He's plenty smart enough to do the job. It's his lack of curiosity about complex issues which troubles me.
He truly believes he's on a mission from God. Absolute faith like that overwhelms a need for analysis. The whole thing about faith is to believe things for which there is no empirical evidence.
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.
Unfortunately I'm giving it away, since that last one is quite famous. I think those quotes apply to Paul Krugman, but they come from a 2004 article by Ron Suskind on George W. Bush and his administration.
Krugman is certainly smart enough for the job. He didn't get a Nobel prize in economics for nothing. What's the job, though? Krugman still holds an academic position at Princeton, but he's not into academic life any more. Just ask anyone who takes his classes, goes to seminars at Princeton, or attends professional conferences. Krugman spends his time writing a NYT column, a NYT-sponsored blog, giving speeches, and writing popular books. If you have read Krugman's recent writings, and you know modern macroeconomics, you have probably noted his lack of curiosity. The ignorance may be willful, but maybe he just doesn't have the time. What a lot of distractions!
Krugman is indeed on a mission. That's a political mission, not a mission to educate the lay public about economics. He wants to see Democrats elected to high office, and he wants the adoption of a particular set of economic policies. Krugman's religion, which he uses to motivate his followers, is an Econ 101 version of Keynesian economics. This is a wonderful motivator, as there are millions of people out there whose only contact with macroeconomics was just that - a world of thrift paradoxes, multipliers, and macroeconomic-policy-as-engineering-problem - gleaned from Econ 101. These people are true believers, and if you can push them along by raising the specter of some mostly-unnamed foils - non-Keynesian bad guys intent on starving the unemployed - all the better.
As in the Bush administration, oft-repeated un-truth becomes truth, in the limit. You create your own reality - as in this recent missive. According to Krugman, there are good guys:
it’s not hard to find open-minded macroeconomists willing to respond to the evidence. These days, they’re called Keynesians and/or saltwater macroeconomists.And there are bad guys:
...freshwater macro has been failing empirical tests for decades... Everywhere you turn there are anomalies that should have had that side of the ...rather than questioning its premises, that side of the field essentially turned its back on evidence, calibrating its models rather than testing them, and refusing even to teach alternative views.But why do those bad guys cling to their silly theories in the face of all that contrary evidence?
So there’s the trouble with macro: it’s basically political, and it’s mainly – not entirely, but mainly – coming from one side.Krugman finishes with:
Do we need better macroeconomics? Indeed we do. But we also need better critics, who are prepared to take the risk of actually taking sides for good economics and against dogmatism.
What's wrong with that?
1. The existence of the bad guys is a fiction - a figment of Krugman's imagination. I don't know any macroeconomists who identify themselves as "saltwater" and "freshwater." Modern New Keynesians, who I suppose are good guys in Krugman's mind, have much more in common with Ed Prescott than with John Maynard Keynes. If we dug Keynes up today and re-animated him, he would not recognize his ideas in Mike Woodford's book.
2. The watershed of modern macroeconomics was the Phelps volume and Lucas's Expectations and the Neutrality of Money. In the forty years since then, the profession has hardly been static. Methods have evolved; our ideas about the sources of business cycles have changed; we have adopted ideas from information economics, mechanism design, search theory, general equilibrium, and growth theory; research programs have come and gone. All of this development has involved an active interplay between theory and measurement - theory adapts to the evidence, measurement adapts to the evolving theory.
3. Modern macroeconomics has been much more concerned with science than with politics. Robert Solow, David Cass, Tjalling Koopmans, Len Mirman, and Buzz Brock were not thinking about politics when they developed the theory that Kydland and Prescott used in their early work. I don't think Kydland and Prescott had politics on their mind in 1982, nor was Mike Woodford thinking about politics when he adapted Kydland and Prescott's work to come up with New Keynesian theory. Everyone knows that the tickets to Washington typically go to old-style Keynesians - Tobin, Heller, Summers, Mankiw, Romer, for example. Modern Minnesota macros - Sargent, Wallace, Lucas (by association), for example - are basically nerds. If you gave Sargent a ticket, he wouldn't go.
One senses a tone of frustration in Krugman's post. He seems to think that the world should be on his "side," but even people who have only a vague idea of what practicing macroeconomists are up to aren't responding well to his message. Krugman's post is in part a response to Diane Coyle, who writes:
Paul Krugman in his new book End This Depression Now plainly thinks those who disagree with him about a fiscal stimulus now are blithering idiots. OK, maybe I am, but it’s not a good tactic to win me over in the debate.I also ran across this New Yorker piece, which includes a conversation with Tom Sargent, and this comment:
Sargent has a halting, poker-faced manner and a tinge of California in his voice (he’s from Pasadena), which makes him seem laid-back and self-effacing. He’s no Paul Krugman.Krugman is all about self-promotion and the demonization of straw men, and I think that's obvious to most people. So there's hope.