Tuesday, January 03, 2012

Macro Imploding

Not the macroeconomy, just the science. Not that it every really was a science, just that 40 years ago everyone thought it was, now, not so much. Yesterday I read a really fun catfight between Krugman and everyone (e.g, Tabarrok, then Krugman, then Cowen, then Krugman, but this is typical). Now, losing one's temper in an argument is usually symptomatic of losing the argument, and so I am quite pleased watching Krugman boil over. Yesterday's Krugman post was precious, as he defending being peevish by noting that he only treats people like 'mendacious idiots' if they are so, and civility is irrelevant when the stakes are important!

He doesn't understand that civility is more important the greater the stakes, because they are helpful and takes discipline. It's easy to lose it and just start calling someone names, questioning their motives, but this is just appealing to your base emotions, as highlighted by the behavior people with their frontal lobe activity reduced (i.e., drunk people). On the other hand, on issues that are not important, well, it's easy to be gracious about things that don't matter because it takes no effort, there's nothing to restrain, there's no cost of doing so because you don't care if you 'lose'. If you are trying to bring a crowd to your point of view, manners are very helpful, they are a better sign of good faith argumentation. If you are just being angry, this can help incite a predisposed mob, but little else because everyone knows that someone highly emotional is not reasoning at all, just rationalizing. Sure, we all do it, but if we don't at least pretend not to, we clearly are not coming close to the rational objective we all aspire to in less heated environments.

Then there's Matt Yglesias trying to mix it up with Chicago-school type John Cochrane:
Chochran: Defenders think that devaluing would fool workers into a bout of “competitiveness,” as if people wouldn’t realize they were being paid in Monopoly money. If devaluing the currency made countries competitive, Zimbabwe be the richest country on Earth.

Yglesias: Try this mode of argument on for size. If water made agriculture possible, then the Pacific Ocean would be the breadbasket of the earth.

I found that analogy incredibly lame, and it made me think of Bulwer-Lytton contests (this year's winner: "Cheryl’s mind turned like the vanes of a wind-powered turbine, chopping her sparrow-like thoughts into bloody pieces that fell onto a growing pile of forgotten memories."), but Keynesian Brad DeLong thought it was devastating, highlighting the importance of ideology.

In contrast to this, I listened to much of the two latest Nobel prize winning economists--macroeconomists--giving their Nobel speeches...and they are as boring as any you might have remembered from college.

So, it's either a rather unfocused, nasty fight about the Keynesian stimulus or experts unconsciously imitating Ben Stein in Ferris Bueller.

Econ grad students going to the big annual econ and finance meetings this weekend in Chicago should ask themselves whether this is a club worth joining. Sure, the top 10 make a good living, but no one else does, as companies and municipalities don't need macroeconomists any more than they need sociologists.


MSL said...
This comment has been removed by the author.
MSL said...

Tabarrok's initial claims were conditional on a perceived contradiction between 2003 and 2008 that Tabarrok later admitted was not so (since Krugman recanted 2003 claim).

People who find metadiscussions irritating are likely to side with Krugman on this one. While politics is rife with metadiscussion at the expense of actual policy questions, this is probably one of the first times that metadiscussions have crowded out actual discussions in economics blogosphere. Do you agree with Cochrane's claim? I don't know because you did not explain why you found Yglesias's analogy lame. Instead, you ruminated on Brad DeLong's finding that it was apt.

On a more philosophical level Cochrane, Tabarrok, DeLong, Krugman and Yglesias are appropriately using syllogisms. You and Cowen are not and the actual discussion suffers your refusal to provide us with insight as a result.

MSL said...

Also, doesn't this fact seem false to you:

"someone highly emotional is not reasoning at all, just rationalizing."

Eric Falkenstein said...

Emotions are necessary for humans, because without them we have no ambition, no will. Yet all within moderation, as indignant people are simply in 'want mode', which is why no one lies as much as the indignant do. Everything's secondary to the greater good that they find being threatened. Every great evil was perpetuated by a seemingly awesome moral idea.

One of the best ways to win an argument is to say something that gets them angry, it will lower their IQ 20 points.

Mercury said...

Since at least the days of the Bush II administration, becoming emotionally unhinged in public, when attempting to advance one’s position on a particular issue, has become a badge of honor (and more importantly of “authenticity”) on the Left.

They alone don’t have a monopoly on this kind of thing of course but just think of some of the more memorable performances by Al Gore, Garrison Keillor, Chris Mathews, Paul Krugman, Alec Baldwin etc. and the approbation with which they were greeted by their core supporters. Their performances may not make much sense but they can be effective nonetheless.

Why, if the Left were ever to produce a committed radical who made emotional appeals in a calm and ordered manner he could probably be elected president....oh, wait.

And obviously the water supply necessary for agriculture and the salt water in the world’s largest ocean isn’t an apples-to-apples comparison but the Pacific probably is, by many measures, the bread basket of the world.

Anonymous said...

Because you recant a statement doesn't mean you weren't caught in a contradiction, it just means you already admited to it. Krugman grossly attacking those who believe WHAT HE USED TO BELIEVE is still pathetic.

Aaron Brown said...

I think civility versus rudeness is a tactical rhetorical decision unrelated to the stakes. Both can work. The weakness is to be unable to control rudeness due to emotion or the stakes.

What matters more to me is precision. "Idiot" is just wrong. No one is seriously questioning the IQ of any of the participants. You might think some of them are foolish, or ivory tower, or misinformed, but they're not idiots.

"Mendacious" is too broad. If you call someone a liar, you should point out the alleged lie. I can't believe Krugman thinks people who disagree with him know that he's right. At worst, he might think they don't really know what the answer is, but deny Krugman's case anyway and overstate their own. For example, a libertarian might not know whether or not stimulus will improve the economy in the short-term, but since he thinks it's both wrong and a bad long-term idea, he might mendaciously denegrate Krugman's argument for stimulus.

If that's what Krugman thinks, he should say so and (as he claims he always does) document it. It's a serious charge against an academic. On the other hand, I doubt even Krugman would deny (and I'm confident his best friend wouldn't deny) that type of mendaciousness is exactly what he practices as a columnist, for whom it is a less serious offence. His columns claim far more certainty, and are far more politically predictable, than his journal articles. So he should find a nicer word for it, say "partisan."

Patrick R. Sullivan said...

I've always thought Krugman was jealous of Milton Friedman and wanted to be the left-wing Friedman. He might ask himself if Milton ever got into these kinds of nasty disputes.

Tel said...

A true gentleman is one who is never unintentionally rude.

As far as I can tell, yes this is a nasty fight about the Keynesian stimulus, about as focused as the stimulus itself.

It largely boils down to the Krugman adage, "Economics is not a morality play." Ignoring the fact that Krugman ignores his own adage when convenient; there is the much bigger problem that without some fundamental ethical system whereby people have responsibility for their own decisions (and the outcome of those decisions) you can't actually operate an economy at all (other than central planning, and even that won't hold together for long).

You can see the basic presumption from Yglesias is that when misallocation of resources occurs it's a "bummer" but these things just happen for no particular reason, so best to just make everyone a bit poorer and carry on.

Thing is that the country as a whole did not make a decision to foolishly allocate resources, certain people went into debt to buy big houses, others saved their cash and rented small houses.

Now the reason I work, is to get a reward. I put effort in, because I expect something in return -- that is the heart of trade. Investment is no different, people put effort into research and selection of wise investment, only because they expect to be rewarded for that. If you force the person who hung onto his cash to pay the price for a debt crisis caused by others who were reckless then this destroys any incentive to make sensible investment decisions. It undermines the entire core of the economy.