“Matthew Yglesias”:http://yglesias.thinkprogress.org/archives/2009/06/prestige-cross-pollination.php does Martin Feldstein a serious injustice.
Feldstein’s characterization of the bill isn’t really correct and some of his economic analysis is debatable. But beyond that, the key point on which Feldstein’s argument turns actually has nothing whatsoever to do with economics. … Feldstein’s hypothesis … is clearly a proposition about _international relations_ … Presumably the reason the Post is interested in Feldstein is his expertise in economics. So there’s no reason for them to be running an op-ed whose key contention has nothing to do with economics.
Matt is clearly unaware of Feldstein’s distinguished record as a theorist of international relations (this may not be as distinguished as his research record on “the relationship between Social Security and savings”:http://www.monthlyreview.org/nftae02.htm, but you can only do what you can do). Feldstein is particularly famous (well, famous is one way of putting it), for his suggestion in a 1997 “Foreign Affairs article”:http://www.nber.org/feldstein/fa1197.html that the introduction of the euro might lead to a civil war that would tear Europe apart.
War within Europe itself would be abhorrent but not impossible. The conflicts over economic policies and interference with national sovereignty could reinforce long-standing animosities based on history, nationality, and religion. Germany’s assertion that it needs to be contained in a larger European political entity is itself a warning. Would such a structure contain Germany, or tempt it to exercise hegemonic leadership?
A critical feature of the EU in general and EMU in particular is that there is no legitimate way for a member to withdraw. This is a marriage made in heaven that must last forever. But if countries discover that the shift to a single currency is hurting their economies and that the new political arrangements also are not to their liking, some of them will want to leave. The majority may not look kindly on secession, either out of economic self-interest or a more general concern about the stability of the entire union. The American experience with the secession of the South may contain some lessons about the danger of a treaty or constitution that has no exits.
The carpers and the hurlers on the ditch might complain that Jean-Yves Reb hasn’t reached for his rifle in the intervening ten years, and doesn’t look like he’s going to anytime in the foreseeable future. But that would be to miss the point that Feldstein’s contribution spurred “much”:http://users.ox.ac.uk/~ssfc0041/federalideals.pdf “spirited”:https://segue.middlebury.edu/repository/viewfile/polyphony-repository___repository_id/edu.middlebury.segue.sites_repository/polyphony-repository___asset_id/2089508/polyphony-repository___record_id/2089509/polyphony-repository___file_name/Amy_Verdun.pdf “discussion”:http://mq.dukejournals.org/cgi/reprint/12/4/33.pdf among international relations scholars, and specialists on the European Union (most of it not very complimentary to Professor Feldstein, but again, you can only do what you can do).
{ 38 comments }
Andrew Smith 06.02.09 at 8:40 pm
That’s the funniest thing I’ve read in a while, thanks Henry. That “American South” comparison is uproarious.
Barry 06.02.09 at 9:49 pm
Heinlein once said that the way to properly punctuate the sentence ‘it’s none of my business, but….’ was to firmly place a period after the word ‘but’. Excessive force was morally acceptable, but might cause social problems.
In the same way, the proper response to a right-wing economist opining about anything but economics (and these days, most of the time when they are opining about economics) is to tell them to STFU while us liberals fix their mess.
Barry 06.02.09 at 9:53 pm
Isn’t Feldstein an MIT guy? Consdering Krugman, I’m loathe to put MIT on the ‘Carthaginian-style department shutdown’ list (which Harvard, Chicago and Texas A&M lead), but we *do* suffer a surplus of high-prestige/low-truth-value economics professors.
(Checking Wikipedia) He’s from Harvard!!!!!!!!!!!!!!! More reason to shut that department down.
John Quiggin 06.02.09 at 10:01 pm
This piece seems to have really hit the Zeitgeist. I got a reference to it in an email from a DC-based friend yesterday, then saw Jonathan Chait take it to bits in Even The Liberal New Republic and now Yglesias and Henry. But there’s absolutely nothing new in Feldstein’s free rider argument: the DeLay&Doolittle crowd in Australia has been taking the same line for years. The piece does have some very shonky economics, to which I’ll respond if I get a free moment.
eddie 06.02.09 at 11:37 pm
Is the post offering op-eds as part of some therapy for nutjobs scheme? I can’t believe that the euro civil war piece wasn’t the guy’s last ever professional gig.
On a wider theme, has any of economic theory ever been more than scrying bones? I admit I once thought they might have some basis in reality. Reading the economics part of John L Casti’s Searching For Certainty shocked me.
Jon Livesey 06.03.09 at 12:19 am
Ah yes. It can never happen again. Sure it can’t. Does anyone remember “The War to end War”?
derrida derider 06.03.09 at 12:26 am
Oh come on, by right-wing US wilful-ignorance-of-foreigners standards this was a very moderate approach. And to be fair to the guy, he did sorta mark it as speculation rather than prophecy; I dunno that all my speculations of a decade or two ago would look good now. And there are indeed some real economic problems caused by European monetary union, broadly of the nature he (and others) predicted – it’s just that saying they might lead to war was over the top.
But then again, my over-the-top speculations don’t get several pages in a prestigious magazine.
P O'Neill 06.03.09 at 1:50 am
Putting his two theses together, it’s impressive that he can argue that a collective scheme like the Euro is doomed because the countries would want to go it alone, whereas a single country cap and trade scheme is doomed because countries should only want to do it collectively.
Zamfir 06.03.09 at 6:39 am
We have always been at war at war with Eurasia.
notsneaky 06.03.09 at 7:37 am
Whatever Feldstein’s faults are, that piece in the Monthly Review is simply idiotic.
As a disclaimer I’ve never actually bothered to look that much into this “Feldstein computer error” controversy – mostly because by the time I got around to graduating from grad school that was considered *really old* research that there was little point in wasting precious grad school time with, and the not-so-really-old research was enough to convince me (superficially, since it wasn’t my area) that computer error or no computer error, he was wrong anyway (at least quantitatively if not qualitatively).
I can buy that he took years two fork up the data (this is not uncommon for 100% completely legit research, but particularly for “famous” people who probably get what they consider annoying requests all the time), I can buy he made a computer error, and I can buy that when the other dudes ran it they got a different result. I can also buy that when he re ran it, all legit and stuff, he got the same result as original. Things like that leave a LOT of room for data mining and manipulation. Either way, this is a really really really dead, bereft of life, he rests in peace, horse folks keep beating on.
Mrs Tilton 06.03.09 at 8:06 am
Jon @6,
do you really think anybody is mocking Feldstein because they believe that intra-European war can’t happen again, and not because such war has not happened for the reason Feldstein suggested it might, because it looks astonishingly unlikely to happen for that reason, and because his proposal of EMU as potential root cause of a European civil war is just plain fatuous?
If you’re the same Jon Livesey who used to post to scc/sci, I find it hard to believe you could really be that silly.
dsquared 06.03.09 at 9:09 am
It is not as if that was the only paper that Feldstein wrote on Social Security which had a major error in it, though, is it? He was also responsible for another horror of a paper which had inconsistent assumptions about GDP and equity returns which would have led to a PE ratio of something like 250 by the end of the forecast horizon. If the MR piece referred to the only single act of horrendous rightwing hackery in a career otherwise marked by impartial and useful contributions to the public debate, then I’d agree with you.
bert 06.03.09 at 10:02 am
A few years ago a Commission official called Bernard Connolly fell out with his bosses, resigned his job, and went public with his concerns about flaws in the design for the euro. Shortly afterward, he published a book in which his rather dry, technical and entirely legitimate concerns about optimal currency areas and so on were padded out with speculations about doom, collapse and European civil war.
Two conclusions.
Firstly, the EU power structures deal very poorly with heretics. Obviously this doesn’t apply to Feldstein. It does however explain Connolly’s journey from criticism to outright denunciation, just as it helps explain Marta Andreasen’s presence on the UKIP candidate list.
Secondly, there is a profitable market, particularly in Britain, for prejudice-confirming euroscepticism, and this market is regularly served by symbolically-credentialled people who ought to know better. This applies to Feldstein in spades.
notsneaky 06.03.09 at 10:08 am
Like I said, not familiar, due to the fact that it was old news by the time I got around to speculating about a thesis topic, or more likely, contemplating the concept of grad school to begin with. The point being that I really don’t think that those papers had all that much effect on the subsequent path of academic debate on Social Security (policy debate is another matter). But some specific references would be nice here – particularly since the other example you cite has something to do with “inconsistencies” and “equity returns” and those two actually go together quite nicely in the literature which is why they named a puzzle after it.
Barry 06.03.09 at 10:19 am
Notsneaky, you seem to be missing the point. When somebody has a record of dishonesty, it never becomes ‘old news’, unless it’s clear that they have repented. For example, anybody who deals with a current Wall St fraud 10 years down the road might well find out that the ‘old news’ from 2008-9 is still highly relevant.
rea 06.03.09 at 12:18 pm
Marty Feldstein and Igor Panarin–identical twins seperated at birth?
http://en.rian.ru/world/20081124/118512713.html
Barry 06.03.09 at 1:32 pm
And continuing in the STFU theme, we have Nobel Laureate Gary S. Becker flunk Econ 101:
http://krugman.blogs.nytimes.com/2009/01/19/getting-fiscal/
http://www.becker-posner-blog.com/archives/2009/01/on_the_obama_st.html
I read the Becker-Posner blog a few times, when it was new; I came to the conclusion that it was right-wing Chicagarbage. I’ve not seen nor heard any evidence to the contrary.
Joshua Herring 06.03.09 at 2:00 pm
@Barry – fail to see how Becker “flunks Econ 101.” He asks a legitimate question, Krugman supplies an answer. It is Krugman’s derision that is misplaced. Krugman’s answer, by the way, is a bit misleading, since it wasn’t a loosening of the monetary policy that ended the 1981-2 recession, as Krugman well knows.
@Mrs. Tilton – Someone in the social sciences made a plausible-sounding prediction turned out to be wrong. It hardly seems the basis for derision to me. Nor does 10 years into the Euro seem like the best time to decidedly conclude that his prediction has not come true. I agree that it seems increasingly unlikely – but remember that part of this is predicated on resentment by member nations of Germany assuming a hegemonic role. In fact, there is quite a bit of grumbling about exactly this – recently assuaged by the expanded membership. It was an exaggerated analysis in that the tensions were nowhere near as severe as he thought they would be – but can anyone doubt that he is correct about the source of a lot of tension in the EU? As another commenter pointed out, he DID label the war bit as speculation.
I post at Barry and Mrs. Tilton in the same comment to illustrate the point that a lot of criticism in modern commentary is exaggerated. I don’t want to defend Mr. Feldstein’s hypothesis per se, just to question that it is so off the rails as to deserve a blog post poking fun. Ditto Krugman’s column about Gary Becker – makes the right points, but in hopelessly exaggerated terms.
Henry 06.03.09 at 2:51 pm
The point is precisely that it wasn’t a “plausible-sounding prediction” at all, to anyone who knew anything about the European Union. The suggestion that Germany might invade any country seeking to leave EMU is utterly bizarre – a bit like suggesting that the US would invade Canada if it left NAFTA (I know, I know, Michael Moore made a movie sort of along those lines, but that movie was a _satire_ ). Canadians grumble about US hegemony and bullying quite frequently – I lived there for a couple of years and witnessed this – but anyone seriously suggesting that there was a good chance of the two going to war in the foreseeable future would be dismissed as an utter crackpot. Feldstein’s suggestion was completely off the rails, was widely perceived as such at the time, and is still off the rails.
Mrs Tilton 06.03.09 at 3:02 pm
Joshua @18,
what Henry said. Feldstein’s prediction was plausible only for values of “plausible” including, and limited to, “fatuous”.
ajay 06.03.09 at 3:19 pm
Nor does 10 years into the Euro seem like the best time to decidedly conclude that his prediction has not come true.
Well, it didn’t come true during the long boom, and it didn’t come true during the oil price spike, and it didn’t come true during the wave of eastward expansion, and it hasn’t come true yet during the deepest postwar recession, so I’d say it’s been fairly well stress tested.
I loved the postulated “March To European War”, which as far as I can tell went like this:
1. Inflation rises in (say) Germany, which is undergoing a boom
2. ECB increases interest rates to control it
3. This causes rising unemployment in France, which is growing less quickly than Germany
4. ???
5. TANKS ON THE RHINE!
james 06.03.09 at 4:29 pm
I don’t know. It is not like Germany has never attacked its neighbors. Wasn’t there a war or something like 67 years ago? The last time the US and Canada fought was around 195 years ago. Maybe we should give the peace with Germany another 100 years before saying with certainty that they would never go to war with their neighbors.
Mrs Tilton 06.03.09 at 5:04 pm
james @22,
The US has other neighbours too, you know, some of which it has gone to (decidely one-sided) war with significantly more recently than 67 years ago, to say nothing of 195 years. But in any event, and although I suppose a mass change in political and popular attitudes to basic notions like “invading the neighbours” is theoretically possible (Germany having been through one or two such changes in its time), if you were to suggest to any of its EU neighbours[FN 1] these days that a German attack were even remotely plausible, you’d be laughed at, and rightly so.
[FN 1] Offer might not apply in Poland or along the western border of the Czech Republic; but even there, I suspect very little local distrust of Germany on grounds of supposed potential belligerence is anything but posturing. It is a show stopper, a tool to preempt debate when Poland or the Czech Republic are in a pissing contest with Germany. This is not invariably a bad thing. For example, the two main conservative parties in Germany, especially the more aggressively right-wing Bavarian version, have for decades disgracefully supported the irredentist claims of the stroppier sort of Vertriebene, the ethnic Germans expelled post-WWII from Pomerania, Silesia and the Sudetenland. A few years ago, when some German pol or other started demanding redress for the unprecedented and unprovoked injustices visited on Sudeten Germans by post-war Czechoslovakia, the president of the Czech parliament replied that, “The Sudeten Question has long since been answered — by Germany, in 1938”. Good man!
Barry 06.03.09 at 6:06 pm
Joshua Herring 06.03.09 at 2:00 pm
“@Barry – fail to see how Becker “flunks Econ 101.†He asks a legitimate question, Krugman supplies an answer.”
Becker asked a rhetorical question on a blog, and didn’t provide an answer. Perhaps I missed the link Becker provided to Krugman’s blog, or to an explanation.
I went back and checked, just to make sure – nope, no such link, nor any trackback to Krugman’s blog.
Let me help you here – if a speaker asks a rhetorical question, and wants the answer to be provided, then either the speaker provides it, or the speaker calls on somebody in the audience to answer it (note – this doesn’t always work as tidily as it does in movies and on TV). Unless the answer is *so* obvious that answering it would waste time, the speaker does *not* ask it, and leave it hanging.
Becker was trying to deceive people, and got called on it.
jacob 06.03.09 at 7:50 pm
Actually, the last time there was an American invasion of Canada was 1867, or 142 years ago. Admittedly, the U.S. government claimed that the Fenians were renegades and refused to take any responsibility for the damage they caused in their incursions. But since the Fenians were U.S. army veterans, trained openly in the U.S., and invaded from the U.S., the American government had roughly the same relationship to them as the Taliban did to Al Qaeda. Moreover, there were American war plans developed and kept current for a war against Canada well into the 20th century.
LFC 06.03.09 at 8:05 pm
Speaking of pieces that appeared in Foreign Affairs in 1997 or thereabouts, how about Steven Weber’s piece of that vintage on “the end of the business cycle” [sic]? (See my post “Annals of (apparently) bad predictions”.)
Barry 06.03.09 at 8:13 pm
LFC, I didn’t see that one, way back when. I look for things like that, because they’re my personal sign of a iminent recession (from back in 1989, when the WSJ editorial page claimed that Reagan broke the back of the business cycle).
watson aname 06.03.09 at 9:20 pm
Maybe we should give the peace with Germany another 100 years before saying with certainty that they would never go to war with their neighbors.
Was anybody saying that war in europe was impossible? I thought the issue was that the reasoning in Feldstein’s FA article was at best naive, if not inane.
notsneaky 06.03.09 at 9:32 pm
“When somebody has a record of dishonesty, it never becomes ‘old news’”
And you’re missing the point, that a single data point, of what possibly – very likely was – an honest mistake does not constitute a “record of dishonesty” no matter for how long and how tediously some people keep harping on that one data point.
You can’t bootstrap a single observation no matter how hard you try.
stostosto 06.03.09 at 9:41 pm
This piece seems to have really hit the Zeitgeist. I got a reference to it in an email from a DC-based friend yesterday, then saw Jonathan Chait take it to bits in Even The Liberal New Republic and now Yglesias and Henry.
And Krugman.
FWIW, I remember Feldstein had a critical analysis of the planned euro in The Economist. Quite sensible piece based on optimal currency area considerations and comparisons with the US as a currency area. The conclusion was that a common currency was not economically beneficial, and so the reason for opting for it must be perceived political gains. Which precisely turned the then prevailing line of pro-euro argumentation on its head.
(Other than that, and speaking as a European, I can confirm that any suggestions of inter-European war over currency issues are indeed utterly nonsensical and will be thus perceived by everybody here in Old Europe).
notsneaky 06.03.09 at 9:44 pm
I think the “war in Europe” thing was goofy – though it’ worth remembering that if it had been written, oh, 5, 7, years, earlier it would’ve fit in quite nicely with what amounted to some genuine concerns (which proved later to be unfounded).
Mrs. Tilton is pretty much right in 23 on the situation in Poland. Nobody thinks there’s gonna be a war or anything, though many are quite annoyed by Erika Steinbach and her antics. In fact more or less recently, there was a satirical article on the front page of one of the dailies, entitled something like “We’re Safe Now” discussing the high rates of alcoholism in the Russian army and the high rates of declared pacifism among conscription-age German males.
Becker asks a legitimate question – why is this recession causing a shift in the ideological make up of the profession but the previous major recession didn’t. Krugman supplies (a plausible) answer. What’s the big deal? Barry’s really really stretching this here, same as with Feldstein.
Barry 06.03.09 at 10:10 pm
No, Becker left out *the* obvious and major cause. In 1982, Volcker was keeping real Fed rates at (IRRC) record highs. Relaxing those would be quite easy, anytime that Volcker wished (note: if Volcker had actually produced a collapse, lower rates might not have been enough).
In 2008-09, Fed rates were as low as they could go. The lever of the standard monetary policy mechanism was pushed to the lower limit – the opposite of the situation in 1982.
It’s like whether a fire is dying due to lack of fuel, or too little air. The cures are quite different.
Mrs Tilton 06.03.09 at 10:50 pm
notsneaky @31,
many are quite annoyed by Erika Steinbach and her antics
Many on this side of the Oder-Neisse line are quite annoyed by her as well. Thus does Europe grow into ever closer union, I suppose.
BTW, lest readers unfamiliar with these groups get the wrong idea, in my comment upthread I did not mean to tar all Vertriebene organisations with the same brush. There are many that seek nothing more than to preserve the folkways of their former homelands. Nothing objectionable about that, and these groups have always enjoyed the support of German governments regardless of ideology; quite properly so, just as the state sponsors efforts to preserve the Slavic (Sorbian/Wendish) culture of the Lausitz region. Ms Steinbach and her ilk, by contrast, feed (and feed on) an ugly sort of resentful nationalism with strong blood-and-soil undertones and a mental map Germany that hasn’t been current since 1945. Most of the expellees are dead by now, of course. (Steinbach herself, though born in former German territory in the East, could not possibly have actual memories of the place.) But expellee irredentism survives, to the extent that it does, because the Union finds it a useful tool for attracting votes from the more troglodytic portion of the populace, and because the functionries of certain expellee groups find it a useful tool for extracting subventions from Union-led governments.
a satirical article … discussing the high rates of alcoholism in the Russian army and the high rates of declared pacifism among conscription-age German males
Straight reporting of the facts doing double-duty as satire? Now, that’s efficiency.
notsneaky 06.03.09 at 11:19 pm
What are some of the regular Vertriebene groups? I’m genuinely interested because all you hear about is BdV.
Also, I might be wrong on this but I think the only reason why Steinbach can consider herself an “expellee” is because she was born to Wehrmacht soldier stationed in occupied Poland – not exactly roots that go back many generations (I think this is a general objection to some of this expellee stuff – that it covers much more than just the “authentic” expellees. Though honestly my knowledge of this issue is fairly superficial)
Mrs Tilton 06.03.09 at 11:57 pm
ns @34,
What are some of the regular Vertriebene groups? I’m genuinely interested because all you hear about is BdV
There are lots of them. They’re frequently called something like Landsmannschaft X, where X is some town or village or valley or district in formerly German parts where the members (or often, by this point, their parents or even grandparents) came from. You don’t hear much about them because they are typically local, low-key, and interested primarily in things like traditional costume, songs, folk dances etc.
Mind you, I’m sure there’s some degree of overlap between these groups and the Steinbach sort of thing, and the overlap was probably bigger 30 or 40 years ago. But a lot of the Vertriebene just aren’t like tat. I am related by marriage to some people expelled from Breslau, as it then was. The generation who were adults at the time of the expulsions did sometimes go to Fests thrown by Landsmannschaften, but on the political front (although deeply saddened at having to leave their city) managed to see the whole thing in perspective, given what had gone before. The generation who were kids at the time really couldn’t give a monkey’s — as far as they’re concerned, they’re Swabians (and can’t utter a syllable without audibly confirming the fact). Still, they have gone back to visit WrocÅ‚aw, and they rave about it.
So do all the Poles I know, for that matter. It must be a bit of a jewel. Sadly, my visits to Poland haven’t yet brought me outside of Warsaw. My Warsovian friends are all apologetic because they think their city so ugly. “Relax, dudes,” I always tell them; “I live in Frankfurt“.
notsneaky 06.04.09 at 12:39 am
WrocÅ‚aw is quite nice – with most of that niceness coming back in the post communist period. The WrocÅ‚aw that I grew up in was a dirty, polluted, smelly, angry, grey city with tracks and tracks of Stalinist housing projects (the only thing that was nice back then, and this is from a kid’s perspective, was the old “German Zoo”) – of course pretty much all Polish (and East German too) cities were like that back then. They did a really excellent job of restoring it. Amazingly I’ve never been to Warsaw but WrocÅ‚awians definitely look down on Varsovians for the very reason you mention.
Thing about WrocÅ‚aw is that it’s mostly descendants of folks from current day Ukraine, Belarus and Lithuania (like my folks) who themselves were expelled by the Soviets (apparently back in the 50’s “Ukrainiec” used to be slang for WrocÅ‚awians) so they tend to have little patience for German irredentist claims.
Through an aunt’s marriage we’re actually connected to some Silesian Germans that barely slipped the post war expulsions from Katowice/Kattowitz (now THAT is an ugly city) area. The older folks still speak German at home and they got the black eagle hanging in their living room right next to the white one.
Map Maker 06.04.09 at 4:12 am
“… an ugly sort of resentful nationalism with strong blood-and-soil undertones and a mental map Germany that hasn’t been current since 1945. Most of the expellees are dead by now, of course”
Oh wait, now we’re going to have a diversion into a discussion about the middle east maps, expulsions and blood-and-soil links to G-d. Just kidding …
I guess your argument is the territorial changes after world war two are/were appropriate to make the peace in 1945 and shouldn’t be re-opened? I don’t have too much knowledge of the german territories, but something about the Soviet Union keeping territories taken from Poland, Finland and Japan seem harder to justify. I’m sure nationalist groups can bring up these wrongs for all sorts of bad reasons, but doesn’t change the fact that Poland especially seems screwed by the territorial consessions of world war two …
Katherine 06.04.09 at 8:56 am
Well, this is just lovely. This started out as a discussion of some twit of an American economist predicting war in Europe over the Euro (yawn, sigh, ho ho ho etc etc), and now I’m learning all sorts of new things about German irredentist claims and the loveliness of a city called Wroclaw that I’ve never even heard of before. I like that.
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