Matt Yglesias Whitewashes Economic Dispute

Matt YglesiasThere was a big fight in San Diego this weekend, but it wasn’t even on pay-per-view. It was on the effects of government stimulus between Paul Krugman and UC San Diego professor Valerie Ramey at the American Economics Association conference. Unfortunately, the only coverage I’ve read of it comes from Matt Yglesias in the article whose title demonstrates its problems, The Frustrating Fiscal Stimulus Debate. In as much as Yglesias presents a blow by blow account, it seems that Krugman scored a technical knock out. But Yglesias’ commentary is classic false equivalence.

The argument he makes is that the economics profession pretty much agrees when you get right down to it. Ramey was arguing that stimulus wasn’t very effective throughout the 20th century. But, Yglesias notes, Krugman agrees: there are very few times when government stimulus is high effective. It is just that right now is one of those times. And that, I fear, is where Yglesias goes off the rails.

The problem is that conservative economists are ideologically constrained. Krugman is a liberal. But you don’t see him claiming that there wasn’t stagflation in the 1970s. He doesn’t claim that stimulus is always the answer. But conservative economists certainly do claim that stimulus is never the answer—at least as long as a Democrat is in the White House. What’s more, Ramey wouldn’t be arguing as she is if she thought that stimulus worked now. And we have plenty of examples of conservative economists this last four years claiming that the recession was due to some supply shock.

Yglesias ends his article by speculating what is driving conservative and liberal economists. “I get the overwhelming impression that with a few exceptions the issue is basically that right-of-center economists generally think the existing level of government spending is too high and that additional government spending is likely to be wasteful.” He says the reverse can be said about the liberals.

There are a couple of problems here. First, the issue of stimulus is not about money being well spent or not. The idea is to get the government started. World War II was not useful spending. But apart from this, the claim that stimulus money is wasted is just an excuse for not doing anything. It is like oil company funded politicians who claim to be for tighter regulation, but there are somehow always minor problems with any bill that comes for a vote. If the multiplier of a stimulus bill was thought to be 2.2 instead of 1.2, the conservatives would claim that any multiplier under 2.5 was wasteful. So Yglesias is treating these economists as though they are honest players. Certain the behavior of Kevin Hassett, Glenn Hubbard, Gregory Mankiw, and John Taylor this last year should have put such nonsense to rest.

What’s more, Yglesias’ claim that conservatives think government spending is too high was dealt with in a recent Krugman article. He was talking about politicians, but I don’t see how it is any different with economists. Conservatives think the the government is too big. But they don’t have a clue what about the government is too big. I don’t know what Valerie Ramey would say on this issue. But I doubt she could say any more than conservatives will generally say in private: kill Social Security; kill Medicare; kill Medicaid. But the people see things differently—making these the most popular of government spending.

The whole push of conservative economists to show that stimulus is just never quite effective enough to be done is nothing but apologetics. And apologetics is not about science. The very fact that these conservatives are feverishly hunting around for some information—Any information!—that will justify their favored policies shows they have a real problem. They are not engaged in science. And thus, they are doomed to failure, even if some of their favored policies turn out to be right.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

0 thoughts on “Matt Yglesias Whitewashes Economic Dispute

  1. There’s a joke I read ages ago, I don’t remember where (Greider, maybe?):

    Q: How many economists does it take to change a light bulb?

    A: First you assume a ladder . . .

    Not to be too crude, but much of modern economics reminds me of race "science" 100 years ago (popular among the elite everywhere, including here — American plutocrat Madison Grant’s "The Passing Of The Great Race" was well-regarded by critics, academics, and creepy Austrian sociopaths.)

    In both cases you have a field of inquiry that wraps itself in scientific-sounding terminology, yet isn’t really scientific. It rejects data that counters its assumptions, and those assumptions are based on observations which are highly biased and subjective to begin with.

    If I publish experimental results which claim to have created cold fusion in my bathtub, about a zillion scientists will test my methodology and prove me wrong immediately. That’s how science works, and that’s why the climate-change deniers are beyond dishonest in their claims that global warming is a "myth" concocted by a self-serving cabal. Science isn’t about cabals; it LOVES poking holes in conventional wisdom.

    Conservative or "free-market" economics serves power. Its assumptions have been tested, repeatedly, and shown to be utterly flawed. And yet you can still get a PhD by repeating them (with a nice little think-tank salary to boot.) Where else is this possible? Physicists can’t ignore quantum theory, physiologists can’t blame cancer on "ill Humours."

    A fun book is Michael Goodwin and Dan. E. Burr’s "Economix." It’s a graphic history of economic theories and practice from Smith on down. Goodwin (the author; Burr illustrates) is a liberal who acknowledges the good capitalism has done, while presenting the downside in an amusing (rather than brutally depressing) fashion. It’s one that might be useful to open-minded people who’ve swallowed conservative economics whole; it’s also a great refresher course for the rest of us. (I’d forgotten who David Ricardo was.)

    (Also, just BTW: Jonathan Spiro’s "Defending The Master Race" is a fascinating book on Grant; the guy was a piece of work, basically Mr. Burns, and yet he did play a part in saving the redwoods. They’re still here, while his eugenics tracts are utterly forgotten. Even assholes can have useful benefits, sometimes.)

  2. @JMF – I think there is a defense to be made of economics. And it is kind of a defense of Yglesias. I think economics and atmospheric science are very similar. In particular, they both deal with very complex systems; you can’t do direct experiments; and thus you have to depend upon models.

    I think the biggest problem with economics is that it is really useful in politics. If there was something very lucrative about denying quantum mechanics, I assure you, the University of Chicago would have a physics department dedicated to classical mechanics.

    What seems to really frustrate Krugman is that a lot of settled macroeconomic theory suddenly became disputed the moment a depressed economy was handed to a black Democratic president. Mankiw was always pretty Keynesian until about 4 years ago. The problem, I’m afraid, is just money. Big name economists can be bought. But it isn’t just economists. Look at historian Niall Ferguson. He doesn’t seem to care about his academic reputation so long as the big checks keep coming in. And let’s be honest: it isn’t like Mankiw is going to be publicly shamed or passed over for Treasury Secretary the moment a Republican gets into the White House.

    The only thing is that people like Mankiw and Hubbard will make it into the books on the history of economics and they will look really bad. What’s more, this will likely happen within their lifetimes.

    As for eugenics, well, I think there is a lot of that in "conservative" economics. Both groups have things they [i]want[/i] to believe. But at least with early followers of eugenics, they had mostly really bad data. The economists have a lot of good data that they choose to avoid or apologize away. Also, most of these conservative economists are getting rich telling the powerful what they want to hear. It is disgusting.

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