Are blogs ruining economic debate?

by Henry on February 10, 2009

Clive Crook suggests that they’re at least part of the problem.

I used to have no time for the idea that economists never agree, so economics must be a bogus science and a waste of time. Of course economists disagree, I would say. … But my earlier confidence that economists are not wasting their own and everybody else’s time is diminishing. Are the leaders of the profession measuring up to the standards I just mentioned? Are they helping to improve policy, or raise the standard of public understanding? You could easily argue the opposite. … This impression of disarray – that economics has nothing clear to say on these questions – is not the fault of economics as such. It is a mostly false impression created by some of its leading public intellectuals, Mr Krugman among them. …


The problem is not that Mr Krugman questions the consensus on trade (if indeed he does), or that Mr Barro questions the consensus on fiscal policy (as he certainly does). It is that both set the consensus aside so carelessly. In doing so, these stars of the profession destroy the credibility of their own discipline. … The web, for all its blessings, is an aggravating factor. Many of the most successful economics blogs promote communication within political groupings, not across them. On the web you best build an audience by organising a claque and stroking its prejudices. Extend elaborate courtesy to people you agree with and boorish contempt to those who do not get it. Celebrate exasperation and incivility as marks of intellectual authenticity – an attitude easier to tolerate in teenagers under hormonal stress than in professors at world-class universities.

See both Paul Krugman and Tyler Cowen for responses. I think that Tyler is right when he argues that blogging tends to select for people with stronger ideologies and sharper elbows (this is what the relevant scholarly research would suggest is most likely to be true). But I’m very skeptical indeed of Crook’s suggestion that this is necessarily a bad thing (and indeed I suspect that this isn’t the actual reason why Crook, whom I like and respect as a writer, is so upset).

First, blogs do reflect a greater availability of information about what economists actually think. Internal discussions within economics and the face that the profession presents to the outside world are often quite different. The former involves strong disagreement, often over quite basic issues, conducted via genteelly venomous panel discussions and clashing articles. The latter is (as Krugman describes it) often a dumbed down Ricardian Economics 101, in which disagreements are brushed over lest they unduly disturb the children and servants. The economics blogosphere – like other academic blogospheres – creates a kind of intermediary zone in which professional disagreements can be aired in ways that are accessible to non-economists. It is not surprising that these discussions will be especially heated when they may have massive real world consequences (this is arguably one of the rare moments of general uncertainty where academic debates are materially important to policy).

Second, to the extent that blogs involve less convergence on commonalities and more sharp disagreement, they can have salutary effects. As Jim Johnson noted the other day of Supreme Court appointments:

A pragmatist, after all, is not concerned with consensus, but with the robustness of debate and therefore with insuring a wide range of views can find expression therein. Put otherwise pragmatists are properly concerned with the uses of disagreement.

Crook deplores how Krugman and Barro ‘[narrow] the common ground’ and ‘further [polarize]’ their readers, leaving those in the middle thinking that economics is useless. But his piece begs the question of why this is necessarily a bad thing. We don’t have any a priori reason to believe that the truth is in the middle of any distribution of ideologies, and vigorous debate between starkly opposed positions can do a lot to reveal what the underlying problem is, and the weakness of one or another side to the argument. Yes, it makes agreement harder, but as Ross Douthat argues (in what is perhaps the first post he has ever written where I agreed with every word), moderate agreements that split the difference can sometimes be a terrible idea.

The funny thing is that Crook, usually a moderate conservative, seems to be in agreement with the underlying sentiments here. He’s just written a piece suggesting that Obama’s tendencies towards moderation may be a problem, and that we need to radically remake the banking system. He shouldn’t have a problem in principle with polarizing the debate or with recognizing that truth can sometimes lie at the extremes rather than at the center. So why is he so upset?

I don’t actually think that it has much to do with blogs and polarization. Instead, I suspect that Crook’s main beef with Krugman isn’t with polarization, but with the particulars of Krugman’s suggestion that the case for free trade is a qualified rather than an absolute one. Crook more or less accuses Krugman of being a dishonest partisan hack for saying this. However, from my limited understanding, Krugman is making claims that are reasonable ones within the internal debate among economists. Certainly, Crook doesn’t provide any contrary evidence. Thus, I suspect that Krugman’s perceived crime was to express these qualifications in the agora rather than in closed session. Which is to say that the ‘consensus’ that Krugman is setting aside so ‘carelessly’ is a political one – the shibboleth that free trade is an Unqualified Good Thing – rather than a seamless consensus that emerges from the underlying academic debates.

Or to put it a slightly different way, Krugman (who is personally strongly in favour of free trade), is making it clear that the case for free trade is a political one, rather than one that necessarily flows from technical knowledge. This is something that seems inarguable to me (you can’t and shouldn’t argue for or against free trade, without taking into account politics, distributional consequences, institutions etc), but is rarely acknowledged by free trade’s public defenders.

Update: Cosma points in comments to this lovely little paper by Robert Driskill which does an elegant job of deconstructing economists’ arguments for free trade and pointing out the missing bits. Interestingly, Driskill takes many of his examples of implicit pro-free trade bias from Krugman and Obstfeld’s international economics textbook.

Update 2: Crook responds to Krugman here.

Was that piece really hysterical? I believe it is the first time I have ever been called that. … as it happens I don’t think that “being reasonable means declaring, in all circumstances, that Democrats and Republicans are equally in the wrong”. Each side is usually somewhat wrong, I find, but the proportions do vary according to topic. I am very much in the Democratic camp on the stimulus, for instance. I think it is unreasonable, on the other hand, to regard everything Republicans say as definitionally wicked or stupid or both, which is the organising principle of everything Paul writes in the NYT.

…As for defending free trade, I don’t recall ever shouting “Heresy! Sacrilege!” at anyone who “even suggests that the world is more complicated than in Econ 101”. Well, perhaps I have, but only as a joke, I promise. (Odd by the way that Paul thinks Econ 101 is all you need to talk about the stimulus intelligently, but far too simplistic when it comes to trade.) In fact I agree with Paul about free trade: in the real world, theoretical reservations aside, he is for it and so am I. The problem is that he can’t just say that, because most of the progressive Democrats who adore his writings do not want to hear it. He is too good an economist, and too honest a person, to advocate protectionism, so he does the next best thing. He equivocates.

… I think Paul is disingenuous (there I go again, more hysterics) when he says that the blog-post in question makes it clear he is not in favour of acting on the short-run argument for protection. You be the judge. In my view, he says it is all very complicated. He kind of supports free trade in an ideal world—that would be an Econ 101 world—but there are circumstances, which happen to be very like today’s circumstances, in which protection could make sense. This “needs to be taken seriously”, and the case gets stronger if optimal macro co-ordination is not forthcoming (which it won’t be). Ask any Democratic congressman what Paul’s advice on “Buy American” is. The answer will not be, “Don’t do it.” It will be, “The most brilliant economist I know of thinks there’s a case.”

[plus an email exchange with Barro]

I’m not going to say that Crook is being disingenuous here; but I will say, as one of the lefties who is purportedly lapping up Krugman’s equivocation on free trade, that Crook’s interpretation is a very peculiar one. But as he himself says, see for yourself.

Krugman isn’t contrasting an ideal Econ 101 world where free trade is a good idea with the real world where it perhaps isn’t – he quite explicitly says that free trade is a good idea in the real world, and that if “we go all protectionist, [it] will shatter the hard-won achievements of 70 years of trade negotiations — and it might take decades to put Humpty-Dumpty back together again.” Indeed, his case for continued adherence to free trade is precisely a pragmatic one – he is saying that even if protectionism may seem like a good idea in the short term, its long term consequences are likely to be terrible. His proviso is that if the current crisis continues without a recovery program, this short-termist policy is going to look like a better and better idea (and hence, I presume, is more likely to be implemented), despite its long term adverse consequences.

So I don’t think that he is being even slightly disingenuous – instead, Krugman is saying (a) that the best case for free trade is a pragmatic rather than an ideological one, and (b) that the pragmatic case is going to be more difficult to argue, despite its long term superiority, if we don’t see a response to the crisis. If there is a political audience for this message, it isn’t Buy America lefties (who won’t even find this to be thin gruel), but instead free-trade consensus types who are wavering over whether to support a big bailout. Krugman is saying that if a proper bailout doesn’t happen, we are likely to see protectionism all over the place. Now whether people should agree with all of these claims is a matter for reasonable debate – but I simply don’t think that Crook’s interpretation (that this post is a sop to protectionists, and that Krugman is equivocating on the joys of free trade) is at all a plausible one.

{ 81 comments }

1

Zach 02.10.09 at 6:12 pm

Cook also fails to point out that Krugman’s “questioning of the consensus” on trade is split. Krugman is pro-sweatshops (few on the (far) Left would stand next to him.) Moreover, that is THE work that won him the Nobel/a paradigm shift in economics.

I take the blogosphere debate to be a manifestation of the new splits in economics. Overnight, we returned to the pronounced-dead Keynes. (Sure, some Chicago economists/Cato Institute guys are still whining, but even Martin Feldstein offered tenuous support for some sort of stimulus.)

Moreover, the rational actor model is getting yet another beat down. The ontological core of the profession had been hammered at for years, particularly by the behavioral economics guys, but hopefully this crisis is the final nail in the coffin.

Maybe a new economics will emerge? Or will the astrological like predictions of the economy continue?

2

Matthew Kuzma 02.10.09 at 6:24 pm

So basically his argument boils down to “not in front of the kids!”

It seems that there really is a legitimate disagreement on most of the fundamentals of Economics, and the same can be said of most of the social sciences, I think. And there’s always been a contingent of people who like their fields of study to actually have some answers, rather than just more questions, that have challenged the value of those fields. As Richard Feynman said, “Knowledge is of no real value if all you can tell me is what happened yesterday”, and what happened yesterday seems to be all that social scientists can agree on. But it’s clear to me that there is an aquired skill associated with the process of inquiry into any of these subjects, and the experts in these fields consistently produce more interesting questions and theories, and provide more insightful analyses of the issues. In that way they’re at least as valuable as any other entertainers.

3

David 02.10.09 at 6:41 pm

Over the years, I have enjoyed encountering those names presented to the public that are so emblematic of either the profession they are representing or some general perception thereof. In my own neighborhood is a dentist, one Dr. Dull. To this list I can now add Mr. Crook, opining away about the insults and injuries to economists at the hands of Paul Krugman. Perhaps Mr. Crook can write an alternative column under the name of Crock and be on the road to a distinguished prize in economics.

4

Cosma 02.10.09 at 7:11 pm

This paper by Robert Driskill would also seem to be relevant…

5

Righteous Bubba 02.10.09 at 7:16 pm

On the web you best build an audience by organising a claque and stroking its prejudices. Extend elaborate courtesy to people you agree with and boorish contempt to those who do not get it. Celebrate exasperation and incivility as marks of intellectual authenticity – an attitude easier to tolerate in teenagers under hormonal stress than in professors at world-class universities.

Internet readers of Crook, you should be grateful that you are too stupid to have your epiphany.

6

salacious 02.10.09 at 7:18 pm

“Not in front of the kids” seems like an apt description of this discursive convention.

What interests me is the question that follows from this description: are economists justified in presenting an artificially unified front to the political world/public at large? To use free trade as an example, the rationale is primarily political. Even if the free trade dissenters are correct in a technical sense, economists fret that anything less than the appearance of wholesale consensus will be use as political cover for wholesale protectionism. Publicly airing dissent will inevitably lead to Joe Q. Senator implementing protective tariffs for textiles or some other politically powerful industry. Better to keep the debate locked away in dry journals where cracks in the consensus are less likely to do harm.

I must admit, I find this narrative somewhat compelling. Does anyone have any good counterarguments?

7

Barry 02.10.09 at 7:27 pm

“So why is he [Crook] so upset?”

Perhaps because the Washington neoliberal ‘consensus’ has failed, and the elites are terrified of actual reforms. When prominent economists dissent (a) the facade of Unity in Truth is damaged, and (b) many see just how bad the defenders of neoliberalism are, and how little claim they have to any truth.

8

Cosma 02.10.09 at 7:35 pm

6: I must admit, I find this narrative somewhat compelling. Does anyone have any good counterarguments?

How about, “Who the fuck died and left the economists in charge?” I mean, if the AEA thinks it should be set up as the Republic’s Council of Guardians who gets to approve candidates for office or public measures, let them openly propose that and convince people that it would be better that way. Otherwise, we’re talking about the kind of stupid elitist manipulation which gives “priestcraft” a bad name.

It is, moreover, a manipulation of dubious effectiveness, since there are actual reasons why the case for free trade is not unqualified, and it’s not impossible for non-economists to discover them and publicize them. In fact I’d say this happens routinely.

ObDisclaimer: some of my best friends are economists, etc.

9

frank 02.10.09 at 7:48 pm

Economics blogs are great for us non-economists, really the only good way into the present macro problems. Since they are-usually- looking for a large readership, they are-usually- intelligible to the lay reader. And you can take them in doses as large or as small as you want.

10

salacious 02.10.09 at 7:52 pm

“It is, moreover, a manipulation of dubious effectiveness, since there are actual reasons why the case for free trade is not unqualified, and it’s not impossible for non-economists to discover them and publicize them. In fact I’d say this happens routinely.”

Well yeah. The self-appointed technocratic priesthood accusation might have some bite if economists were somehow suppressing dissent, but they’re not. Anyone can read and publicize all the heterodox economics they want. Its just a professional convention about what gets emphasized and whats get minimized. This is unavoidably a politicized decision anyway, so why not consider the political ramifications?

11

Stuart 02.10.09 at 7:54 pm

I must admit, I find this narrative somewhat compelling. Does anyone have any good counterarguments?

Because it doesn’t work and it makes economists look like they are deliberately deceptive and untrustworthy?

12

Bruce Wilder 02.10.09 at 7:57 pm

One might as well ask if the organization of academe is ruining the political discourse. Academia promotes and rewards people with very strong points of view, as well as people with the capacity to arrive as balanced syntheses (the rewards are different, and differently distributed). Barro has made his career as a kind of libertarian bomb-thrower and iconoclast; he takes extreme points of view, and backs them up. Did anyone, who knows him, think he would enter the public discourse with a balanced assessment? The man doesn’t do balanced assessment. Cook’s problem is that he doesn’t want to call Barro a nutcase, and then be left alone with Krugman abrasive truth-telling. Well, Barro is a nutcase. That’s hardly the fault of blogs.

13

Righteous Bubba 02.10.09 at 7:57 pm

Adults: adult enough for adulthood?

14

Martin 02.10.09 at 8:15 pm

One thing that is potentially helpful, for readers in not for tendentious critics, is when economists make an effort to situtate their positions and arguments in a broader field, There are a lot of ways to do this– pointing out empirical assumptions that they and their intellectual opponents are making; situating immediate policy arguments in broader contexts (e.g. economists like Barro who emphasize theoretical consistency vs. economists who take a looser theoretical approach), simply pointing out which opponents appear to be making intellectually respectable arguments and which do not, etc.

Many of the participants in the economic blogosphere seem to be making a good effort here, including notably DeLong, Tyler Cowan, and some on the conservative side whose names I have forgotten. Moreover, even Krugman is not bad on this score, though sometimes more allusive and less ponderous about it. His post on protectionism is a case in point–he made very clear that his “wonkish” point was not some sort of indisputable killer argument for protectionism as a policy.

15

yabonn 02.10.09 at 8:23 pm

In doing so, these stars of the profession destroy the credibility of their own discipline.

Funny, it’s the 21st century and all that, but I really think I heard someone proposing ceremonial wigs, for the good of an academic discipline.

But, but, but…. the importance of the academic discipline is independant of the ceremonial wigishness, yes? And the people interested in the academic discipline don’t care about ceremonial wigging or what? (Unless the academic discipline is Ceremonial Wigs, granted).

Maybe it’s the people not interested in the field that should be impressed by all the wiggage? But then won’t it interefere with the academic discipline? “I came for the wig, what’s all that discipline around”? Or “I’d like that academic discipline, but not the wigs”? Is it wise, I ask you, to fit the round peg of an academic discipline in the square hole of a wig? Mmmhm?

It’s a mystery.

16

yabonn 02.10.09 at 8:26 pm

As soon as I posted I realized my mistake : no, this comment was not up to the standards he just mentioned, and destroys the credibility of posting on blogs.

So I’d like to make amends and declare I wholeheartedly agree with Mr Crook, the poster and the commenters.

17

Colin Danby 02.10.09 at 9:05 pm

Krugman’s reply is good especially re trade.

Re fiscal stimulus, surely debate is good! The weird thing is fetishizing “economists agree.” Somehow economics is not allowed to be a normal social science in which people have all sorts of disagreements. If arguments from authority are idiotic, arguments from massed authority are no smarter. Challenging consensus should be encouraged. Krugman, whatever his faults, makes real arguments, thinks through the logic of things, appeals to evidence. So the trouble is Crook’s self-lobotomization: he wants to hear Krugman not as someone who thinks and looks at evidence, but as pure authority.

There’s a certain truth to the complaints about blogs e.g. Greg Mankiw inspires way more pitchfork-waving among DeLong’s commenters than he merits. But better that than Crook’s windbaggery.

18

dsquared 02.10.09 at 9:24 pm

Good God.

On the web you best build an audience by organising a claque and stroking its prejudices. Extend elaborate courtesy to people you agree with and boorish contempt to those who do not get it

So, Clive Crook of the Economist and Financial Times, tell us more about this “organising a claque and stroking its prejudices” stuff. It sounds fascinating. Perhaps you could get some friends along from The Atlantic and the National Journal to give us a few pointers about “elaborate courtesy to people you agree with and boorish contempt to those who do not get it”.

For fuck’s sake. Here he is knocking it, when organising claques and stroking their prejudices has been putting bread on his table for the last twenty years. It’s unseemly.

19

salient 02.10.09 at 9:33 pm

(this is arguably one of the rare moments of general uncertainty where academic debates are materially important to policy).

Threadjack warning? (Sorry.) Did anyone else see this?

Said Kanjorski: “If they had not [immediately raised FDIC guarantees to $250,000], their estimation is that by 2 p.m. that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed.”

I don’t know anything about Rep. Kanjorski, but for those of you in the know: where does this statement lie on the legitimate-analysis-to-obscene-fearmongering scale?

20

stostosto 02.10.09 at 10:28 pm

Of course blogs aren’t ruining economic debate. On the contrary, I think blogging economics professors are doing us all an enormous service. And Krugman in particular.

Regarding him it’s incredible that Crook so unthinkingly and blitheringly toes the movement conservative line on him that he is taking his marching orders from the liberals. Next he’ll be stating that his Nobel was awarded for his politics.

21

roger 02.10.09 at 10:50 pm

The good thing about the economics blogs is the comments. The economic agents who are the bitplayers in the circus are finally waking up to the system. Except for Uwe Reinhardt, the economists who gain the most prominence have never given a moments reflection to the fact that they’ve been wrong for a decade. Really wrong. Instead, they drearily generate one column after another suggesting ways in which we could tailor our economy to benefit the small group of the wealthiest people in the country. Now, of course, economists who don’t toe the neo-liberal line don’t get to sit at the big table. Any economist who expects to get quoted in the NYT had better intone the magic words, the private sector is more efficient at allocating capital than the government – or, the lastest comedy turn from Summers and Geithner, the government is really bad at managing bank assets. Of course, this is total b.s., as anyone with eyes to see can see. Even liberal economists will throw themselves, like Brer rabbit punching the tar baby, into the econospeak, in which we have to discuss the most idiotic “models”. Model talk makes the boys feel like men. Meanwhile, of course, the models are really mostly bad poems, in which the ceteris paribus conditions do all the heavy work. And even then there is no examination of what those conditions are. I have yet to hear anybody say that not only do the rightwing critiques of the stimulus plan assume full employment, but that full employment by the private sector in the U.S. went out in 1929. It isn’t as if the government hasn’t been massively intervening in the economy since the end of WWII. If it hadn’t, the unemployment from the Great Depression would never have ended. Under Eisenhower, without government employment, we would have had 18 to 20 percent unemployment, and at the moment it would be around 25 percent. The private sector, when it is really pulling its weight, can maybe employ, max, eighty percent of the employable. But you will never hear that little fact because it doesn’t fit into the narrative. How to break through the narrative? In the same way it was broken through when the press pressed us into Iraq. Angry amateurs of foreign policy. I yet seen any economists challenged about their advice over the last eight years – Mankiew, who shouldn’t be so subject to pitchforks, poor little scientist, worked for the Bush administration and actually advised on the last measures to tamp a recession – you remember, a mere eight years ago, when the housing bubble wasn’t a spawn of Stan, but our rock in hard times? Thus, the bad faith – misrepresentation of our real economic system through extensive use of economic jargon – and lack of even the most minimum learning curve over the mistakes of past policies, makes me hope for a lot more pitchfork by the amateurs. They are running far, far ahead of the economists.

22

Martin Bento 02.10.09 at 11:51 pm

6: I must admit, I find this narrative somewhat compelling. Does anyone have any good counterarguments?

First of all, if the experts are to present their knowledge and metaknowledge (information about how certain or uncontroversial their claims are) dishonestly, people will come to realize this and distrust them. Indeed, people *should* distrust them in this case, as distrust accurately reflects the situation, which is deeply problematic for a society where people have to rely on the accuracy of expert knowledge all the time. If we can’t believe the economists on free trade, can we believe the climate scientists on global warming? I think so, but I think those who hold that a presented expert consensus must be accepted as conclusive really are obligated to object strenuously to experts poisoning the well by presenting their knowledge dishonestly.

And it is not a simple matter of emphasis, though it is also not clear why public discussion should have a cooked emphasis. “Free trade benefits everyone” is the party line. Is this necessarily true? The classic argument is that free trade is a positive-sum game, which just means the total gained exceeds the total lost; absent distribution considerations, that does not imply all are winners. All individuals are not necessarily winners; not even most necessarily are. Nor all nations, if capital is free to flee, which is part of the free trade being advocated. “Free trade benefits everyone” as a categorical statement is not a choice of emphasis; it is a lie.

One has to wonder about St. Paul meeting Keynes on the road to Damascus. All these Chicago school and most of these neoliberal boys who have been telling us Keynes was fundamentally wrong or fundamentally outdated have converted to religion. But why? Yes, we have seen the failure of Chicago school, but whether Keynes is going to work in this situation is yet to be seen. No one seems to be suggesting the US should go through what innumerable poorer countries have been forced through when their economic systems were insolvent or opaque: austerity. It really looks as though a lot of these guys never actually believed the stuff they were selling themselves, so quickly have they abandoned it.

23

John Emerson 02.11.09 at 12:16 am

Crook is complaining because blogging gives non-economists and inside look at economics, and thus betrays professional secrets,weakens the profession’s brand, destroys its mystique, and makes it less useful for chilling out the marks.

None of this would make any difference if we aren’t going into a mysterious depression which happens to have started during the Golden Age of scientific economics and (hopelfully) the highest point ever of economics’ worldly power.

24

Barry 02.11.09 at 12:21 am

Martin Bento 02.10.09 at 11:51 pm

“First of all, if the experts are to present their knowledge and metaknowledge (information about how certain or uncontroversial their claims are) dishonestly, people will come to realize this and distrust them. Indeed, people should distrust them in this case, as distrust accurately reflects the situation, which is deeply problematic for a society where people have to rely on the accuracy of expert knowledge all the time.”

Note that that distrust can take decades to build up. The Chicago school seemed to become politically dominant in the 1980’s, and presided over a quarter century of the majority of Americans getting the shaft. It *still* took a massive housing collapse + a recession ++ a stock market melt-down +++ the financial arm of Wall St crumbling into the abyss to shake its dominance.

” If we can’t believe the economists on free trade, can we believe the climate scientists on global warming? “

Well, if a GOP politician wants an economist to back BS, he can go to elite departments (Chicago, Harvard, Stanford). But for a climate scientist, the hacks at elite departments are thin on the ground; better to go to a think-tank.

25

Tom T. 02.11.09 at 12:57 am

Celebrate exasperation and incivility as marks of intellectual authenticity – an attitude easier to tolerate in teenagers under hormonal stress than in professors at world-class universities.

Where are these universities where there is no incivility among professors?

26

Barbar 02.11.09 at 1:12 am

This impression of disarray – that economics has nothing clear to say on these questions – is not the fault of economics as such. It is a mostly false impression created by some of its leading public intellectuals, Mr Krugman among them. …

How ridiculous. If you want to correct the impression of disarray, then you can state the clear consensus of the field. Crook can’t.

No sympathy for the economics profession here. Not only does the field not have well-defined boundaries, but there are plenty of economists out there who define it as a “set of tools” or even worse “whatever economists do.” This allows economists to think of themselves as immensely clever without acknowledging unresolved questions that the public actually cares about.

27

bob mcmanus 02.11.09 at 1:58 am

24:the financial arm of Wall St crumbling into the abyss to shake its dominance.

The University of Chicago has had it’s dominance shaken? Did I miss an impeachment or runoff or something?

28

Robert 02.11.09 at 2:11 am

Krugman is not at one of the edges; he is in the center. I would think soft leftists with memories would have many a problem with him.

And trade is not necessarily a positive sum game, never mind the distribution. That is proven in the link from my name. I’m not original; the argument is more than a quarter-century old.

I think of the label “New Keynesian” as dishonest. So my distaste for Greg Mankiw is about his behavior predating his CEA employment.

I’ll have to look at the paper Cosma cites.

29

bianca steele 02.11.09 at 3:23 am

I kind of agree in part with Crook. Many New York Times readers don’t know or care about academic conventions. They believe in “experts” (take a close look at the non-opinion sections of the paper if you don’t believe me). Krugman has a Ph.D. in economics, teaches economics, has won the Nobel Prize for economics. Therefore, Krugman knows What Economics Teaches To Be True, from which it follows that he believes exactly what all the other economists believe. Since that’s not the case, treating all disagreement as political is counterproductive. But to blame it on blogs is silly. Krugman’s been writing this way for years, and I’m pretty sure the libertarians have been at it for at least as long.

30

roger 02.11.09 at 3:35 am

Robert – you remembered! Krugman was originally hired, I’m pretty sure, because of his Slate writings. He was supposed to bring that Slate contrarianism with him – the sort of Micky Kraus-ism in which you contend that really, agreeing with Ann Coulter is the higher liberalism – indeed, she’s the New Left! So they were shocked when he made a turn and started biting pieces out of Bush’s hide, instead of finding reasons that invading Iraq was just the cutest, most liberal and Democratic thing you could do. I think they regretted not hiring Saletan, a liberal capacious enough to embrace the ideology of the KKK, but only because he was driven to it by science! Slate contrarianism subsequently found a home on the WP op ed pages, where it died a dishonorable death and became Richard Cohen.

But surely Slate contrarianism is set for a come back. Oh, the stories about how liberal it would be to, well, to give tax breaks to the wealthy. Get rid of that capital gains tax! Perhaps Krugman noticed that it was all a crew of the undead over at Slate. And got the horrors. .

But the NYT did get Freakonomics, which does its part to lobotomize the public discourse.

31

Martin Bento 02.11.09 at 4:48 am

Looking at the Krugman post that set this all off, I think the argument for protectionism he presents is actually rather good, though he thinks it doesn’t prevail. Keep in mind:

1) The benefits come now, during the crisis, when the benefits are most sorely needed. If we are at a fork, as Krugman seems to think, taking the right path now could be a lot more important than marginal benefits of more efficient production down the road.

2) Free trade seems to dramatically empower the financial and business communities at the expense of labor and government regulation. It’s not clear that it can be done in such a way not to achieve this. Therefore, this rebalancing should count as one of its costs, to the extent that you regard such rebalancing as destructive.

3) The deeply interconnected world that free trade creates is more vulnerable to systemic failure, as now. Increased robustness is often worth increased efficiency.

32

Martin Bento 02.11.09 at 5:40 am

Make that: “Increased robustness is often worth decreased efficiency.”

33

JoB 02.11.09 at 10:55 am

Martin,

Yep, I also think he is deeper into it than he realizes or cares to admit. That’s no shame, there’s no case against free trade in a certain sense and no case for free trade in another sense because the concept is not properly defined. That’s where the Devil of Protectionism comes in, you can use it at will to make anything that protects anything a taboo (which is what Bush did say, whilst he happily poured money into the US industry giving their growing inefficiencies undue edge).

If anything, Krugman should be more ‘bloggy’ on this one and say: if you insist on calling THAT protectionism, then just call me a PROTECTIONIST: a world where nobody is protected but an established group of rich people at the expense of everybody else is not the world I want (and – YES, that is a political point).

34

salacious 02.11.09 at 10:58 am

Martin, I believe our disagreement is about the facts of the internal trade debate rather than how that debate is simplified for outsiders. My perception of the debate–and please contradict me on this if I’m wrong–is that the free trade consensus is still substantially intact. Most economists still think that as a broad rule, free trade trade is better than the alternatives. Where people have deviated from this consensus, they have been focusing on important, but limited cases where free trade orthodoxy fails–nibbling around the edges, if you will. The example that leaps to mind is Krugmans recent paper about the effects of vertical integration of production across national borders on inequality.

On the other hand, you seem to be arguing that the free trade dissenters have mounted a convincing attack on the central premises of the free trade orthodoxy. Their not nibbling around the edges, their stabbing free trade right in the heart. If you think this is true, then yeah, telling the laity that “Oh yeah, free trade is dandy!” is a load of bullshit.

But if we accept my view of things, “free trade is dandy” becomes a lot more defensible. Political communication doesn’t have room for a lot of subtly. Economists are just hammering in the fundamental point; including all the caveats and “on the other hands” would only confuse the issue and dilute their message. Its a case of the perfect being the enemy of the good.

So yeah, I think we’re disagreeing more about the actual state of the free trade debate and less about how that debate should be presented.

Also, if anything is going to destroy public trust in economists, I’m pretty sure it’s going to be noone having two shits of an idea whats going on macroeconomically, not some shading of the truth on free trade policy.

35

JoB 02.11.09 at 11:06 am

Less roundaboutly:

Assume parliament X wants to take measure Y increasing the cost of good (or service) Z, where good (or service) Z can be made outside of the control of parliament X & needs to be allowed to compete in the territory of parliament X (unregulated free trade of the neoliberal heavens).

The end result will be that parliament X, on balance, needs to forego measures Y (whatever the importance of the citizens voting for parliament X).

So, you need some kind of protection if you want some level of meaningful democratic working (and this is why we have trade agreements based on quid pro quo rather than free trade). What’s all the pooha about then?

It’s just scaremongering by those who’d prefer to put power in the hands of multinationals at the expense of citizens. We should be proud to be protectionists (wanting to maximize conditions in which we can have meaningful global free trade).

36

stostosto 02.11.09 at 12:38 pm

Free trade is universally accepted by economists as a Good Thing. Krugman himself, if I remember correctly, has warned about the fragility of free trade and its dependance on political will for its upholding.

Also, he aggressively attacked then labour secretary Robert Reich and what he termed “the strategic traders” during the first Clinton term. They served as a prime exhibit in his book “Peddling Prosperity” as what he called “policy entrepreneurs” who ran with half-digested fragments from academic economist’s research efforts and used them for peddling dubious policies.

The reason he describes his recent remarks on the matter as “intellectually honest” (after all, why wouldn’t they be?) is that he is conscious that they are or can be portrayed as an admission to a more general anti-free trade case. He obviously regrets that but makes the statement in spite of this. He sees some trade-off between free trade and countries’ possibilities of effectively boosting domestic aggregate demand by fiscal expansion. Keynes had the same ideas – and it’s implicit in most introductory text book models.

I would think it’s quite uncontroversial as far as the economics is concerned. But it seems nothing Keynesian is uncontroversial with certain types in the economist’s landscape. Notably freshwater types, but apparently also others.

37

Barry 02.11.09 at 1:56 pm

Rager @ 30 – an excellent point! From the perspective of 1999, Krugman looked like the perfect, snarky, no-enemies-on-the-right pseudo-liberal that the NYT loves.

38

Peter 02.11.09 at 2:20 pm

Crook is upset that blogging allows people to look behind the curtain. And as long as economists were hidden behind academic publications and high falutin’ words, then they could get away with fleecing the marks in the fashion of Humpty Dumpty:

‘When I use a word,’ Humpty Dumpty said, in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’

39

SamChevre 02.11.09 at 5:07 pm

I find the blogs helpful in economic debate, but I’ve a BA in Economics.

I do think Crook is identifying a real problem: I’ll illustrate with a different discipline.

It entirely possible to say “XYZ might be true in some cases, but isn’t useful in most and I don’t advocate acting on it” as a professional statement, but find it entirely unhelpful in public discussion. Think, for example, of the endless argument over IQ; it isn’t helped by having well-respected people publicly say that “it appears that group X is just not as smart on average as group Y, even though that shouldn’t affect our judgment of different members of the groups”–even if, as seems likely, that is a true statement and should be kept in mind in a test-design environment.

40

donna 02.11.09 at 5:18 pm

I have not seen PK be wrong about much of anything in the years now that I’ve been reading him.

I think Crook is just jealous.

As to the credibility of economics, politics has nothing to do with it. In case Crook hasn’t noticed, the Chicago school is melting down in ffront of his eyes along with the world’s economy. Perhaps this has more to do with the perception of econmics than anyone’s politics right now.

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Righteous Bubba 02.11.09 at 5:37 pm

Think, for example, of the endless argument over IQ

Maybe a better thing to talk about would be vaccines.

It’s true that X small number of people have awful things happen to them after vaccinations. Is is bad for experts to say that in public?

42

David 02.11.09 at 6:21 pm

Any trade textbook will tell you that in the short term a large country (able to affect prices) can gain utility through protectionism. It is elementary trade economics. Even my hyper-free trade professor taught this. I took Paul Krugman to merely be saying that, especially since he went on to talk about the long term. But yes, ultimately it comes down to there being certain taboos when talking about trade that free traders and economists try to enforce because the economics profession as a whole, when the final analysis is done, overwhelmingly supports free trade and they don’t like other smart economic sounding arugments out there to mess up that consensus.

43

geo 02.11.09 at 6:49 pm

Roger @30: You’re so right about “Slate contrarianism.” Excellent mini-rant; do you know of any full-length ones?

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Colin Danby 02.11.09 at 7:58 pm

1. Is it possible that the people launching broadsides against economics are even more attached to the idea of disciplinary authority than those economists who invoke disciplinary authority? That is, the (silly) image of the economist as sage and seer is what the anti-economists need, so they can assail bad sages/seers.

2. These chats often circle to free trade as a sort of shibboleth. This unhelpfully converts a question of analysis into a question of theology, and conflates a range of ethical, political, informational, etcetera questions that come into play when we ask under what conditions gov’t ought to get in between buyers and sellers.

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Barkley Rosser 02.11.09 at 8:53 pm

I am one who thinks that while Crook came off as “Broderish,” Krugman’s characterization of Crook’s criticisms of his “wonkish” post as “hysterical attacks” was itself ricidulously hysterical. If he wants to label someone as engaging in hysterical attacks against him for his not very wise column on this matter, they should go look at my post on econospeak (now scrolled off into the “older posts” section) “Revoke Krugman’s Nobel Prize.” I take the prize for being “hysterical” on this matter.

BTW, for all the a ranting about some unanimous consensus that unbridled free trade is good, the hard fact is that conventional economists and the textbooks have long allowed for some exceptions, such as infant industry cases and some cases involving environmental externalities or safety issues, and so on. Needles to say, none of these is remotely relevant to the current discussions of the proposed “buy US” provisions in the fiscal stimulus package, unless one wants to declare the US steel industry a “reborn infant.”

And while it is also true that the US has had a poor record of assisting those in import competing industries who get hurt by increased free trade, it is not necessarily true that always happens. Sweden has regularly spent about 2% of its GDP on assisting workers in transitional situations. It can be done (and Sweden, a nice, progressive social democracy, is very pro-free trade).

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Martin Bento 02.11.09 at 9:15 pm

stostosto 02.11.09 wrote:

“Free trade is universally accepted by economists as a Good Thing.”

Here is a problem. If economics is a discipline to model the world, and the expert knowledge consists of the best modeling available, how do we get to normative judgements? Not that normative judgements can or should be avoided, they are rather the point in this field, but they will intrinsically bring values into the discussion, at which point the question arises why the value judgements of experts should prevail over others. An economist can argue that free trade will according to his models create greater overall prosperity. He can argue that the people opposed to it are undermining their own interests as he percieves them, though that is not true in all cases. But if someone replies “I don’t care. I want cars built by Americans, and I don’t care whether or am even opposed to the further industrial development of Asia, and I embrace this as the cost of getting the best value possible on my car”, the economist cannot honestly say that this viewpoint is contradicted by economic theory, because it is a value judgement not a fact. And, in fact, the notion that value judgements are intrinsically subjective lies at the heart of conventional economics: if you are a Marxist, you may think, riffing on Ricardo, that the value of goods is determined by the labor they represent, but if you believe in markets, you think things are worth what people think they are worth. If someone values keeping productional local more than the increased efficiency of free trade, that is a choice that economics cannot call simply though it dishonestly does all the time. Now, I have deliberately picked an example that sounds a bit xenophobic, because that is the standard boogeyman that ecnomists, e.g., Delong, use: anyone who opposes free trade is probably a bigot. Even granting that for the sake of argument, the expert knowledge of economics provides no basis for condemnation; for that we should look to philosophy.

The job of experts is to provide knowledge as objective as possible for people to make their decisions, not to shade knowledge to support normative positions that the experts have. Climate scientists can tell us that carbon emissions are heating the planet. If someone understands this and responds: “I don’t care about future generations; I want my SUV” that is not a scientifically incorrect position, and the climate scientist is being dishonest if he says that his expertise gives him a basis for saying such a position is “wrong”; his expertise is not in ethics. It is not a sympathetic position to me (part of the reason I chose it as an example).

Economists think free trade is good, because they are defining “good” as maximally efficient. Other definitions are possible, and are frequently held. And even within the parameters of economic’s own concepts: if protectionism is good in the short run and free trade in the long, which is better, then, depends on your time discount. But what empirical basis in economics is there for saying what a time discount “should” be? If I have a high time discount, I will choose the short term over the long, and I would like to know what economic model proves that choice “false”.

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lemuel pitkin 02.11.09 at 9:16 pm

for all the a ranting about some unanimous consensus that unbridled free trade is good, the hard fact is that conventional economists and the textbooks have long allowed for some exceptions, such as infant industry cases and some cases involving environmental externalities or safety issues, and so on. Needles to say, none of these is remotely relevant to the current discussions of the proposed “buy US” provisions in the fiscal stimulus package, unless one wants to declare the US steel industry a “reborn infant.”

But what about the case that Krugman (IIUC) was considering: suppose fiscal expansion was constrained by the balance of payments? While the best case would be simultaneous expansion among all trading partners, the second-best might be uncoordinated expansion combined with sufficient protection to keep imports at a constant level. In other words, given the difficulties with coordinating fiscal stimulus, getting back to full employment may require temporary trade restrictions to ease the external contraint.

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stostosto 02.11.09 at 10:29 pm

Martin Bento,

But if someone replies “I don’t care. I want cars built by Americans, and I don’t care whether or am even opposed to the further industrial development of Asia, and I embrace this as the cost of getting the best value possible on my car”, the economist cannot honestly say that this viewpoint is contradicted by economic theory, because it is a value judgement not a fact.

I think the free traders’ answer would be that this is of course a completely legitimate attitude, no more than the expression of a personal preference for American cars over foreign cars. But in no way does it argue for this consumer’s preference to be extended by government fiat on all other consumers who may have different preferences.

And that by doing so the utility of other consumers are lowered. Also, if the foreign cars are cheaper than domestic cars, consumers under protectionism will have less money to spend on other things than cars, so that in effect the car protecion will work as a tax on other sectors of the domestic economy.

49

Barkley Rosser 02.11.09 at 11:21 pm

Lemuel P.,

Well, this is simply a completely unreal prospect. The only way this is going to work is in a world in which there will be no retaliation for one’s engaging in the “temporary protectionism.” However, just as in the Great Depression, numerous foreign officials have stated that they will retaliate, and given that pretty much the entire world with reason blames the US for this current horrifying situation, they would be most justified in doing so. Why on earth bring up such a ridiculous case that is completely unrealistic but feeds those who are actively trying to push such a “buy US” proviso right now in the US Congress in the fiscal stimulus package?

50

dsquared 02.11.09 at 11:25 pm

Needles to say, none of these is remotely relevant to the current discussions of the proposed “buy US” provisions in the fiscal stimulus package, unless one wants to declare the US steel industry a “reborn infant.”

No, Barkley, you’re very wrong indeed here. Krugman’s most recent entry into the debate over free trade was this one, on the Keynesian case for protectionism during a period of expansionary fiscal policy in order to reduce the leakage of stimulus through net exports. He specifically notes that there can be cases when a little bit of protectionism can be made to do a second best job of ensuring adequate fiscal stimulus in all countries, in the absence of a politically feasible internationally-coordinated fiscal expansion. This is very definitely, and very specifically relevant to the “Buy American” proposals.

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dsquared 02.11.09 at 11:29 pm

The only way this is going to work is in a world in which there will be no retaliation for one’s engaging in the “temporary protectionism.”

No, it also works in worlds in which there was only temporary retaliation, or in which the retaliation caused only small declines in overall world output relative to the sum of the domestic output gaps. Krugman even cites James Tobin to support the view that this is generally an extremely relevant case empirically; “it takes a lot of Harberger triangles to fill an Okun gap”. I really think you’re rather proving Clive Crook’s point here because it seems to me that you’re blustering at Lemuel.

52

salacious 02.12.09 at 12:54 am

dd, aren’t people terrified of sparking off a trade war because “temporary retaliation” is very rarely temporary? Hypothetically, everyone could put up a big wall of tariffs to keep their domestic stimuli internal, pop their economies up to a higher-output equilibrium, and then drop their trade barriers and get the global economy going again. But that scenario requires a whole lot of governments to act very rationally in the face of many different domestic interest group pressures. The more likely case is that, even as the global economy recovers, inertia is going to keep many of those barriers in place. As Krugman says, “it might take decades to put Humpty-Dumpty back together again.”

Also, the elephant in this debate is China. Noone really has any idea what is going to happen in China, but given the size of their trade surplus, it’s at least plausible that China won’t be able to create a large enough stimulus to get their demand up to where it needs to be. A protectionist, “everyone-get-their-own-house-in-order” model is surely going to aggravate this, right? And beyond the immediate economic effects, there will almost certainly be nasty political spillover, both into Chinese foreign policy and into Chinese domestic politics. As I said, predicting what will happen in China is probably impossible, but it doesn’t require huge leaps of the imagination to wonder if this could get very, very ugly.

53

aaron 02.12.09 at 1:36 am

Questions about the state of economics as a science aside, I think the relations between expert discourse and the public has become an increasingly important one. I’m thinking in particular of global warming skepticism–the increasing visibility of fissures within disciplines has created new questions about how policy should be informed by “science”.

I have a post on this on my (linked) blog, but I do feel inclined to say that economic debate is being “ruined” by blogs, but it’s possible that this is for the best at the moment.

54

Tom West 02.12.09 at 3:02 am

#32: Increased robustness is often worth decreased efficiency.

That’s not usually a choice you get to make for long. Unless the risk is obvious or things go wrong within a few years, the only way you can keep robustness is if you essentially impose it on the population. People will simply refuse to accept long periods of *relative* poverty if they cannot see a clear and obvious reasons for it.

The USA is a case in point. For better or worse, it’s generally highly innovative, taking large amounts of risk in return for a much higher standard of living (measured by GDP/capita). It’s massive relative wealth compared to the rest of the world essentially forced the rest of the world (at least the democracies) to move much closer to the USA social/financial model, including taking on the implicit risk (to say nothing about the social transformations).

Another example? Who seriously suggests that we can (on a large scale) move away from mono-crop farming, despite the inherent risk (and that’s risk that we actually know about). Somebody might try it, but after a few years of paying 3 or 4 times as much for food, the government that insists on it is going to be history…

Really, as long as there’s *anyone* choosing efficiency over robustness, eventually pretty much everyone will. (Unless the price of efficiency comes quickly enough.)

55

John Emerson 02.12.09 at 4:27 am

I was an anti-economist before it was cool. Screw the wannabes.

56

John Emerson 02.12.09 at 4:42 am

54: I love posts telling me that if people behave rationally, doom is inevitable.

57

Barry 02.12.09 at 3:01 pm

Tom @54: “Really, as long as there’s anyone choosing efficiency over robustness, eventually pretty much everyone will. (Unless the price of efficiency comes quickly enough.)”

This is where regulation comes in, and why one keeps certain regulatory regimes even when they seem quaint or obsolete. For example, we’re now finding out that some large chunk of the Reagan/post-Reagan Greenspan/Friedman deregulation of the financial sector was not efficient, unless ‘efficient’ is redefined as ‘enabling a small group at the top to loot and destroy’.

58

bianca steele 02.12.09 at 3:41 pm

aaron,
At your blog you suggest these questions should be resolved by academics and scientists. Obviously, this is the place to resolve and clarify questions of theory. However, when it comes to specific cases, how to apply the theory and when to apply which parts of the theory, universities can hardly be expected to take care of that, beyond educating those who will be responsible for it themselves.

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dsquared 02.12.09 at 4:15 pm

52: but this is exactly the same kind of “assume a can opener enough Harberger triangles to fill the Okun gap” reasoning that people always mock economists for. I think that the assumption that retaliation would be massive enough to cause a global depression and very difficult to reverse would be a very extreme assertion about politics which would need proving rather than assuming. Particularly when what we’re talking about is not an actual tariff but rather a “buy local” provision for the use of money appropriated in a single budget bill. “Buy local” policies weren’t even the subject of international trade treaties until about ten years ago – they were the norm.

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dsquared 02.12.09 at 4:17 pm

sorry – posting equivalent of premature ejaculation. I meant to add that it’s possible you’re right, and Krugman certainly did seem to believe that on balance, the long term costs outweighed the short term benefits. But it’s clearly a genuine debate and I thought it was really rather off of Barkley to pretend that the Keynesian argument for trade barriers was so ridiculous it couldn’t possibly be seriously advanced.

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salacious 02.12.09 at 5:11 pm

dd,

That seems fair. I would point out, as a sort of first order approximation, that a world in which we could trust governments to lift trade barriers/subsidies after the crisis passes is probably a world in which governments are trustworthy enough that they could go for the first-best solution and coordinate stimulus efforts.

62

lemuel pitkin 02.12.09 at 6:51 pm

I must say, I was surprised by the vehemnce of Barkley Rosser’s response, both to Krugman and now to me here.

Anyway, it seems like the relevant questions are:

(1) The size of the output gap.
(2) The marginal share of imports in any expansion of demand.
(3) How tightly the external contraint binds — i.e. how likely a deterioration in the current account balance is to lead to higher interest rates or other adverse political or economic effects.
(4) How difficult it is to coordinate fiscal policy internationally.

The larger or more affirmative your answers to those four questions, the stronger the old-fashioned Keynesian argument for combining a fiscal stimulus with some form of import restrictions.

On the other hand, there is obviosuly the counterargument that if other countries restrict your exports in response, that will offset the stimulus. But against that, one might note that where the current account is the binding contraint on fiscal stimulus, the effect of import restrictions is to raise output rather than to reduce imports. So in this case protection doesn’t actually leave trading partners any worse off — they export the same quantity as before. Of course, they might irrationally retaliate anyway, but then the exhortations of Barkely et al. would be better directed at the retaliators rather than the retaliatee.

The last, political economy point is that where fiscal expansion is constrained by trade imbalances, your only options to increase demand are either to coordinate fiscal policy internationally or to impose temporary trade barriers. Of course, “temporary” doesn’t always mean temporary, but then coordinating fiscal policy is no sure thing either. So we have to ask, in practice, is it easier for countries to negotiate a joint fiscal stimulus, or to negotiate trade liberalization once full employment is restored? It seems to me that based on the experience of recent decades, the answer has to be the latter.

I’d be very interested in Barkley’s replies to any of this, if he’s still reading.

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lemuel pitkin 02.12.09 at 6:57 pm

Hypothetically, everyone could put up a big wall of tariffs to keep their domestic stimuli internal, pop their economies up to a higher-output equilibrium, and then drop their trade barriers and get the global economy going again. But that scenario requires a whole lot of governments to act very rationally in the face of many different domestic interest group pressures. The more likely case is that, even as the global economy recovers, inertia is going to keep many of those barriers in place.

It seems to me, tho, that the question isn’t, “is it easy to liberalize trade, once the high-output equilibrium is restored?” It’s “is it *easier* to liberalize trade or to coordinate fiscal expansion?” Both may be hard, but the former is almost certainly easier.

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Martin Bento 02.12.09 at 7:46 pm

salacious wrote:

“Martin, I believe our disagreement is about the facts of the internal trade debate rather than how that debate is simplified for outsiders.”

Not really. Nothing I have said disputes that free trade is positive sum. Most economists consider free trade good and want to promote it. That is a normative position and it is fine, but it is intellectually dishonest to present a normative position as a fact or to shade facts so as to strengthen the case for the normative position you favor. The facts are what they are, your models suggest what they do, and your job as an expert is to present both of these as clearly and fairly to the public as you can. Some simplification is inevitably, but the simplification should be as normatively neutral as possible, and “let’s not tell the hoi polloi about the counter-arguments to what we are saying, because we want them to choose A not B is abuse of intellectual authority. In a democratic society, it is the role of experts to inform, but the role of the general population to decide.

“Also, if anything is going to destroy public trust in economists, I’m pretty sure it’s going to be noone having two shits of an idea whats going on macroeconomically, not some shading of the truth on free trade policy.”

All you have to do is read the comments on this thread to see that there is already a great deal of resentment and suspicion of the dishonesty of the prevailing schools of economics. Accusations that the economists are incompetent are less prevalent and vehement than those they have been lying to us, or are ideologically blindered, i.e., lying to themselves. Commenters in a place like this are not representative of the general population, but I imagine most of us are pretty influential in our own circles.

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Donald Johnson 02.12.09 at 7:48 pm

Just jumping in to add my note of agreement to roger’s theory in post 30 as to why Krugman was hired. And furthermore, initially Krugman fulfilled his assigned role–he wrote columns defending sweatshops and ridiculing “Seattle Man”, iirc and then there was the great debate about cashew nuts in Mozambique (I have mercifully forgotten the details.) Bush’s Presidential campaign, when Bush was allowed to get away with murder, is what drove Krugman back into the arms of the left (and here I mean both mainstream liberals and far lefties, because the current day Krugman is widely respected by both, as best I can tell).

66

Cosma 02.12.09 at 7:54 pm

Krugman might well agree with some version of this account of how he’s changed. From a 2007 interview:

You know, [under Bush], you realize who you actually have only technical disputes with, and that, more fundamentally, you share values. I think I said to Eric Alterman once that while people like you and me are having our disputes over trade policy, Sauron was gathering his forces in Mordor.

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Martin Bento 02.12.09 at 8:06 pm

stostosto wrote:

“I think the free traders’ answer would be that this is of course a completely legitimate attitude, no more than the expression of a personal preference for American cars over foreign cars. But in no way does it argue for this consumer’s preference to be extended by government fiat on all other consumers who may have different preferences.”

Economics as a descriptive discipline provides no basis for ethical judgments, such as deciding whether an attitude is “legitimate” or not. Moreover, the preference was not simply for owning an American car, but for living in a world where industrial production remains more centered in America at the expense of Asia. If the argument is what government should do, take it to the ballot box. But, of course, economists seldom favor that on trade issues, as protectionism almost always wins. What seems to underlie your position is that notion that individual choice in economic transactions should not overridden by authority, at least not to ochieve objectives such as this one. Which is fine, but it is an ethical judgement reflecting a certain set of ethical values. Certainly, economists can make ethical judgments like anyone else, but ethical judgments are not facts, and presenting them as such or distorting facts to support them is intellectually dishonest. Now, there are cases where it may be OK. Polemical art, such as plays or paintings with explicitly political intentions, often presents facts selectively to support a normative position. But the artist is not assuming the position of “expert” whose interpretation of facts is to be given deference because of their knowledge. If you consider “Dr. Strangelove” to be BS, Kubrick cannot claim that his opinion is intrinsically superior to yours because he is an expert.

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Martin Bento 02.12.09 at 8:32 pm

Another point. I chose a deliberately unsympathetic example of an objection to free trade, but let’s look at a better one. Obama said that the labor movement created the middle class. That’s a little over simple, but, as Krugman shows in Conscience of a Liberal, it is government interference in the market that has brought the majority of the population into the middle class. One form is the right to strike, which amounts to the government allowing a group of workers to behave as a cartel in the absence of an actual monopoly and extract rent from employers. Steeply progressive taxation was also part of this.

One can and neoclassical economists do valorize consumer choice. The ethical position that stostosto took (or claimed a free trader would take): people have no right to impose general preferences for society in such a way as to override individual choice. My own position is that individual choice is a strong value, but so is having a middle-class society. And it is not clear that labor can extract rent is a global market, nor that the government can redistribute wealth as effectively. I realize that these things are debated in at least some areas within the academy. But they are part of the public debate as well, and the experts serve us well to the extent that they make the public debate more informed and more fair. Suppressing nuance in support of agendas makes it both less informed and less fair.

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Martin Bento 02.12.09 at 8:37 pm

Tom, the imposition of American style policies on the world in the last few decades has mostly been imposed by elites, not demanded by the masses. Protectionism may be good or bad, but it is hard to argue that it is not perennially popular. And part of the support for it, especially the reflexive support that economists so hate, seems to be simple resistance to change, which is surely, in large part, resistance to risk. So the notion that the public will not tolerate lower efficiency for reduced risk does not seem to hold up, given its actual preferences.

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Barry 02.12.09 at 11:21 pm

Good point, Martin. A significant part of the role of the right-wing economics professoriate has been to justify such things.

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Barry 02.12.09 at 11:22 pm

lemuel pitkin 02.12.09 at 6:51 pm

“I must say, I was surprised by the vehemnce of Barkley Rosser’s response, both to Krugman and now to me here.”

I’ve noted what sort of person gets really p*ssed at Krugman, and it tends to be a surprisingly good indicator of honesty and reasonableness.

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Thorstein Veblen 02.13.09 at 8:24 am

I agree that blogging tends to select for those with sharper elbows… See this:

http://www.firelarrysummersnow.blogspot.com

On the whole, I’d say economics is somewhat similar to foreign policy. Of course, in the runup to Iraq, there were foreign policy experts with 100% different views on the issue. Economics is no different. Just like during the Iraq debate, however, any thinking liberal economist will reject as fanciful incoherent anti-stimulus arguments from the right. The only real debate is whether the stimulus is big enough. I think there’s good reason to suspect it is not.

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stostosto 02.13.09 at 12:04 pm

Martin Bento,

I guess the free traders’ argument is an ethical position. You might also call it a political position. But I don’t think you can argue it is free from facts. You can take the opposite ethical (political) position and still recognise that protectionism has adverse economic effects, i.e. there is a real cost, both to individuals, groups and sectors, and to society as a whole. You may think it’s worth the cost, but most times the protectionists deny the cost altogether.

As for this:

it is not clear that labor can extract rent is a global market, nor that the government can redistribute wealth as effectively. I realize that these things are debated in at least some areas within the academy.

You bet they are. The big buildup of the post-WWII welfare states coincided with a huge expansion of international trade. The paragons of welfare states, the Scandinavian ones, are all small open economies with trade accounting for something like half their GDPs. At the same time their tax burdens are around 50% of GDP, their income distributions are among the most equal in the world (pre-tax as well as after-tax), and they have very strong labour movements that are thoroughly integrated in the political processes.

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Tom West 02.13.09 at 12:30 pm

Tom, the imposition of American style policies on the world in the last few decades has mostly been imposed by elites, not demanded by the masses.

I would agree, sort of. The masses definitely do not want changes that cause higher growth, they only want the higher growth, especially as the relative wealth of the USA grows higher and higher compared to their own.

However, the elite politicians eventually do respond to the masses overall desire by imposing unpopular policies that produce that higher growth. This is also no doubt also motivated by a desire to not have one’s country slide into economic irrelevance.

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Martin Bento 02.13.09 at 8:13 pm

stostosto,

Yes, it’s an ethical or political position either way. My objection is to shading the facts in support of a political position. If experts want their renditions of reality to be accepted as the best approximation of reality available, they should not shade it. As for the facts, yes there are costs to protectionism, but if the case against it is so clear it should stand up if presented fairly.

Tom,

What I would say the masses want is as high as possible a risk-adjusted median standard of living. High growth can reflect rapid appreciation of assets whose ownership is not widespread, and I don’t think the masses care about that. I also think people care a great deal about security, as attested by all those who work jobs they don’t like but feel will continue to sustain them.

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Tom West 02.14.09 at 2:39 am

I’m a Canadian, so we see a *lot* of comparisons with Americans. Really, when our economic policies did diverge significantly from the Americans, it was (1) why are things so damn cheap 30 minutes away across the border, and (2) why are they paid so much more for what was perceived as the same work.

Really, the idea of there being a trade-off for that wealth doesn’t really come into it. Those who advocated for American-style policies would never admit the downside, and those who were against such policies made themselves look silly by pretending there was no economic gains to be had. Of course, we also had a continual drain of the most talented and ambitious (often the same) to the south were they could get the most return on their abilities.

Europe is far enough away that the comparisons weren’t as inevitable, but I do think that the “shrinking world” doesn’t help things. As communication becomes better, it’s much harder not to feel the effects of relative poverty compared to the Americans. And to be honest, the Europeans have adapted a lot of American style policies that have considerably increased average wealth (if by nothing else, making things much much cheaper – I remember from my youth that you added 50% to the price of anything to get the Canadian price and tripled it to get the price in Europe).

Sadly, they’re also now paying the price for it along with everyone else.

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Martin Bento 02.14.09 at 6:17 pm

Well, it sounds like some of this may have been poor presentation as the part of advocates of the more robust system. Also, since the current downturn was thought to be impossible or extremely unlikely, the risk of it was underestimated. I think it safe to say that will not happen again for at least a generation. Brain drain to societies that rewarded the talented or ambitious at the expense of others is a problem, though.

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Tom West 02.14.09 at 11:20 pm

I think it safe to say that will not happen again for at least a generation.

We’re not in Great Depression area yet, but yes, we’re likely to be more highly aware of risk (at least in the financial sector) for quite some time. If it’s a depression-level event, then yes, a generation.

On the other hand, I don’t (yet) see a big move to allow prices to rise to allow for higher robustness in fields like agriculture, electronics, power generation, etc.

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Martin Bento 02.15.09 at 9:29 am

The smart grid stuff is largely making the electrical system more robust. Instead of being charged directly, the cost is being picked up, at least initially, by the government, but seemingly with popular support.

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Robert Waldmann 02.16.09 at 3:05 am

Crook is being dishonest. As Henry noted, his description of Krugman’s post on protection has nothing to do with Krugman’s post. He also writes “I think it is unreasonable, on the other hand, to regard everything Republicans say as definitionally wicked or stupid or both, which is the organising principle of everything Paul writes in the NYT.” This is nonsense. Krugman makes specific arguments about policy based on evidence and logic. Crook claims that Krugman is unreasonably hard on Republicans. However, he doesn’t present an example of such unreasonableness.

It just won’t do to criticize someone’s reasoning without actually quoting something that they wrote. If Krugman reasoning is invalid, as Crook asserts without any qualification or hint of doubt, then one would expect him to have reached an unreasonable conclusion. Crook presents no specific criticisms of Krugman and, in particular, does not address his argument about protection during a liquidity trap at all.

He also falsely claims that Krugman thinks that economics 101 is fine for analysis of the stimulus. Thus he ignores the original model developed by Paul Krugman and presented on his blog http://tinyurl.com/8wqdnq which wasn’t to be found in any introductory economics textbook, or any textbook or anywhere at all until Krugman wrote it down.

Crook seems to me to be typical of Krugman critics. He considers Krugman’s conclusions to be shrill, therefore he asserts that Krugman’s reasoning is invalid. However, he doesn’t present and defend a less shrill conclusion. I do not think it is a valid approach to reasoning to start with the conclusion or even a range of acceptable conclusions and work backwards. I doubt that Crook does either.

Finally Crook assumes that it is a bad thing to reduce public esteem for economists below its currently low level. He must know that the heated blog debate is tame compared to what these people say about each other in private (try to guess which new Keynesian referred to the Chicago Minnesota school as “the crazies” in my preseence). So he thinks that economists should hide the truth from the public. An odd view for an economist or a journalist.

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Robert Waldmann 02.16.09 at 3:06 am

Having defended Krugman I will note that he has his faults. He has a very thin skin and a very long memory. People who question his integrity tend to regret it very much.

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