Over the weekend, I had started writing a post titled "When Will [economist Paul] Krugman Have His Creationist Epiphany?" It was inspired by a comment left on a Krugman post about "the Great Ignorance which seems to have overtaken much of the economics profession -- the "rediscovery" of old fallacies about deficit spending and interest rates, presented as if they were deep insights, the bizarre arguments presented by economists with sterling reputations."
While Krugman argues this is due to flat-out ignorance, a commenter made a great point (italics mine):
This is a point I've kept making to Brad - you're not really "tag-teaming", you're still maintaining professional courtesy with these people. How long can that continue? How long do you go on saying that people are "good economists" when they keep on maintaining arithmetic fallacies, and when they clearly fail the only meaningful test of what it is to be an economist - which you correctly identify as the ability to reason about the economy as a whole. At some point there surely needs to be a clean break with the past, and a whole lot of people who currently hold down jobs as economics professors need to be consigned to the same dustbin of history as the physiocrats and mercantilists. I only bring this up because as the world's most prominent economist and as someone who has no need for the social infrastructure of economics to bolster his credibility, you're basically the only person in the world who can actually make this split...
I think anyone who has dealt with creationists regularly will agree with that statement. That's why I think many, though not all, biologists have reached a consensus on how to act. Rather than treating it as a dichotomy--engage them as equals and grant them legitimacy, or ignore them--most have started to engage them, but emphatically not treat them as equals (because they're not--they're fucking morons). And it's been reasonably successful.
Back to economics, there are three possibilities:
- Macroeconomic ignorance is due to cognitive malfunction (i.e., they're stupid). I don't think this is the case.
- Faculty really are that ignorant. I wouldn't rule that out in all cases, but many probably are.
- This is willful ignorance. That is, data are 'selectively remembered'. Related to this, willful ignorance may have taken such a hold on some economics departments such that they have become the economic equivalent of the biology department at Liberty University.
So I wonder when, like many biologists, Krugman was going to realize that much of the problem was behind door #3. But I see hope!
Today's column calls global warming denialism "treason against the planet." Krugman (italics mine):
...if you watched the debate on Friday, you didn't see people who've thought hard about a crucial issue, and are trying to do the right thing. What you saw, instead, were people who show no sign of being interested in the truth. They don't like the political and policy implications of climate change, so they've decided not to believe in it -- and they'll grab any argument, no matter how disreputable, that feeds their denial.
Indeed, if there was a defining moment in Friday's debate, it was the declaration by Representative Paul Broun of Georgia that climate change is nothing but a "hoax" that has been "perpetrated out of the scientific community." I'd call this a crazy conspiracy theory, but doing so would actually be unfair to crazy conspiracy theorists. After all, to believe that global warming is a hoax you have to believe in a vast cabal consisting of thousands of scientists -- a cabal so powerful that it has managed to create false records on everything from global temperatures to Arctic sea ice.
Yet Mr. Broun's declaration was met with applause.
Given this contempt for hard science, I'm almost reluctant to mention the deniers' dishonesty on matters economic. But in addition to rejecting climate science, the opponents of the climate bill made a point of misrepresenting the results of studies of the bill's economic impact, which all suggest that the cost will be relatively low.
Still, is it fair to call climate denial a form of treason? Isn't it politics as usual?
Yes, it is -- and that's why it's unforgivable.
I think once Krugman realizes that much of the economic criticism is just as stupid and denialist as global warming denialism, things will get interesting....
I'd say that #3 dominates among older economists, but one of Krugman's commenters, who identifies himself as a 2005 graduate of the University of Chicago economics department, all but states that #2 holds for many younger faculty. He claimed that all that he knew about Keynes, beyond the assertions of his professors that Keynes was wrong, he picked up on his own. Apparently it is possible to get a degree in economics without understanding one of the biggest ideas in the field--even if Keynes is controversial, he was influential enough that an educated economist should at least understand the argument, and those who disagree should have to produce rigorous arguments that Keynes was wrong.
Fortunately for biologists, creationism has been relegated to the lunatic fringe, which makes it easier for sane scientists to shoot down the arguments of the Disco Institute et al. Krugman is talking about his fellow Ivy League professors, such as Mankiw (Harvard), who can use their positions to argue their nonsense in academic circles without being laughed out of the room. Until there is a reputational penalty within academia for spouting such obvious fallacies, Krugman will have to deal with these kooks as equals. It shouldn't be that way, but it is.
The parallels break down at a certain point.
Creationism fails dramatically against the successes of evolutionary biology, geology, etc.
Voodoo economics confronts a deficient, much shakier rival. While Keynes offers a well-reasoned and -supported model, it is woefully incomplete in terms of our current crucial needs (concerning environment, resources, population, technology and much more). The field is a study of epiphenomena, and the bulk of its practitioners (from "left" to "right") were/are trained within hopelessly unrealistic paradigms such an permanent growth, externalizable costs and the like.
Not only are economic theories inadequate, the discipline suffers from a fuzzy-numbers problem that makes biology's sometimes-ambiguous data look like mechanical engineering. Experiments are difficult to undertake, always contaminated by known and unknown extrinsic factors, and measured by "instruments" of stunning imprecision.
Worse yet, biology is primarily descriptive, while economics must also fill a prescriptive role. Medicine comes closest to that niche in biological science today, but the tools of economics contain nothing in which we can feel confidence comparable to that earned by surgery, antibiotics, or even elementary nutrition & sanitation.
For Krugman to confront the deep flaws within his own discipline would probably take him far beyond his comfort zone, and far past shouting range of his colleagues.
Looking for analogies, a few spring to mind. A first point is that it still is early days in slaying economic pseudoscience, with many of the woo peddlers being academics and the field still having a large slice that makes political arguments in the language of economics.
So while their are parallels to creationism, the creationism debate is at a much later stage--perhaps a better comparison is to the creationism debate in the 1920's or 1930's, where there were still biologists who knew or should or known about evolution but didn't rely on it in their research and found it easier to side publicly with their main political allies and downplay it.
The closest parallel is perhaps the debate over atmospheric nuclear tests, where enough data was available to conclude that the testing was a danger to the public but many scientists still argued that it was harmless or unproven and against an atmospheric testing ban due to their long political alliance with military and the defense industry.
The reason Krugman's posturing like this is he knows he's full of crap. The "creationist" here is Krugman, babbling about different ways of knowing because he knows the standard macro analytical techniques indicate he's full of it, so he has to revert to dubious applications of models that are poorly regarded for a good reason. IS-LM makes very unrealistic assumptions about interests rate behavior by conflating real and nominal interest rates, which only works when price levels are stable. Price stickiness creates a short window where this is a reasonable assumption, but it is problematic even in this case, since goods reprice at different rates, resulting in sectoral distortions and possibly asset bubbles. Most of the useful insights of IS-LM can be derived from the AD-AS framework without the problematic real=nominal interest rate assumption and AD-AS is not at all controversial.
While IS-LM models are controversial but defensible, Krugman has been spewing plenty of flat out BS as well. For example:
1. A multipier of 3 - Complete and total bollocks that is contradicted by all the empirical work on multipliers. Krugman is well aware of this, but he put it out there anyway to justify more spending.
2. The US is in a liquidity trap - The US doesn't meet the criteria Krugman set out in his own work describing liquidity traps. Krugman also plays up the effectiveness of fiscal stimulus currently, while his serious work on the matter gives reason to doubt it.
Particularly with regard to the second example, there's no way that it could even be a good faith mistake on Krugman's part. He's BSing for partisan reasons - I know it, he knows it, the economists that Krugman whines about know it. The only ones not in on it are the Democratic drones who blindly accept whatever the he says.
PS - The "treason" rhetoric is no less asinine when it's liberals doing it. Grow up.
Krugman may not be a creationist but is certainly worse than a Malthusian.Rev Malthus opined (1799) that food production could only grow arithmetically, while population grows geometrically. St Paul Krugman endorses the IPCC all of whose models have a built-in assumption that increased food production (ie NPP) will any day from now be impossible. This follows from the use since 1993 if not before (see Wigley 1903, Tellus) of the Michaelis-Menten function, in one form or another, by ALL models deployed by the IPCC. That function states that after a certain level of atmospheric CO2 has been reached no new NPP will be possible, and it will in fact decline with rising warming. All IPCC projections from 2000 to 2100 and beyond assume this has already happened. Malthus has at least been confronted with the evidence on this point, none of the IPCC's modellers ever has - or will, for the simple reason there is no evidence for this wholly baseless assumption.
Part of the problem is that economists themselves generally do not understand Keynes. His General Theory was a revolutionary break from the past, and in an effort to understand it, a watered down rather harmless "neoclassical" version was presented by Hicks and adopted by almost everyone as what Keynes was saying. Between his heart attack and the war, Keynes had little time to correct this.
Unfortunately, this version is borderline inconsistent, and the tweaking implied by rational expectations killed it until fancier versions resurrected Keynes. Perhaps the only economist who understood what Keynes was saying was Hyman Minsky.
One of the tricks the crazies have adopted is baldly rewriting history. Most economists are not very good at history, and for that matter, most historians are not very good at economics, so it's a simple matter to fabricate disproofs of Keynes that very few readers can dissect. Thomas Sowell, in one of his books, baldly stated that the Savings and Loan disaster under Reagan was caused by Roosevelt's regulations and not Reagan's deregulation. And even when it comes to something as meaningless as "what would Reagan do", the crazies ignore what Reagan often did: raise taxes (1982, 1983, 1984, 1986).
tim - please note that while 'St Paul Krugman ' might earn you 'heh' cred with the right, in other circles it's just a handy tool for us to know that you're full of it.
"One of the tricks the crazies have adopted is baldly rewriting history."
Note that this is a standard creationist technique.
I agree with the willful ignorance idea. Here are some factors that I think contribute to it:
Most economists who work outside of academia have an economic interest in saying what the people who pay them want to hear â It pays to ignore contrary data.
Many (most?) economists may have ideological stances that carry more weight than evidence.
Almost all economists tend to ignore/understate the âceteris paribusâ principle (all else being equal). This is the limiting factor in economics â the models only work if everything else remains the same. In fact almost everything is always changing, which means their models are, at best, approximations. Economists do know this, but are loathe to admit it, even to themselves.
All economic models are built on assumptions and that if the assumptions are wrong, the model is wrong. If you have a lot invested in a particular model and its assumptions, you may be more inclined to spin the results of the model than to question your assumptions.
As a side note, I have noticed that my economics professors and text book authors (such as Mankiw) hold and express opinions that are in direct contradiction to what they teach. When I pointed this out to one of my professors, he merely shrugged and moved on. So this maybe this is more a matter of cognitive dissonance than willful ignorance or cognitive malfunction.
Bottom line: Economists do not know as much as they would like us to believe.
"His General Theory was a revolutionary break from the past, and in an effort to understand it, a watered down rather harmless "neoclassical" version was presented by Hicks and adopted by almost everyone as what Keynes was saying."
It is my understanding that most economists would tell you that the IS/LM model is at best a first approximation to Keynes' General Theory. Probably its biggest and most recognized flaw is that it ignores uncertainty (being a linear equilibrium model), which is essential to understanding liquidity preference.
My own opinion on the current crisis in the economics profession comes from understanding historical context. In the 1970's onward the University of Chicago gained huge prominence, and pretty much their whole project was deposing of the "Keynesian orthodoxy". Although the prestige of Chicago has waned over the years (in comparison to what it was), the effects of a whole decades worth of acclaim and propaganda don't disappear overnight.
"The US is in a liquidity trap - The US doesn't meet the criteria Krugman set out in his own work describing liquidity traps. Krugman also plays up the effectiveness of fiscal stimulus currently, while his serious work on the matter gives reason to doubt it."
I've always thought the main features of a liquidity trap were zero-bound interest rates with liquidity failing to stimulate the economy. That certainly looks like the case here.
For extra evidence, there is the fact that inflation is still cooling (still putting us in danger of deflation) even though the monetary base has more than doubled. This mirrors Depression-era U.S. and 1990's Japan, both of which experienced deflation during time periods of dramatic money supply increase.
very thanks for article!