nobels over the last couple decades i.e. Phelps, Lucas, Prescott, etc. they are aware where their research fits in a historical context and a history of thought context.

    Modern macro has its limitations but what science doesn't? 40 years ago macroeconomics was a collection of models based on irrational expectations, had limited micro foundations and was not presented in a clear general equilibrium framework. In just over a generation the situation has been rectified, but there is a lot of progress still to be made.

    If I had one critique of macroeconomics at the university level it would be on how undergraduates are taught. The material in intro and intermediate macro does not correspond very well to the current state of knowledge. Part of this is the inherent difficulty in explaining complex general equilibrium models to students lacking the mathematical prerequisites. Several books like the one authored by Professor Williamson have done a nice job bridging the gap, but we need more teachers to use this instead of teaching vulgar Keynesianism to undergrads. I see this as necessary since it is usually the brightest students with bachelor and master degrees rather than PhD economists who go onto careers as successfu journalists, media personalities and politicians. And who has the loudest bully pulpit to spew voodoo economics? That would be journalists, media personalities and politicians.

  19. "Modern macro has its limitations but what science doesn't? 40 years ago macroeconomics was a collection of models based on irrational expectations, had limited micro foundations and was not presented in a clear general equilibrium framework. In just over a generation the situation has been rectified, but there is a lot of progress still to be made."

    You've just undermined your own point, or made the critics' point for them. Take your pick.

    Take a close look at what you just wrote. You didn't say that modern macro has become more useful for predicting future states of the economy. It hasn't. You didn't say that it has become better at explaining past movements of the economy. It hasn't. It's not better at prediction or description. In other words, it is not a better scientific theory.

    You've basically said that the model has become more elegant. It's now based on rational expectations, which is great if the world was based wholly on rational expectations. If not -- if, for instance, huge swaths of economic and financial activity consisted of creating securities designed to lose value and selling them in a bubble to suckers -- then so what? Sure, rational expectations is probably a good but imperfect model of human behavior. But it's not axiomatic unless you choose to treat it as such.

    Modern macro is now based on micro foundations and a clear general equilibrium framework? Again, so what? As far as I know, the scientific method does not give bonus points for general equilibria. These are not a priori desirable properties of economic theory. They are implied substantive claims about how the world works. They are useful features only if they improve the theory's predictive or descriptive ability. They haven't.

    If this is the first defense you offer for modern macro, do you think that maybe you should rethink what it is that macroeconomics is supposed to be doing? And that maybe you aren't going to be making progress if you don't know what direction you should be going?

  20. David Barker,

    The snippet you quote at first seems wrong, but if you read it in context, it's merely poorly written. The problem is that the phrase "the implications" doesn't have a clear referent, so you are left wondering what in the heck he is talking about.

    But if you read the page closely, you'll see that he's referring to the implication that tax cuts are financed by government debt. Thus, under standard assumptions, investment in capital would not change. The tax cut beneficiaries have $X more to invest, but the government's financing needs have also increased by $X, and assuming full output, the larger government deficit crowds out $X of private investment. So the only effect would be distributional.

    Of course, there are second-order arguments about why this type of distributional change might affect investment efficiency, but to a first approximation Quiggan's argument is correct. Though, as I said, poorly written.

    As for the AJ&L paper, the abstract mentions a 13 year "repayment period" so to speak. But I think (having not read the paper) that is a mean or median across the countries studied.

    Quiggan's claim about the lower incomes not making up the ground in 30 years was in reference to a set of simulated results AJ&L produced for the U.S. It's possible that the repayment period is longer in the U.S. than in other countries.

  21. Cuttlefish said,

    "Well I never..." .. and we never imagined you had ...

  22. What is it about German/Austrian intellectuals anyway? For years, there was no school of thought anywhere on the planet as reflexively defensive, passive aggressive and idol-worshipping as Marxists. When they mostly died out, they passed the mantle to the Freudians. And now that they've mostly died, the mantle has been passed to Austrian economists.

    Yes, Hayek had a bunch of great insights, and people have learned from him. Same with Descartes and Ricardo and Smith. But you don't see Cartesians and Ricardians running around screaming if someone implies that the displines of philosophy and economics have moved beyond their masters' teachings.

  23. "When you accuse someone like Krugman or Quiggan of having "little or no knowledge of what makes modern macroeconomics tick," you ARE trying to pull rank."

    How is that "pulling rank?" That's an argument about ideas, and what's right and wrong. Some people have told me that Krugman must be right because he has a Nobel prize. In the forum of ideas we're all equal.

    "It leaves you highly vulnerable in the event that you make a mistake or say something silly, as you clearly did in your Quiggin review."

    Yes. I know I'm sticking my neck out. But I'm old, and I think I can afford to do it. The only mistake here involves words, clarity, and what people understand about my intent, which hopefully you are starting to absorb.

    "If I were you, I would have responded to Noah Smith..."

    For some reason Noah is out to get me, but I forgive him.

    "You went down swinging, trying to defend the indefensible."

    I'm puzzled as to what the crime is exactly. Being insufficiently humble? Being insufficiently deferential to John Quiggin? The man seems pretty feisty, and perfectly capable of looking after himself.

  24. Unfortunately, after reading your blog for some time, I am yet to find in it any new insights, analysis or policy recommendations in it. It is in most cases about how Krugman is wrong - but with no empirical data to support your contention. As Scott Sumner, whose blog I love for all the insights and policy recommendations, points out PK's strongest suit is that he uses data to make his points, and without a question, his analysis and forecasts, have turned out right most of the time. It may be the equivalent of using Newtonian physics instead of Quantum or Einsteinian physics (which we know is definitely closer to the "truth") but seems to work fine when we are dealing with day-to-day conditions. You don't need theories and models of quantum gravity to explain or calculate the acceleration of falling objects.

    While you may be pursuing the holy grail of macro economic models. all models are approximations, and sometime simple models seems to work well enough.

    You may disagree with this, but the tone of most of your comments do come across as condescending - such as to Quiggen and Noah. And that is what most people are reacting to.

  25. Seems you haven't been reading. You can find plenty of data and policy conclusions in my blog pieces if you care to look. Question: If the crime is only "tone," that doesn't seem so bad does it? Brad DeLong once called me the "stupidest man on earth." That has a "tone" to it, doesn't it? Read Noah Smith's comment. What kind of "tone" do you find in there?

  26. Anonymous:
    I don't think you are right about what Quiggin means in the snippet I quoted. The paragraph before the snippet is about effects on government revenue (the Laffer effect), but in the paragraph I quoted he shifts to discussion of the "trickle-down hypothesis," by which he means the idea that a rising tide lifts all boats. Having dealt with the Laffer effect, he then takes aim at trickle down, saying "the implications for the trickle-down hypothesis are even worse." He says that there is no reason to expect any kind of general trickle-down effect, with the minor qualification that there may be a partial offset of government revenue loss. I really think he is saying that, aside from any tax effects, investment by the rich only benefits the rich.

    I've now read AJ&L, and it is a very nice paper. I don't see how Quiggin can take it as evidence against trickle-down. The key line in the paper is: "Our results support Forbes’s (2000) conclusion that increases in inequality lead to more growth." The basic result is that the bottom 90% gains back what it loses from a redistribution to the rich in 13 years because of better economic growth. In the U.S. simulation, inequality rises in fits and starts, but over time the effect is positive for everyone:

    "From 1970 through 1985 the growth-promoting and share-reducing effects of rising inequality roughly offset one another. However, TopShare10 rises almost four per cent between 1986 and 1989. As a result, the mean income of the bottom nine deciles over the ensuing decade is 4 to 7 points lower than it would have been if inequality had remained at its 1970 level. From 1998 to 2003, in contrast, the income share of the top decile was high but stable. As a result, the growth promoting effects of the higher level of inequality began to offset the share-reducing effect. Indeed, the simulation suggests that by 2001 the growth-promoting effects of redistribution had pushed the mean income of the bottom nine deciles above what it would have been if their share of total income had not fallen from 68 to 58 per cent over the previous thirty years."

    If higher growth is permanent, then the benefits of inequality will be much larger in the long run. Of course, whether that is really worth it will depend on discount rates. And if the poor are more envious than greedy, disutility from inequality will outweigh utility from higher income. So if the bottom 90% are envious and impatient, they should steal from the rich. But if they are willing to wait for a return on an investment and care more about absolute than relative income, they should not.

  27. "Question: If the crime is only "tone," that doesn't seem so bad does it? Brad DeLong once called me the "stupidest man on earth." That has a "tone" to it, doesn't it? Read Noah Smith's comment. What kind of "tone" do you find in there?"

    Whoa, Stephenson asking questions, I though he only had answers. I'll take that one. Do you really want the bar by which you're measured to be at DeLong's level? I stopped reading his blog ages ago because of his tone, ad hominems, hits below the belt etc., never mind the way he deleted any posts he disagreed with.

    I like your technical posts but avoid your attack posts. The more tone and condescension you choose to use, the more you'll attract readers who like that tone while driving away those who prefer clean play. The readers who stay will be those who, by virtue of their training, probably already agree with everything you have to say anyways, and just want to cheer you on while you rip into the enemy.

    But you once said this blog was meant to be an outreach tool... for the curious non-academics or near-academics, those who might not have the time or wherewithal to read papers and don't yet hold to any technique, tradition, or whatnot. Its your blog, but I think you'll have more success at outreach if you were a less condescending (I doubt you are capable of not being condescending). Outsiders like me who just want to learn about the subject find the aggressive sniping amongst economists to be odd and distracting. Your roots are in Ontario, the land of excess politeness, how did you stray so far off course? ;)

  28. Haha, not Stephenson, Williamson. Sorry about that. Bet you get that a lot.

  29. I think to tell Noah that he may not pass the prelims at WashU was not just condescending in tone but in content. And pulling rank!

    Noah's post on your Quiggin post was hysterical - it was very funny. That you were prickly about it may say more about your insecurity and inability to take any criticism of your approach and analysis, and to not see the humor in it. And it was a takedown based on exactly what you wrote. It was very persuasive, to many, as I see in all the comments on his blog.

    I read your reactions usually as follows: The modeling you do is the only way to understand and make any sense of macro-economics, and your model is always and must be right. Your model is your only predominant concern, and assuming the correctness of the model (no testing is necessary!), you have reached the following conclusions: Romer is stupid, Bernanke is stupid to try QE2, PK is always nauseum.

    If anyone uses data (e.g. Blinder and Zandi) to show that maybe the stimulus worked, of course they have it all wrong because the model (and Ricardian equivalence assumed of course) says it just cannot be so! Since you have also claimed you don't do any predictions, obviously the model can never be tested! Only fitted ex-post to explain something - i.e. to tell a story! That it is a mathematical model (which is just a metaphor as McCloskey would persuasively argue) does not make it truer.

    I remember you arguing that inflation was going to gallop soon by implication (convenient to leave out a time frame since it may turn out true, maybe in 100 years?) by looking at the Fed's actions and arguing vociferously for looking at Headline inflation instead of core inflation. When headline inflation has come down just as predicted by folks like Sumner and PK who looked at the TIPS data to make their case, not once, did you even acknowledge you may have jumped the gun. While Sumner and PK acknowledge all the times they have been right, the fact is they have been more right than all the others, including yourself.

    Long time readers, other than those who think only the model matters, all remember all those posts on how all the others are wrong!

  30. I didn't get past the first line of Noah's post. If I did not read the thing, how could I be insecure about it? I was never intentionally condescending to Noah. I would say the same thing to Tom Sargent. We would be pleased to have him in our graduate program, provided he could pass the prelims.

    What's all this condescending stuff about? I am not supposed to let on to knowing anything?

  31. Stephen, when you say "Krugman doesn't know anything about modern macroeconomics," you're asserting that you're an expert and Krugman is not. That's a form of pulling rank. The fact that Krugman is more famous doesn't matter; you're denigrating his knowledge based on your own authority.

    And that isn't an intellectual argument. It's a naked assertion. More classy than name-calling, but intellectually more or less equivalent. It's definitely ad hominem, since the argument is that Krugman must be wrong because he's insufficiently educated.

    Granted, this debate practically begs for this level of argument. If A says "modern macro is useless," and B disagrees, how to reply? By listing stuff that is useful -- which implies that A either didn't know about it, or can't appreciate its usefulness.

    Still, it's far better to let that be an implication than to write it explicitly. My opinion. Your blog.

  32. David Barker, I'm not here to defend Quiggan and if he's miscited AJ&L, then that was sloppy on his part. I'll take your word for it since I don't have time to read the paper.

    As for your snippet, read page 145 in its entirety. He talks about the "optimistic" Mankiw studgy and what it purported to show. Then he wrote something like "but Mankiw assumed that tax cuts would be financed by decrased spending. Everything is different if they are financed from public debt."

    That's the pivot point for the whole page. The next paragraph concerns the implications of that funding choice on the public debt. Then comes your paragraph, which deals with the implications of the debt funding for the so-called trickle-down claim. He's 100% right based on first-order, standard assumptions.

    In my opinion, he's guilty of two things here:

    1. Terrible writing. His main point, that funding sources matter, is buried at the end of a paragraph with a very different topic sentence. Then the topic sentences of the next two sentences contain vague terms with no obvious referent. That's a really good way to not get your point across.

    I'm quite confident in my exposition here, but also I had to read it about four times to figure out what he's saying. And I'm not exactly the lay audience for whom he's writing.

    2. He spends a chapter attacking something called "Trickle-down economics." As far as I know, there is no economic theory by that name. There are some economic theories that have been given that pejorative label, but the label is usually used indiscriminately.

    Debunking "trickle-down economics" is about as useful as debunking Obama's post-colonial ideas.

  33. OK, Anonymous, now I'm angry - you made me buy the Kindle version of Zombie Economics. Just kidding; I should have done that in the first place instead of spouting off from Look Inside.

    I'm more convinced than ever that Quiggin was making two distinct points in the chapter and on page 145: 1. The Laffer Hypothesis is wrong and 2. The Trickle Down Hypothesis is wrong. I agree with Quiggin on 1 - we are not on the decreasing portion of the Laffer Curve. But on 2, Quiggin really believes that when the rich get richer, the poor won't benefit at all. I think that is wrong, and I think the main paper he cites in support shows that he is wrong.

    Quiggin being wrong on 2 doesn't prove that the Tea Party is right, of course, but it does show that the world is more complicated than Quiggin's standard liberal view assumes.

    Other things are curious in his argument; the fixation with the number of lower income people in elite universities instead of the fact that a steadily increasing percentage of the U.S. population is receiving higher education, his refusal to discuss the effects of immigration, trade patterns, or technological change as factors in increased income inequality, etc.

    I agree with Steve and Anonymous that the arguments in the book are weak. I wish the discussion here had focused on that instead of whether Steve is being polite or not.

  34. "Stephen, when you say "Krugman doesn't know anything about modern macroeconomics," you're asserting that you're an expert and Krugman is not. That's a form of pulling rank. The fact that Krugman is more famous doesn't matter; you're denigrating his knowledge based on your own authority."

    It's bad bevavior to let on you know something? Very strange ideas you have.

  35. "Zombie Economics reads like fringe economics (Austrians, Post-Keynesians, etc.). In fringe economics, the game is dismissing things you know little about, and offering little that is actually constructive."

    As opposed to nothing that is constructive? It was, after all, fringe economists who got the Panic of 2008 right.

    And it is comical that this follows the pretense that Williamson is not "pulling rank". What is dismissing work that he does not understand because of the status of the approaches in the profession, except a game of "pulling rank"?

  36. This comment has been removed by the author.

  37. where did this canard about "fringe economists" not knowing anything about mainstream economics come from? most heterodox economists i know are people who work at schools with business schools where their economics program will get crushed if they dare teach anything but neoclassical economics to the undergraduates (see notre dame). even when teaching the graduate students most of the professors I've met feel the need to compare and contrast the all the different strands of neoclassical economics to the alternative they're presenting (which usually involves presenting all different view points within the "fringe"). do you think they know nothing about mainstream economics simply because they disagree with you?

  38. Anon 7:31 AM: "As Scott Sumner, whose blog I love for all the insights and policy recommendations, points out PK's strongest suit is that he uses data to make his points, and without a question, his analysis and forecasts, have turned out right most of the time."

    Where is the database of PK's forecasts? Is it available online? How do they compare to the median of the SPF?

    By using data to make his points in his analysis, do you mean like when he compared WI schools favorably to TX schools on the basis of test scores, only to be completely embarrassed when it turned out that TX schools outperformed WI for every racial/ethnic group at nearly every grade in nearly every subject? Like that analysis? It was a brilliant example of allowing one's preconceptions guide faulty analysis.

    BRuceMcF: "It was, after all, fringe economists who got the Panic of 2008 right."

    Which fringe? The Post-Keynesians who think that the problem was that the govt didn't fully control/own the financial system or the Austrians who think that the problem is that the govt regulates the financial system and issues money?

  39. This is interesting. What is an expert? What makes you trust what someone says even if you can't actually verify it is true? Maybe there are some things they say that we can actually verify, so we trust them on the rest. Maybe they have some kind of certification - an award or a title conferred on them by someone we trust. But maybe we don't trust those certificates either. Maybe someone works at Harvard. But maybe your brother Harry works at Harvard too, and he's a dope. We all sort information, and make judgments about the people who are peddling information. Sometimes we sort ourselves into groups, within which we all agree with each other, but the groups disagree, and they can't all be right. How can you be fair about the disagreements, and who gets to decide what fair is?

  40. "It's bad bevavior to let on you know something? Very strange ideas you have. "


    You don't win arguments by claiming to know something. You win arguments by showing that you know something. The latter is not inconsistent with the former, and if you want to tell the world that you something, go ahead. Don't stop there.

    Arguments from authority are generally sort of weak. Arguments from your own authority are more or less pathetic.

    As I said earlier, the whole debate sort of invites this thing, but you're not helping your cause by taking it to a new level.

  41. David Barker,

    Quiggan may have indeed written some nonsense. We'll agree to disagree about what he meant in that particular paragraph. That's a detail, and more or less irrelevant to whether the chapter or the book itself is accurate or misleading.

    Since I haven't read the book, I have nothing to say about the latter question. I have no interest in defending Quiggan. So you may indeed be right about the substance of that chapter. As I said earlier, when an economist criticizes "trickle down economics," that's sort of a red flag that over-simplification or distortion is coming.

    But there's another point here that's worth contemplating. In a sense, it doesn't really matter whether the book itself is any good, because it has a great title. One that fits into the zeitgeist, much in the same manner as Yves Smith's Econned.

    90% of the people who learn about Quiggan aren't going to read the book. They're going to read a short summary, and that title will stick in their head. And when they read Krugman writing convincingly about zombie lies (which probably are in fact much different, and much more transparently wrong than what Quiggan is writing about), it fits into an overall narrative.

    From this perspective, criticizing the book for misciting economic papers or oversimplifying theories lands only a glancing blow. In a sense, it's a little bit like critiquing Ann Coulter for lying in her books. Of course she lies; that's her raison d'etre; and the public who engages her doesn't really care that much. I'm not, by the way, equating Quiggan with Coulter. Only offering an extreme analogy that might or might not be useful.

    If this is true, then responding to the book is a challenge, and worthy of some deep reflection. It might be sort of what was going on in Williamson's head when he wrote what he did about it. But what's become quite obvious is that Williamson's strategy -- basically saying (rightly or wrongly) that Quiggan is ignorant -- was not effective.

  42. "...that Quiggan is ignorant..."

    We are all ignorant. The problem is when you make bold assertions and strong recommendations concerning things about which you are ignorant.

  43. BIS chief economist William White & his BIS research team were on top of the misallocation boom & financial pathologies & the inevitable bust exploiting money/finance/macro ideas of Selgin, Hayek & Minsky.

    "Finge" macroeconomics indeed.

  44. E.g. Stephen Williamson discussing the academic work of George Segin, Lawrence White, Roger Garrison, Robert Murphy, William White & Steven Horwitz, etc. ....

    "We are all ignorant. The problem is when you make bold assertions and strong recommendations concerning things about which you are ignorant."

  45. The problem is that Williamson seems incapable or showing how they are weak -- it's informal argument fallacies all the way to the core.

    Which suggests that ultimately Williamson has got nothing -- he's got an empty chamber. All he has is the bluff of status derived from the status game of producing elegant math. Empirically he's got nothing. Prediction wise he's got notthing. More significantly, he's got a completely empty wallet when it comes to providing soind causal mechanisms describing causal actors actually existing in the real world.

    So there is a reason for the fallacies despite the weakness of Quiggin -- Williamson's position is also weak as a paper thin rotted platform ready to collapse and fold under the stress of any empiriical or explanatory demand.

    It's the Emperior pulling rank insisting his threads are the finest because everyone who is elegent says they are elegant -- all the whioe being nakee to the most obvious criticism of those who fail to bow down to the argument from authority to to pure innocents and insistence of the obvious.

    "I agree with Steve and Anonymous that the arguments in the book are weak. I wish the discussion here had focused on that instead of whether Steve is being polite or not."

  46. "The problem is that Williamson seems incapable or showing how they are weak..."

    I could go on about it, but the cryptic nature of my comments was deliberate. There's a bit of a puzzle there you have to figure out. There's a basic weakness in that, if you know what he seems to be trying to criticize, it doesn't make any sense. If he had sent me a draft of his book, I would have been happy to go through it and help him out a bit, but done is done.

  47. Stephen said "I try to be careful about my use of words..."

    I'm not an economist so have no idea as to whether Quiggin's book is good or not, but I've followed this with some amusement.

    Your review really did come across as condescending. Maybe it's a cultural thing - Australians with our convict and colonial past tend to get prickly at any perception of being 'put in our place' so perhaps more was read into your review than intended.

    Nevertheless, saying "...Quiggin is the Australian farm team in the Krugman/Thoma/DeLong league" didn't sound very nice.

    I have to say I have no idea what "farm team" means either but it did not seem to be something written by someone being careful with their words. In fact it seemed that you were dismissing Quiggin as a colonial, a second rater, a rube... In other words, pulling rank.

  48. Quiggin is a bit of a character. He is a feisty individual, self-confident, and his work ranges widely across fields in economics. He has a high profile in Australia, but would not be a household name for my readers, but that's not a bad thing. I am probably better-known in Canada than elsewhere, and I'm no stranger to how it feels to be made to feel colonial. A farm team is a minor-league team that feeds the majors. In the case of "Zombie Economics," I thought the term applied to Quiggin, in relation to Krugman, for example, as many of the ideas, and the political attitude, overlap, and the thrust of the book was basically derivative-Krugman. It certainly did not intend to suggest that Quiggin, Australia, or the Australian economics profession is "bush-league." Quiggin has done good and well-respected work, Australia is a place I would love to live if it were not so far from most of the people I know, and I have a lot of respect for Australian economists, many of whom are my good friends.