Arnold Kling on the economics profession
Arnold Kling from Econlog has an excellent post on the debates between economists. One of the best quote for me was:
There are economists making the case against the stimulus in ways that I find unpersuasive (Eugene Fama, for example). But the economists making the case for the stimulus are not doing a very good job, either.
There is no definitive answer. Those that are selling stimulus as the ONLY possibility are merely using a different set of value judgments than those selling the market as perfectly self-correcting. Ultimately, as Arnold says:
My advice to Will Wilkinson would be to distrust one-handed economists when it comes to macro
Economic models are incredibly useful for framing a situation like the one we are in now. However, don’t let the ideology of certain economists be more persuasive just because it is from economists.
I would add that by far the most balanced economic discussion on the crisis has come from Econlog and Marginal Revolution. And the reason that there description has seemed so balance is because they are TRANSPARENT with their value judgments – massively different to many of the other US economists on the blogsphere.
Straw man alert!
Mark wrote:
“those selling the market as perfectly self-correcting.”
“Straw man alert!”
Since I was naming the two EXTREMES of course they are “straw men”. Notice that I didn’t even put anyone in that camp, I just named the extreme point that could occur.
My point wasn’t to say that these extremes were wrong – just that the extremes differ in terms of value judgments, and that these judgments that are sometimes not put out in the open for everyone to look at.
If I had said all of X believe that the market is perfectly correcting and that is “silly” you could pull me up for an oversimplistic straw man argument – but I don’t think that is the case here 🙂
BTW its Matt not Mark 🙂
Sorry Matt.
Keynes misrepresented his peers in this way, and it’s a consistent theme in the literature, and I even ran into it in an exchange this week with another economist. For many, this “straw man” it taken as a fact of the matter about non-Keynesian economics.
Keynes represents himself as the rival to “full employment” economics — which no-body every suggested was anything but a first-step theoretical construction for understanding the ordered structure of the economy. But in the hands of Keynes and many since, the dishonest canard has been current that this construction wasn’t a construction, but represented the “faith” of the model constructor in “the market as perfectly self-correcting.”
Keynes represented this non-existent “extreme” as the _norm_ among his peers, and many, many economists since have mistakenly taken Keynes’ word for it.
I note that you are not one of them.
Sorry Matt.
Keynes misrepresented his peers in this way, and it’s a consistent theme in the literature, and I even ran into it in an exchange this week with another economist. For many, this “straw man” it taken as a fact of the matter about non-Keynesian economics.
Keynes represents himself as the rival to “full employment” economics — which no-body every suggested was anything but a first-step theoretical construction for understanding the ordered structure of the economy. But in the hands of Keynes and many since, the dishonest canard has been current that this construction wasn’t a construction, but represented the “faith” of the model constructor in “the market as perfectly self-correcting.”
Keynes represented this non-existent “extreme” as the _norm_ among his peers, and many, many economists since have mistakenly taken Keynes’ word for it.
I note that you are not one of them.
All good Greg, I don’t like it when people use straw men arguments against people either.
I would also note that I do not have the intellect or ego of Keynes, so you are unlikely to find anything either as intelligent or as critical on this blog 😛
Also I don’t think I was anti-stimulus enough in the post – I should have said large stimulus instead of stimulus. I will change that now 🙂