Clive Crook’s exchanges with Krugman and Barro are a must-read. In response to Crook’s quite reasonable charge that Krugman and Barro have both made themselves and their profession look bad, the Princeton Punisher charmingly replies, in a post titled “What Happened to Clive Crook”:
Clive used to be a reasonable guy; in his mind he probably still is a reasonable guy. But he has misunderstood what it means to be reasonable.
So there you have it. If Crook thinks Krugman has made himself look bad, that’s probably because he’s forgotten what it even means to be a reasonable person. Clive amply demonstrates his reasonableness through the restraint of his persuasive reply.
But the really fascinating part of Crook’s post is the email exchange with Robert Barro. Unlike Krugman, Barro wants to talk about the relevant economics, not politics. And Barro indeed thinks a lot of important people are guilty of “voodoo macroeconomics.” Is he being a dick? I don’t think so. Barro, unlike Krugman, is one of the world’s best, most cited, and most influential macroeconomists. And he keeps referring to a project he’s working on that provides evidence that the multiplier for non-defense spending is zilch. I’m looking forward to the published study, and to the professional response. If he’s right, we’re pretty clearly about to make an immense mistake. Barro also clarifies a useful distinction worth spreading:
One thing I think you need to be clear on is the distinction between Ricardian equivalence and Keynesian multipliers. The first bears, for example, on how a deficit-finance tax cut affects aggregate demand. The Ricardian view is no effect, and the “standard” view is that the effect is positive but less than one. The multiplier has to do with how a change in aggregate demand affects output. It is possible to have a large multiplier even with Ricardian equivalence, and it is possible to have a small multiplier even without Ricardian equivalence.
True.
If Barro can supply evidence to support the conclusion that the non-defense spending multiplier is zero *when economic output is low*, he will replace Friedman as The Second Greatest Economist Ever.
If he can supply evidence to support the conclusion that the non-defense spending multiplier is zero *at times of a extra-ordinarily low demand*, he will replace Keynes as The Greatest Economist Ever.
AND he will need to explain what it is about defense spending that is so distinctive.
I have liked Krugman's rhetoric less as time goes on–during the Bush years, it seemed as if his targets were more focused. Now he often seems to be swinging wildly.
However, Crook's initial attack on Krugman, that he was advocating protectionism because he followed the liberal wing of the Democratic party, was indefensible. First, that sort of speculation about motives is common enough, but still a low blow. If Crook can lead with that sort of charge, it's not exactly surprising that Krugman will react angrily.
Second, it is clear in reading Krugman's post that it is not meant to undermine the well-established arguments against free trade, arguments that made Obama, to take just one example, look bad during the presidential campaign.
Third, and most importantly, Krugman argues that even if the case he's presented is accurate, free trade is such an important issue that abandoning the progress we've made on it would be unacceptable. And he says that we should not abandon free trade even if it would mean giving up on a temporary source of economic stimulus.
Frankly, I can see why Krugman might be annoyed that he'd been called a protectionist shill for the Democratic party. He could've been more polite, but he'd been accused of acting in bad faith. Crook's polite reply smells a lot like that kid in elementary school who started fights but acted like an angel in front of the teacher.
Barro is a total f*cking embarrassment. Last I read, he was offering up evidence about the spending multiplier being .8 in WWII (with unemployment at less than 1%) as evidence that the multiplier today is less than one…
Of course, that's not nearly as dumb as his prediction (see paper with Tenreyro), that the Euro would fiple world trade. That's right, I wrote fiple. As in single, double, triple, quadruple, and so forth…
Didn't really pan out, did it?
http://firelarrysummersnow.blogspot.com/
Krugman:
Let’s be clear: this isn’t an argument for beggaring thy neighbor, it’s an argument that protectionism can make the world as a whole better off. It’s a second-best argument — coordinated policy is the first-best answer. But it needs to be taken seriously.
Crook:
Then I read Paul Krugman…explain that raising tariffs – though perhaps unwise for other reasons – “can make the world better off”. “There is a short-run case for protectionism,” he went on, “and that case will increase in force if we don’t have an effective economic recovery programme.” What are his readers to make of this? Are all the economists who say otherwise just wrong? …If you wish to know what Mr Krugman thinks on any policy question, do not read his scholarly writings; see which policies are advocated by the progressive wing of the Democratic party.
Krugman responds:
<l>…I acknowledge that there is a potential short-run argument for protectionism, while making it clear that I’m not in favor of acting on that argument. He doesn’t actually take on my argument; he just insists that the only reason I might possibly have said anything like this is partisan bias, as opposed to an attempt to be intellectually honest.
Krugman, 1
Croook, 0
Wilkinson's reading compehension, 0
Wilkinson's definition of “quite reasonable charge”, 0
Seriously, Will? You're going to plant your flag on the hill of High Broderism? Really?
Damned html tags!!!
Crook's column was “high Broderism.” And Krugman's response was weak. But the suggestion that Crook “has misunderstood what it means to be reasonable” just isn't all that punishing, especially after Crook had used Krugman as a leading example of an economist who is harming his profession. (Besides the serial position effect, there is also the fact that Krugman receives scrutiny for three paragraphs, while Barro receives about a sentence's worth.)
I sure look forward to Barro's demonstration that the multiplier on NDS is zero, though. That'll be neat. (Of particular interest will be how he controls for war-time rationing and high employment.)
Who in God's name conferred on the Keynes the title of “The Greatest Economist Ever”?
Keynes was a charlatan whose theories have approximately as much empirical basis as alchemy. The reason he's held in any sort of esteem at all is because his work provides shabby intellectual cover for the looters and the wreckers.
Krugman's response was weak, but that doesn't change the fact that Crook's column was “high Broderism.” In any case, the suggestion that Crook “has misunderstood what it means to be reasonable” just isn't all that punishing — especially considering that Crook had just used Krugman as a leading example of an economist who is harming the profession. (Besides the biasing from this serial positioning, there is also the fact that Krugman receives scrutiny for three paragraphs, whereas Barro receives about a sentence's worth.)
Anyway, I sure look forward to Barro's demonstration that the multiplier on NDS is zero, though. That'll be neat. (Of particular interest will be how he controls for war-time rationing and high employment.)
Who in God's name conferred on the Keynes the title of “The Greatest Economist Ever”?
Keynes was a charlatan whose theories have approximately as much empirical basis as alchemy. The reason he's held in any sort of esteem at all is because his work provides shabby intellectual cover for the looters and the wreckers.