The attacks on Keynes and how to be a bad analyst

Brad Delong, combined with an imbedded quote by Krugman, covers off the bone-headed remarks of Niall Ferguson on Keynes in this post.

[Note:  You might wondering why I’m posting when he has apologised – isn’t that a bit uncharitable of me.  Well, he’s said these things in the past so I believe that some element of them remains core to his analysis, and even for off the cuff remarks they indicate a rot that exists among analysts when it comes to looking at models that I want to rant about.]

Now I am not calling Niall Ferguson an idiot for no reason – I accept he is a man of high regard who has, and will, achieve more than I ever will.  Furthermore, as a historian, even as a good analyst, the ideas and philosophies imbedded in someones actions are fair game!  The fact Keynes is gay, was in the Bloomsbury group, and didn’t have kids are all relevant factors for trying to understand Keynes and the subjective assumptions he made when doing analysis!

I have simply lost all respect for Ferguson’s analysis because he has simply played the man and not the ball when doing this.  Any analyst, and especially any real historian, would given this real context in terms of where it actually matters.  Here let me explain.

Truly, the lessons we learnt from Keynes and can apply to our understanding of the economy and the management of currency (which are many) exist independent of our subjective belief about what the “right” rate of time preference is.  The debate about the correct rate of time preference hasn’t been set by any “ancient Keynesian tomb” and should be discussed directly – rather than abusing the notion of a man that can’t defend himself.

If Keynes had said “the discount factor is X” then someone may say “his subjective preferences due to his lifestyle had an impact on that, and I don’t think that is a fair interpretations of how we see things now – and the trade-offs we are willing to make”.

Instead, we see people come out feeling that the government is borrowing too much – and they decide to throw ad hominem attacks on a dead man.  Keynes as a man wasn’t even a supporter of large sustained deficits – he was simply a man trying to work out what the hell was going on during the Great Depression.  Something many modern analysts avoid by directly excluding that time period and just assuming it will never happen again.

Think about it for a second.  Economics involves many models trying to explain and add light to tendencies in the world.  During the largest slump in history and following on from a Great War and the collapse of democracy, would you expect the thinkers of the day to be focused on building and trying to understand models of 100 years in the future – or of trying to understand the extreme business cycle and institutional fluctuations of the day!  The term “the General Theory” may have been inappropriate and grandiose – but his work on business cycles was undeniably useful, especially when combined with the increasing formalisation of the discipline in the following decades.

If bagging someones entire process of thought because they were gay (in truth bisexual) is a legitimate expression of academia nowadays, it’s frankly embarrassing – and suggests that people should perhaps spend a little more time refining their understanding of philosophy before they open their mouth.  If we want to think of the type of standard that people discussing economic concepts should set (and the unfairly high standard I apply to economists I’m listening to), then we should go back to a quote by none other than Keynes, the first quote I popped up on this blog:

… the master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher–in some degree.  He must understand symbols and speak in words.  He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought.  He must study the present in the light of the past for the purposes of the future.  No part of man’s nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician.

It was this quote that turned me to economics when I was 14, and it was attending classes with lecturers who felt this way about the subject that convinced me to give up on any other career or hobby and study economics.  So I guess I’m undoubtedly a little biased – perhaps that is colouring my defence, and I should be ignored for the man who is implicitly assuming that gay people, and people without children, effectively hate the rest of society ….

7 replies
  1. Paul Walker
    Paul Walker says:

    You may wish to the following comment on Keynes by Joseph A.Schumpeter , no less.

    “He was the English intellectual, a little deraciné and beholding a most uncomfortable situation. He was childless and his philosophy of life was essentially a short-run philosophy.”

    Somewhat Ferguson like, no?

    • Matt Nolan
      Matt Nolan says:

      Indeed – although without context I can’t really talk about the appropriateness of those comments either. If they were simply written in biographical terms about his policy prescriptions during the GD then they would be closer to appropriate.

      If they are out of context, then I don’t really care if Adam Smith came back from the grave to say them – I would still call it out as ad hominem crap. To introduce further inappropriate generialisations, I was raised in an Irish family to put very little weight on arguments that rely on appeal to authority 😉

      • Paul Walker
        Paul Walker says:

        Well try checking the quote. Page 275 of Schumperer’s “Ten Great Economists: From Marx to Keynes”. While you are at it try pages 6-7 of the chapter “The revolt against the Victorians” by Robert Skidelsky in “The End of the Keynesian Era: Essays on the Disintegration of the Keynesian Political Economy” edited by Skidelsky.

        • Matt Nolan
          Matt Nolan says:

          Sure, they sound like interesting books.

          However, what does any of this really have to do with the validity of the arguments by people, in the current environment, who attack Keynes individual choices as a defacto way of trying to make an argument about time preference?

          To put it in context, attacking current ideas of time preference with regards to Keynes lifestyle makes as much sense as attacking current views on entrepreneurship on the basis of Schumperer’s implied antisemitism [a inference you could also apply to Keynes and Hayek I will gladly admit]. Furthermore, there is at least a reason for moral outrage relating to these ideas of antisemitism – the fact someone liked to have consensual homosexual relationships has, in of itself, no fair moral implication if you were to accept negative liberty as a moral basis.

  2. Peter Cresswell
    Peter Cresswell says:

    I wonder who these modern analysts are who you say directly exclude the Great Depression from their analysis, and just assume it will never happen again?

    • Matt Nolan
      Matt Nolan says:

      Originally I had modern economists – but I decided to broaden it a bit 😉

      To be fair, there are many economists who do include the depression in analysis. Friedman and Bernanke are the clearest examples. And the appropriateness of popping it in does depend on the “question being asked”. But I used to fret (along with many others who held a preference towards history) that ignoring the period could lead us to a path where we repeated old mistakes – by 2007 I had convinced myself this was unlikely. The global financial crisis was quick to correct me on that 😛

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