The Wisdom of Laureates

The recent New York Times article on the Minneapolis Fed President, Narayana Kocherlakota is making a moderately big splash on economics blogs because it highlights Kocherlakota’s prominent reversal of his stance on monetary policy.

However, it’s the quote from Ed Prescott that seems to have most people talking.  Prescott is quoted as saying

It is an established scientific fact that monetary policy has had virtually no effect on output and employment in the U.S. since the formation of the Fed.

Paul Krugman says this statement reveals that Prescott is part of “an irrational cult.”  Noah Smith takes this as evidence that the Nobel Prize in economics is screwed-up because, just a few years after Prescott won the Nobel, Chris Sims won and Sims thinks that monetary policy has real effects.  Steve Williamson says that Prescott might simply be trying to be provocative (though he also admits that perhaps there is a case to be made that Prescott is right).

OK, first off – Prescott is wrong.  It is NOT an established fact the monetary policy has no effect on economic activity.  The balance of the evidence suggests the opposite.  Monetary policy seems to have clear measurable effects on the economy.  This isn’t what I want to talk about however.

It struck me as I read the Prescott quote that perhaps we should think a little bit before listening so closely to the opinions of Nobel Laureates.  Nobel Laureates are called upon often to make pronouncements and give policy assessments.  Some of them are asked to be regular contributors to the New York Times.  But should we pay so much attention to their opinions?  Should we grant Ed Prescott, or Paul Krugman, or Robert Lucas, or Peter Diamond much more credence than other smart observers?  It’s really not clear.

All of the Nobel winners are extremely smart.  They are a special group though.  Nobel Prize winners have typically devoted their entire careers to a rather narrow study of a particular area.  I’ll use Paul Krugman as an example.  Paul Krugman’s opinions on trade have to be taken very seriously.  When it comes to the best understanding of international trade, Krugman is the master of the universe.  When he moves on to topics outside of trade however, his assessment loses a lot of its authority.  Krugman is an excellent economist so it’s perfectly reasonable to expect that his opinions on heath policy, tax policy, business cycles, finance, etc. will be reasonable and it’s worth listening to him.  That said, he is not an expert on any of those topics the way he is on trade.

In addition to the fact that Nobel Laureates often have very narrow areas of true expertise, they are also often radical thinkers who are out to overturn established ways of thinking.  Paying attention to a Nobel Prize winner means paying attention to someone who thinks unusual thoughts.  Academics are rewarded not for having good insights on average; they are rewarded for having path-breaking ideas every now and then.   An academic who has one or two ingenious ideas in a career might well be viewed as someone worthy of a Nobel, even if most of their ideas are crazy.  In academia, we can have as many crazy ideas as we want provided that we have a few insightful ideas along the way.  In fact, the price we pay for having unusual insights might be that we often have unorthodox approaches to topics.  I would guess that the Nobel laureates are even more extreme than typical academics.  Prescott’s statement is obviously a bit unorthodox but that is the mode he has been in his whole career.  “Toeing the party line” is just not part of his playbook.  Prescott didn’t win the Nobel Prize for having a balanced assessment of the mainstream consensus of economic expertise.  He won it for putting forth new ways of thinking about economics.  This isn’t limited to Prescott.  Even Paul Krugman has been known to say some rather nutty things at times.

Bobby Fischer was perhaps the greatest chess player ever and was certainly extremely intelligent.  At the same time, Bobby Fischer said many crazy things during his life (he was a Holocaust denier, he thought the U.S. orchestrated the 911 attacks, …).*  Listening to Fischer talk about chess is one thing.  Listening to him talk about foreign policy would be like entering the Twilight Zone.  I certainly don’t want to make a very strong comparison between Bobby Fischer on the one hand, and Paul Krugman and Ed Prescott on the other.  But, when we listen to people like Prescott and Krugman we have to remember that we are drawing on the opinions of a very unusual group.

* Bobby Fischer is a truly tragic figure.  This clip from the ESPN short Finding Bobby Fischer gives a depressing glimpse of Fischer’s life.

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137 thoughts on “The Wisdom of Laureates

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  2. “Even Paul Krugman has been known to say some rather nutty things at times.”

    Like what?

    I’ve read almost every Krugman post and column since he started with the Times, and many of his popular books, like “Peddling Prosperity”. I’ve seen nothing nutty, even though there are some things I don’t totally agree with, or am not totally convinced of. Krugman’s logic and evidence are typically very strong — do you read his posts much? If you think otherwise, you would definitely be doing a service to articulate why clearly to well-educated laypeople, or at least to other economists, because other’s have tried, but rarely do this well.

    • The Euro was doomed? The Coin was ever a serious policy option? Overall, I’m in agreement with Krugman most of the time but he does have his moments.

      • There’s a difference between “probably wrong but the jury’s still out” and “nutty” re: the Eurozone. The platinum coin actually is a serious policy option because that’s exactly how money works, as Krugman emphasized in a post this week.

      • Well, about the coin he said it was seriously considered by the Obama-administration (with a quote), he never said it was a good or useful policy.

        Regarding the euro-area, Krugman was very pesimistic, but nutty? Well, nothing comparable to Prescott’s quote. Basically a lot of very smart people thought the same: it was before the ECB decides to do ‘whatever it needs to save the euro*area’, which was a very strong and totally unexpected move (illegal as well?).

  3. And how much is nuttiness, how much is intentionally trying to mislead the public and other economists to support their ideology, in Prescott’s case libertarianism. I strongly suspect it’s much more trying to mislead for the cause than nuttiness.

    • Another thing that I should mention is that pride and ego are always factors when you are talking to academics (and the pride effect is probably even greater for Nobel Prize winners). Prescott’s view of his own research contribution is probably quite different from the general view of his contribution. The evidence is now pretty clear that productivity shocks don’t really have anything to do with the business cycle but Prescott may be very reluctant to openly admit this. His statement about monetary policy might be his way of “doubling down” on his earlier claim that the business cycle could be caused by real shocks.

      • I am still looking for your example of something Diamond or Krugman said–or even that Lucas said–that is within even an order of magnitude of Prescott’s nuttiness? What are you thinking of when you equate them?

      • “The evidence is now pretty clear that productivity shocks don’t really have anything to do with the business cycle”

        I think you just won our earlier debate about the empiricism of macroeconomists…

      • I mean, I’ve talked to some macroeconomists who essentially take the position that “Every theory is wrong, so let’s just keep every theory around, and keep making more of them, and never say that any of them have been refuted by the data.” It seems like would come right out and say “The evidence is now pretty clear that productivity shocks don’t really have anything to do with the business cycle.” So color me impressed…

      • OK, I think I see the problem here; Chris, you’re ashamed to cite your example of Krugman’s nuttiness because you thought Krugman was serious about the space aliens, didn’t you? Come on admit it…

      • Unfortunately, I don’t think this conversation has done anything to clear up the essential problem here. The fact is that no matter who a person is, what their awards are, what their intelligence level is, they can be wrong sometimes.

        We can actually throw this back on Chris and say that Chris refuses to admit that he was somewhat wrong in saying Krugman can be nutty at times. No matter the level of rightness or wrongness of the words that make it to the page, a person tends to defend the thought behind it rather than the words on the page. This is a cultural problem, because when a person does admit a problem with the words on the page, most observers view it as an admission that the thought behind the words were wrong.

        What is missing is a way for Chris to say ok, maybe I was a bit extreme in my portrayal of nuttiness, but I want to remake the point that Nobel laureates are not perfect thinkers. Chris said that here, but it is buried in a deep conversation containing lots of thoughts, agreements and disagreements that would lead a person to believe that everyone is essentially just as right as everyone else.

        John Soriano’s examples are not good ones. He sights TheMoneyIllusion blog. I have read a bit of what was posted there, and it isn’t very good. There’s a bunch of assertions about what Friedman vs. Keynesians have asserted, but I find most of the statements there to be completely inaccurate. If you take them at face value it seems like a good refutation of what Krugman said, but if you understand how it is presented and what these lines of reasoning actually say, the entire post from Sumner is horrible. Nutty, even.

        As far as a God complex goes, it is a real pitfall for people who are forced into a position where their ideas have huge implications for lots of people. It is psychologically impossible not to get a bit of a God complex if you have to make these decisions. This is a manifestation of a system that expects perfection rather than human flaws. This is a symptom of a system dysfunction rather than a personal flaw of character. Nobody should be placed in such a high position because nobody can live up to it.

        Nobody should be immune to open discussion, however. But it takes a systemic change to allow this to work itself out. They system has to stop expecting perfect thinkers, and people have to stop trying to portray themselves as more perfect thinkers. Economics really has to be a social endeavor at the systemic level.

      • Is it really too much to ask? If nothing else, it would give your readers some idea of your criteria for nuttiness. For example, maybe you think that calling Paul Ryan a flim-flam man is Prescott-level lunacy. I wouldn’t agree but at least your response tells us something.

      • In Krugman’s case, more than one. I cannot think of any commentator, economist or anyone else, who has been as consistently sensible as Krugman.

        As far as I’m concerned, this equivalence is a cheap shot.

        OTOH:

        “An academic who has one or two ingenious ideas in a career might well be viewed as someone worthy of a Nobel, even if most of their ideas are crazy.”

        Mundel is my paradigmatic example.

      • Well, yes. I have been racking my brain trying to think of anything Paul Krugman has said that comes within two orders of magnitude of Prescott’s nuttiness. I am coming up blank. But you must be thinking of something, or you wouldn’t equate the two as nutty Nobel Laureates and say: “when we listen to people like Prescott and Krugman we have to remember that we are drawing on the opinions of a very unusual group.” What are you thinking of?

      • Here’s why you’re getting such pushback on this. You make a good point about how Nobel Prize winners are not universal experts about everything. Ed Prescott is a great example of this. But then, in a reflexive effort to equally denigrate both the right and the left, you call Paul Krugman nutty as well. It’s just one more example of false equivalence, in which “balanced” commentators pretend that both sides are the same, when it’s clear to anyone paying attention that the right has more nutcases, in higher positions, with broader support from their side, than the left.

      • Yes, and several people have asked for it.

        In addition, the really big thing about Prescott’s statement (and similar garbage by certain Chicago guys) is that this is not about foreign policy, or this, that and the other, but about economics.

      • Krugmans constant calls for (more) quantitative easing are nuttiness. In fact, Einsteins said that doing the same thing over and over again while expecting different results are craziness.

        QE has been tried for two decades now, starting from Japan, but it hasn’t worked. QE1. QE2. QE3, big QE, “big bazooka”. And still, they are planning to do more (ECB). Why, may I ask?

        Meanwhile, in his last published book about economic frauds (The Economics of Innocent Fraud: Truth For Our Time) , revered John Kenneth Galbraith named belief that monetary policy can affect millions of private spending decisions our MOST cherished form of self-deception. So in his book about economic frauds this was the most profound of them all.

        So in this issue prescott and galbraith agree and I think there are many others. Maybe it is not that cracy after all?

    • I’m not sure I want to rank statements in order of nuttiness. Perhaps Prescott is on the more extreme end and more prone to making really outlandish statements, I’m not sure. In fact, I’m sure there are some Nobel winners who are quite reserved (Sims and Sargent strike me as very understated for instance). The main point of the post is to raise awareness that Nobel winners are a very special selection from the set of potential experts. See the comment below on the “God Complex” as well …

      • As I only have a BA and am starting graduate school next year, I’m probably not qualified to unequivocally call these nutty statements by Krugman, but here are two candidates:

        http://mobile.nytimes.com/blogs/krugman/2013/06/26/aggregate-supply-aggregate-demand-and-coal/

        An accomplished microeconomist who has done research on energy told me PK’s assertion that raising energy costs could possibly have positive effects on production and employment was “very sad”.

        http://www.themoneyillusion.com/?p=22875

        Sumner (his Bentley faculty page says that in addition to monetary policy, he specializes in history of economic thought) said his assertion that decades from now Milton Friedman will be regarded by economic thought historians as “little more than extended footnote,” was the silliest thing he’d ever heard Krugman say.

        Both these examples, if they are truly stupid, would seem to be driven by his ideological priors.

      • So now you are saying that your major point is that Peter Diamond is more likely to say nutty statements than other potential economic experts? I can’t say you are getting any clearer…

      • Professor DeLong, would you have been happier if he mentioned Eugene Fama? Haha.

        My reading of Chris is that we tend to assign a higher intellectual authority to Nobel Laureates, so if they make a bad argument we are more likely to consider and/or accept it. Since they obviously have world-class intelligence, their “wrong arguments” are likely to be better formed than those of others. Also, since they did something brilliant and revolutionary, they are likely to be independent thinkers who are supremely confident in their opinions and are unafraid to delve into areas were they do not have the very highest level of expertise and challenge the conventional thinking there as well, which could sometimes lead to them to making a bad argument. What Chris is saying is that Paul’s otherworldly expertise in trade theory doesn’t necessarily make his opinion on, say, the minimum wage more well thought out on someone who hasn’t won a Nobel, but also has someone who is also extremely intelligent and accomplished like Alan Krueger.

        I don’t think Krugman needs to have made many arguments as bad Prescott’s (or a conspiracy theorist chess master) in order for Chris’s thesis to be true. Of course, another factor could be that since Krugman’s arguments are more visible and scrutinized and therefore when he makes a bad one it is noticed more.

        Side note: If Ed Prescott is right about monetary policy, then Krugman’s statement about Milton Friedman being an extended footnote in the history of economic thought has more credence 🙂

      • Question to the professors who obviously have more experience than me: whose opinion would you trust more on the minimum wage, Krugman’s or a generic labor economist from a top 30-50 department?

      • Once again, people take Krugman out of context. Krugman did not imply that Friedman would go down in the annals of history as a footnote.

        He implied that Friedman’s contributions to economic policy would be overshadowed by Keynes’s contributions and he is absolutely right.

        In fact, the foundations of macroeconomics is about teaching Keynesianism, not about a hands-out off approach and just letting the Fed print money at the same rate as long run growth.

        Nonetheless, people will believe that Friedman’s contributions to policy making will take up chapters in books written in a hundrend years from now. This is most ludicrous when Friedman’s contributions to policy making don’t even take up a few pages in most contemporary inroductory macroeconomic textbooks.

        Basic macroeconoimics textbooks are devoted to Keynensian ideas: how taxation and spending can affect the national economy. Friedman only gets a few pages at most in introductory macroeconomic textbooks.

      • @John Soriano,

        I’m not going to touch your Friedman example because it’s really hard to speculate based on things that will happen in the future.

        However it strikes me as odd that for the energy example you’d consult a micro economist when PK was clearly making a macro argument. I say this because expert micro economists often do not take macroeconomic ideas seriously because it doesn’t always jive with their micro “sensibilities”. His argument is that increases in prices now could actually, other things equal, be good for the economy due to an overhang of debt and because of the excess savings that would be released for investment. What about this argument strikes you as remotely “nutty” from the liquidity trap economic framework Krugman is working from? He’d obviously take the standard micro argument during a period of full employment, but that’s just the problem, microeconomics seems to breakdown in some respects during times of less than full employment especially during a liquidity trap (I believe PK among others have made this very argument).

        That said, I commend you for actually citing an example.

      • @Daniel Dench

        Haha I didn’t mean to make it sound like I found the blog post so important that I ran and went to get the opinion of an economist. I had read the post that day it seemed odd to me (probably because I’m more of a micro guy myself), and happened to be talking to this professor on that day. I read Krugman, but not every single post so those were just the first two examples of questionable things he said that occurred to me.

        I’m not trying to get into a back and forth about his argument since I am not this professor (nor I do I think at this stage in my life I have more expertise in ANY field of economics than PK), but I should better represent his argument. His argument was that since it would be raising the price of specifically energy, an integral part of so many production processes, that it will never be good for employment or production, and demand will fall since producers won’t be willing to operate at such a loss.

        I wasn’t implying it was as bad as Prescott, but as I said in another comment that isn’t consequential to Chris’s thesis.

      • @J Soriano,

        I can understand where you’re coming from. I’ve also applied to attend a PhD program in the fall. I definitely don’t think I know enough to effectively criticize PK or Chris House, but getting engaged at any point will lead us in the right direction (if we’re wrong then the our more learned colleagues will either ignore us or hopefully correct us).

        I’m also more of a micro guy but I enjoy and value macro and I realize that there are times when micro fails for macro reasons. I think the point Krugman was making is that it would raise ALL prices as your professor had stated, and this would be a good thing. I know it seems antithetical to every micro bone in our body, but the argument is that inflation can clear debt and induce rather than stifle investment in a liquidity trap.

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  5. Excellent post. This has been my experience too.

    I think that big public prizes like the Nobel probably encourage top scholars to say even more nutty things, because once you have that giant gold medal, people think anything you say about anything comes from some Deep Ineffable Well of Wisdom.

  6. Great post. I wouldn’t be surprised Nobel Prize Winners were more prone to the “God Complex.” http://www.ted.com/talks/tim_harford.html

    This also reminds me of the recent minimum wage letter that several Nobel Laureates signed, but that the actual authority on the issue, Alan Krueger, wouldn’t because the increase was too large/fast.

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  8. Nobelist A says unorthodox things that are provably wrong; Nobelist B says unorthodox things, therefore we shouldn’t pay attention to Nobelist B? The syllogism fails. People who are proven intelligent are rightfully given an opportunity for our our attention – and the Nobel Prize works as a first level filter for intelligence – but when they say the earth is flat we can henceforth ignore them, regardless of “authoriteh”. I will begin ignoring Krugman when he makes a statement as provably wrong as Prescott – I’ll take the “nutty,” whatever that is.

    • This isn’t really what I mean. Brilliance is no guarantee against being dead wrong. If Nobelist A says something that’s wrong then you shouldn’t believe the statement (even thought it came from a Nobel Prize winner). It doesn’t mean that other things Nobelist A says are wrong though.

      • This seems to be one of the most unnecessary points ever made and is perhaps why people are mostly ignoring it to talk about Krugman. In the internet age where all it takes is a computer to start making public pronouncements (hey, no cracks!) does anybody believe anything just because of who says it? Far more common is the reverse, where someone begs to be taken more seriously because of their credentials or take their oponents less seriously because they are lacking. House does do a bit of a reverse flip here where one is not only supposed believe everything a Nobelist tells you, but to discount it as *less* valuable than normal. I think he misses what is going on here. Kugman gets a lot of followers not because the the letters after his name or accolades but because he articulates a point of view many people already believed but was under-expressed. If somebody is too quick to believe something Krugman or some other smart guy says it is because it is something they want to believe. I think it plausible that anti-credentialism, where people give no credit to any level of expertise, is more of a problem than credentialism, or Nobelism.

      • I beg to differ, Anthony.

        I think the opposite of what you cited. Too much credit is given in areas where it is not due.

  9. I am not sure if Paul Krugman has said anything really nutty. One example in recent posts, that I can think of being somewhat nutty (perhaps deliberately misleading, or even poorly founded is a better characterisation) was his finding that the earnings of the 40 top hedge fund managers, being as much as 300K teachers.

    One can question the system that allows for this level of income disparity. I am sure he is trying to light people up (successfully). I had even made an assertion (without proof of course) to him, that most hedge fund traders/managers will very able to teach high school mathematics. What I seriously doubt, is whether most high school teachers (or Nobel Laureates in Econ, for that matter) will be able to trade a portfolio of assets/derivatives.

    He has not replied.

    P.S. He also (deliberately again) keeps lumping the “carried interest” taxation for P/E managers with hedge funds that overwhelmingly pay ordinary taxes. (btw PK happily shares the podium with hedge fund managers quite happily – Soros – when his ideology is shared)

    He also speculates about the parentage of far too many people – whether a hybridisation of hamsters and simians- explain their views.

    • But most high school teachers and economists can beat or at least match hedge fund managers by simply investing into a very low commission ETF or Index Fund. Granted, some hedge fund managers will be the market after fees, but the majority will not.

      Much easier than teaching high school mathematics.

      • Some truth to what you say of course. The results you are referring to, come from a very long term study. Nobody stays continuously invested that long, especially when markets get volatile. Especially retail. So you need a special class of investors (like Buffet for example) to reap the returns of a very long term strategy. So mostly, the composition of investors change rather quickly.

        Not suggesting that HFs are the greatest thing since sliced bread. There is a lot of hubris. Just like Nobel Laureates spewing their fair share.

    • I am not sure where K’s assertion implies that teachers are as smart as hedge fund managers. I read it as asking whether a hedgefund manager provides a service to society more valuable than thousands of teachers.

  10. Comments swirling around whether Krugman is as nutty as Prescott or vice versa don’t acknowledge the spirit of the argument. Or perhaps your agrument is acknowedged quietly and youre choice of words noted loudly.

    More broadly, I think your point is well made. It is not a bad thing to retain a healthy degree of skepticism, or the willingness to question someone particularly when they are out of their field of expertise. At least it forces them to substantiate their thinking with a model or empirical evidence.

    Really enjoying the blog.

    • But wouldn’t that be a different post? There’s a post that says: “Prescott says nutty things. But you would expect Nobel Prize winners to say nutty things.” Instead we have a column that says “Prescott, Krugman, Lucas, and Diamond are all prone to say nutty things.” But where do Krugman, Lucas, and Diamond come from?

      • I think you and I diverge in our interpretation of the piece. I would argue that this is the post that says “Prescott says nutty things. But why are we asking him in the first place?”

        You take the fact that Chris House has named Prescott, Krugman, Lucas and Diamond as suggesting that they are gaffe prone and nutty. I read it as any four well known laureates or experts who have commented on policy in the past.

        I think the post is deliberately civil. It takes Prescott out to the woodshed for misrepresenting the concensus. It uses Krugman as a mechanism – a well known and prolific commentator on many fields of economics and public policy to make the broader point. Having made the point, the author goes out of his way to state that it is reasonable to expect Krugman to have a reasonable opinion. I don’t read any malice in it at all.

    • From Mankiew’s summary it looks like the Deaton argument is one large and common statistical error. It’s not legitimate to control for race, an IV correlated with the IV the effect of which they want to measure (inequality), to then conclude there’s no effect of the interesting IV on the DV. By controlling for the correlated IV, you’ve removed a chunk of unknown size from the effect. This is also what’s wrong with conservative blogger Iowahawk’s argument against Krugman’s point that Texas has a bad education system. Iowahawk says that outcomes are better in Texas than Wisconsin if you control for race, but that control isn’t legitimate.

  11. I don’t see anyone suggesting we should ask Ed about how to do monetary policy. I certainly wouldn’t. Just engage your Ed filter, listen to what he says, and you can learn something.

  12. Another thought:

    “OK, first off – Prescott is wrong. It is NOT an established fact the monetary policy has no effect on economic activity. The balance of the evidence suggests the opposite.”

    I’m inclined to agree, but the key question is how much? That’s very hard to answer.

  13. Thought I was done, but here’s #3. It’s clear that there are some academics who should not be let out of the nuthouse. Confining attention to Nobel laureates, it’s fair to say, as you do, that we shouldn’t let Ed or Paul run anything, and I think they both understand that, fortunately. In a more contentious case, I think that Peter Diamond would not have been an effective Fed Governor. Stan Fischer will be. I’ve seen Lucas in a room talking about policy, and he’s very down to earth and sensible. It really depends. I think some of us drift into this line of work because we’re not fit for anything else.

  14. I think a very important point that should be made is that the truth is a fearsome enemy of libertarians, especially when combined with democracy, and they know it. If the public really knew of the true full implications of libertarianism, especially long term (the strangled growth long-term, for example, from no public investment, or acknowledgement of externalities), they would recoil in horror. And there would be zero chance of anything close ever being implemented in a majority-rules democracy.

    As a result, libertarians are very hostile to democracy. At the extreme, they want only unanimous consent – which is what Pareto optimality is, so very sadly they won in a profoundly big and harmful way in economic analysis.

    What this all means is that the truth is a great danger to libertarians. They’re forced to constantly lie and mislead in a big way if they’re to have any hope of getting policy more to their liking. And this is the dilemma Prescott and so many other libertarian (and plutocratic) economists face. They just have to tell these whoppers. And I think this is a big part of it for Prescott. Ego is probably a significant factor too, as you note. And, honestly, he may be starting to lose it. You tell your B.S. long enough, you start to get old, and you may start to believe it.

    • Libertarianism/Conservatism thrives off of ignorance, rejecting of data, cooking the books, and half-baked truths. As John Quiggin rightfully pointed out, economics is really the only science that conservatives have a voice in. In every other scientific field, conservatives have been driven out.

      “That’s because, on this as on most issues (climate science, energy, environmental hazards etc), the political right has immunised itself against evidence that conflicts with its desired views. The difference between economics and the natural sciences is that natural scientists have almost uniformly rejected the Republican/right position (around 6 per cent of scientists identify as Republicans). By contrast, in economics, there are plenty of Nobel prizewinners (yes, yes I know) on both sides.”
      http://crookedtimber.org/2014/01/22/new-old-keynesianism/

      Libertarianism is a farce. I have debated many libertarians over the years and when I point out how stupid their arguments are, their responses boils down to:

      1. Denial.
      2. Shifting the goal posts.

      Most sane people do not want to live in a world without Social Security, Medicare, the Clean Air and Water Acts, minimum wage laws, child labor laws, financial regulations, food inspection, consumer protection, public education, public infrastructure, regressive or flat taxes, no financial or energy regulation, etc.

      In fact, our Founding Fathers tried libertarianism and it failed miserably (re: Articles of Confederation).

      Republicans tried libertarianism a few years back in the Northern Marianas without regulations and what happened? Sweatshops, people living in squalor, sex trade, and forced abortions.

      Remember the Civil Rights Act? The legislative act that put a stop to overtly and systemic racism? Libertarians were against that. To this day, they still find it offensive and an assault on private property.

      These people are insane, but smart. Hence why they go to great lengths to play mental gymnastics to the point of ignoring reality, shifting the goal posts, or concocting half-baked truths.

      • “Libertarianism is a farce.”
        How do you define “libertarianism?” Without context it is just as simple to say liberalism is a farce.

        “Most sane people do not want to live in a world without…”
        When you marginalize the people with whom you disagree as insane, or at least aren’t smart enough to agree with you which is something Krugman does usually at least twice a week, you then remove your obligation to make a logically sound argument.

        The Articles of Confederation were not an exercise in libertarianism. I also know plenty of libertarians and not a single one of them has ever made an argument in favor of regressive taxes. I know many other people of varying political philosophies who do not find flat taxes objectionable.

      • I gave concrete examples between liberalism and libertarianism.

        “Most sane people do not want to live in a world without Social Security, Medicare, the Clean Air and Water Acts, minimum wage laws, child labor laws, financial regulations, food inspection, consumer protection, public education, public infrastructure, regressive or flat taxes, no financial or energy regulation, ”

        You said, “The Articles of Confederation were not an exercise in libertarianism.”

        Are you for real? Dispersing powers away from a federal government was not a practice in libertarianism? Seriously?

        Another reason why I don’t take right wingers seriously anymore….they are complete morons.

        How do I respond to this?

  15. Another important point: I think what we’re seeing here, in part, is the tremendous incentive to state false equivalence. There’s just, unfortunately, so much incentive to not be fully truth based and instead have “Balance” and be “in the middle”. There’s just such a strong incentive to profess false equivalence – both sides do it – even though one side does it 100 times as badly.

    This is obviously a profoundly harmful phenomenon in traditional journalism. With the internet, there’s been an amazing revolution, with a great move toward truth-based, non-misleading, intelligent expert journalism, which I think over the long run will make our country much better.

    But, still, we have to try hard to resist the temptation to sacrifice truth and non-misleading to look more “Balanced”, and to have false equivalence.

    Sorry to be so critical. I do, overall, really like your blog so far. And we really do need more accomplished mainstream macroeconomists blogging, to hear that view and explanation.

    • Richard, I think that it’s a big problem in economics because some very big hitters have been shown to be very wrong about the economy, and also highly dishonest. They made bold predictions about inflation, were wring, refused to reconsider the models backing those predictions,and are now trying to pretend that they did not say what they said.

  16. Capablanca was a much better player than Fischer.

    “Statistical ranking systems place Capablanca high among the greatest players of all time.

    In his 1978 book The Rating of Chessplayers, Past and Present, Arpad Elo gave retrospective ratings to players based on their performance over the best five-year span of their career. He concluded that Capablanca was the strongest of those surveyed, with Lasker and Botvinnik sharing second place.”

    • Though the book was finally published in 1978, it was written earlier and does NOT include the five-year averages for Fischer or Karpov. He mentions (as an add-in) the fact that they had (for the time) the highest ELO peak ratings. You can look this up in the book OR trust Wiki:

      http://en.wikipedia.org/wiki/Comparison_of_top_chess_players_throughout_history

      As noted there, there is also disagreement over whether one can in fact compare chessplayers over time using the ELO system (in fact Elo himself says “no”) since it is designed solely to compare players in a specific pool at a specific time. You can read the Wiki article for links to other attempts to make comparisons.

    • I was a club player as a kid and really enjoy the game when I can find the time.

      I think comparing chess players over time is like comparing athletes over time; typically the best modern athletes are much better than the best athletes of 30, 50, 100 years ago. It’s just that today’s athletes have much better training, conditioning, weight work, nutrition, and technique. Athletic science advances, and it’s a huge advantage. Plus, the population gets two, three, or more times bigger, a much bigger pool to draw the very best from.

      Likewise for chess. Clearly, knowing an extra 30, 50, 100 years of advances in openings and other parts of the game? Gigantic advantage. Training with computers, engaging in modern fitness and physical conditioning so you get less tired in these grueling matches and keep your level up and mistakes down, all big. It would be very impressive for Fisher to beat Carlsen with these huge advantages – and Capablanca? armed with just the opening and other game knowledge of the 1920s?? It would be akin to Laver beating Nadal with a wooden racquet.

      Intrinsic ability that’s another question.

  17. First: Paul Krugman has already posted a response which essentially agrees with Chris House’s main argument: arguing from authority isn’t much of an argument. See http://krugman.blogs.nytimes.com/2014/01/31/i-am-not-a-wise-man/?_php=true&_type=blogs&module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body&_r=0

    But I’m disappointed that Chris didn’t man up in comments in response to Brad DeLong’s and Richard Serlin’s requests – which observations of Krugman’s were you thinking of at the time you wrote “Even Paul Krugman has been known to say some rather nutty things at times.”

    If Chris didn’t have some clear examples in mind, a graceful apology and retreat might be in order.

  18. I found the last paragraph the most interesting, regarding Fischer.

    1) I have no idea what manifests the minds of holocaust deniers, but it must be something very irrational and it probably tends towards paranoia, or in the case of Iranian leaders, it is just about politics.
    2) Regarding Fischer’s ideas about 911, nutty is just not a valid way to portray the conspiracy theories. They are pretty rational in fact. I’d go so far to say, I believe Dick Cheney knew what was going to happen that morning and he let it happen. He and Rumsfeld needed the new Pearl Harbor to invade Iraq. Denying this, in my view, is nutty. I think it is emotionally difficult for people to bear the thought, but emotion and rationality are often at odds. If a person is nutty, it usually means that they have kind of a thought disorder, or they apply inappropriate thought patters or emotional patterns in the wrong situations. You always have to ask which side of the issue is being nutty.

    So is it more plausible that the people who lied, lied and lied some more because they wanted to invade Iraq were completely honest about everything leading up to the point the lies started? Or is it more plausible that using attacks by independent groups as political ammunition has been very commonly considered and used before, and this was just another case of using the independent actions of a bad group of people to get their way?

    It is nutty to allow 3000 people to die, but it is also pretty nutty to believe that proven pathological liars just can’t be that bad. Perhaps nutty is the wrong term for the latter: a better description might be that most people are emotionally incapable of believing how bad some people actually are.

  19. Krugman seems to have misread the paper he cited about inequality and health. That is wrong — not nutty. If Prescott had said monetary policy is not effective that would have been wrong — not nutty. But what he said is that it was a scientifically established fact that monetary policy is not effective; THAT is nutty.

  20. Krugman being supposedly nutty is something ‘everyone knows’ if you watch Fox News or read the WSJ, people whos livelihood depend on obfuscating honest reasoning. The things that some people might consider nutty (e.g. the platinum coin, as I think might be one example, or the alien invasion) are not really nutty if you strip away the outrage and look at the logic behind it. There is a basis in law for the platinum coin, however controversial that basis is. And the alien invasion statements demonstrate a point that some people would still disagree with (the broken window metaphor).

    I still think it is false equivalence to say that Krugman says anything that is truly nutty.

  21. I’ll jump on board and say that I’ve never heard Krugman say anything nutty. I can’t think of a single thing.

    But I’d take issue with the idea that we should always defer to ‘experts’ in their area of expertise. Expertise is overrated. I would say that Krugman is an expert in the efficiencies of international trade and the forces that shape trade in the absence of intervention. Does that mean we should defer to Krugman on all issues of trade? Of course not! And this is the mistake that many leaders make — not defining the purpose and appropriate uses of that expertise.

    Trade is a political issue as well as an economic issue, and to claim that such large swaths of our political system should be trusted to ‘experts’ just doesn’t make for wise decisions.

  22. Krugman is light years apart from Prescott in terms of the reasonableness of his opinions. You may not agree with him, but he always makes sense.

  23. I’m still waiting for a real response to Brad DeLong’s question about evidence that demonstrates Paul Krugman says “nutty things” sometimes. I’ve been reading Krugman since before he was at the Times, and I’ve never read anything nutty. I might not agree with every point he makes, but that doesn’t constitute “nutty”. Obviously, there is no proof and Mr. House just spouted out a false equivalence. Too bad; makes him just like others who wanted to be “balanced”.

  24. “Krugman is an excellent economist so it’s perfectly reasonable to expect that his opinions on heath policy, tax policy, business cycles, finance, etc. will be reasonable and it’s worth listening to him. That said, he is not an expert on any of those topics the way he is on trade.”

    Maybe. But Krugman is light years ahead of any of the so-called experts who criticize him.

  25. Krugman will not go down in history for his “crazy, radical, and groundbreaking views” on international trade, but he will be remembered for bringing basic macroeconomics to the masses.

    Therefore, when you claim “When it comes to the best understanding of international trade, Krugman is the master of the universe. When he moves on to topics outside of trade however, his assessment loses a lot of its authority”, I wholeheartedly disagree.

    Paul Krugman understands basic macroeconomics, which sadly, many Nobel Laurettes and other economists don’t. We have experienced a complete abandonment of basic macroeconomics during this crisis. This is largely due to:

    1. Ignorance
    2. Being driven by ideological factors to quench your predefined worldviews.

    I have seen this behavior before to some degree. I was an undergraduate at some podunk state college during the tech boom. There was all this talk about the “new” economy and about how the rules were changing. Many people wanted to write “new rules”. My professor quietly said that the rule of economics have not changed and people were creating much ado about nothing. He was right.

    Krugman has been right all along, not because he “revolutionized or overturned” the literature on international, but because he applied basic macroeconomics, which have been grounded for decades, to our current problem.

    We have an AD deficiency problem and Keynes gave us the knowledge to fix this – we need to offer middle class tax relief, restore the loss of unprecedented unemployment in the public sector (i.e. most school teachers), and invest into our outdated and decaying infrastructure.

    Given the fact that we are stuck in a liquidity trap, we must relay on fiscal policy.

    It amazes me that people think Krugman is nuts for simply applying basic macroeconomics to our current problems.

  26. “When he moves on to topics outside of trade however, his assessment loses a lot of its authority. Krugman is an excellent economist so it’s perfectly reasonable to expect that his opinions on heath policy, tax policy, business cycles, finance, etc. will be reasonable and it’s worth listening to him. That said, he is not an expert on any of those topics the way he is on trade.”

    When I read WSJ editorial pronouncements about macro expertise like this from a blogger I start to wonder, “Well, why the hell should I listen to some self-published nincompoop on a blog make stentatious pronouncement on a blog about macro expertis unless he/she has clear credentials to make any such ability to render forth a judgement on macro expertise?”
    In particular, “Why should I pay more attention to said blogger than Krugman”?

    Nothing on the articles on the first screen provides an answer to this question or provides any evidence of special macro expertise. But then I’m just an anonymous commenter presuming to judge. Right? (The comparison to Bobby Fischer is particularly annoying? Why no go full Monty/Godwin and compare Kruggles to Hitler? Or maybe Ezra Pound or Blake? Or why not compare oneself as blogger to one of those persons wandering down the street muttering to themselves?)

    • Robj,

      Chris is a macroeconomist at Michigan, a top 15-20 economics department in the US. There’s a reason Krugman felt it was worth acknowledging his post.

      • In that case Chris can man up and post those examples.

        Sheesh, being a tenured econ professor at Michigan isn’t much; I can find a whole zoo of hacks, cranks, whores and frauds in higher-ranked programs.

      • Of course there are less than stellar performers here and there. But Michigan is good program. With good faculty. To say otherwise is wrong.

    • I think you are missing the point, and doing so in an extremely uncivil manner.

      The point is that expertise in economics is narrow. No economist is the repository of all economic wisdom. There is no ‘one commentator fits all’ in economics.

      • And ridicule is the tribute paid to the genius by the mediocrities.

        Calling Chris a ‘self-published nincompoop on a blog make stentatious pronouncement on a blog about macro expertis unless he/she has clear credentials to make any such ability to render forth a judgement on macro expertise’ is incivil. It advances no argument and scores no points for any team.

        Is improving the tone of the debate an unspeakable aim?

  27. On the issue of authority in economics, I would say that nobody deserves authority. If you want authority, you should go into divinity. Otherwise the public rightly has authority over the economists when the economists profess to have important ideas about policy.

    If an economist disagrees with another about something important, let it be heard in a public forum. I suspect, however, that many economists are kind of like engineers in that they don’t embrace the public aspects of their jobs. Some just want to hide out and crunch numbers. There’s nothing wrong with that, but their ideas shouldn’t be allowed to change policy unless somebody can explain why their ideas are the best, and if somebody can defend them against public scrutiny.

  28. It seems like Brad Delong likes this blog.

    He will go down in history by being a blowhard, a neoliberal, and then someone who sucks off Krugman.

    • I don’t think he’d be offended by the first 2 assertions, but how does he suck off Krugman? Others say he is a follower of Summers but I don’t see that either. You at least have to give him credit for having humility, don’t you? I’ve seen few economists admit their faults as openly as he does.

  29. A very interesting aspect of this post is the haste with which so many people have pounced on a single sentence and turned the forum into an impassioned defence of Paul Krugman’s non-nuttiness and a debate about what constitutes nuttiness.

    That sentence didn’t even strike me as anything when I first read it.

    Were that single word ‘inaccurate’ rather than ‘nutty’, I suspect the whole thing would have met with near universal approval. I say near, because one commenter cites a Nobel as a filter. I would say this may be true, but not because the TV stations use it as a filter, but because they know the viewing public do. The TV stations and print media know a Nobel establishes credibility quicker and more easily than 30 years of work in a sub-field with many A* journal cites.

    As such, it seems rational for the newscasters to put the Nobelists front and centre only as long as we choose to consume them.

    Does this have an impact on public policy? Perhaps. Krugman’s following is impressive. I would like to say influential, but I don’t know how to quantify that. Influencing the public can affect how public policy is directed from higher up.

    But as long as the right people are in the right places in the policy making institutions, then at least it is the experts that are pulling the levers of policy.

    An analogue to this, and leaving aside nutty, but think about the summer of Yellen / Summers for the Fed.

    Summers is a polymath. Brilliant. Pound for pound, as an economist, better than most and as good as any. But Yellen, on the other hand, has so many years of thinking exclusively about monetary policy and nothing else. He is a great economist, but she is an expert.

    Does anyone doubt the appropriateness of that decision?

    Can I get away with saying that? Are the Summers fans as prolific and vociferous as the Krugman supporters?

    • I think you’ll find that almost anyone, when (s)he writes a blog or articles in the popular press, occasionally says some nutty things. It’s the nature of the beast – you write stuff while you’re tired or grumpy, you aim at one audience and your post gets read the wrong way by another, you just don’t realize how something sounds the first time you write it, etc. etc.

  30. I think that Krugman and Prescott (and Diamond and Lucas) were an example of “thinking outside the box”. False equivalence seems to be the problem in this post. But, if you think inside the box, you may get most things right, but nobody is going to be impressed. If you think outside the box, you may be a Nobel Prize winner but you may have to retrieve some thoughts from Mars (or worse, Prescott’s is some light years away). After all, Krugman gave us a theory of interstellar trade. Of course, the problem is: It made more sense, than Prescott’s comments.

  31. It’s clear that Chris House isn’t going to risk offering a example of a “nutty” Krugman idea. He had a simple thesis- that men acknowledged expert in one area might be accorded too much respect in others, but tried to wholesale the idea to all political stripes with a false equivalence. Krugman may be strongest on trade, but I’ve yet to see an argument of his for which he fails to offer clear empirical and logical evidence. That’s not to say he’s invariably right, but if House is going to call him “nutty” he should show how at least one or two of Krugman’s argumets can be easily refuted on empirical or logical grounds. Otherwise it’s clear that House is taking sides while pretending to be even-handed.
    Still, the fact remains that he’s onto a phenomenon that does exist. James Watson was a co-discoverer of DNA, and is on record saying hilariously goofy things about inherited intelligence. There are plenty of people of racist bent who listen to him and say,”He’s got a Nobel in the genetics field, so he must know something about heredity.”

    • This is about a brewing disagreement between Krugman/Delong and Noah Smith. Noah learned from Chris, and Noah sometimes disagrees with Krugman. Krugman does occasionally make a mistake, and people like to pounce on that. Noah found a couple of disagreements with Krugman over the housing bubble, and he also takes a more behavioral approach to macroeconomics, which can be good or bad.

      Noah hangs out with people from all over the political and economic map, and his desire to remain friendly with all types affects his judgement. He gives too much credence to correlations in my opinion, a common bad habit among financial types. Krugman sometimes takes a view that is too abstract.

      Nobody is perfect. Nutty was just a bad choice of words. He should have said questionable or something else.

  32. Pingback: Krugman’s blog, 1/31/14 | Marion in Savannah

  33. While Krugman does occasionally say the odd questionable thing he’s never said anything as silly as Prescott. Then there is also the inescapable fact that while occasionally drifting into hyperbole he’s been fundamentally correct in his diagnosis of the nature of the US economic crisis and it’s remedies. Prescott and his “cult” have been uniformly wrong.

  34. Having followed Krugman closely since the 90s, the “nuttiest” thing I can recall from him was a recent blog post stating that the Trans Pacific Partnership was no big deal because barriers to trade between the participants was already quite low.

    http://krugman.blogs.nytimes.com/2013/12/12/tpp/

    Now, in terms of free trade deals everything he wrote was actually quite sensible; the problem was that the TPP isn’t primarily about free trade — in fact, it’s quite the opposite. So it was a bit surprising to see Krugman taking a position on an issue given such limited understanding of it.

    Is this an example of a “nutty” statement? Well, consider what happened when Dean Baker and others took issue with the post: Krugman acknowledged the criticism and the fact that he needed to “do some homework” on the subject.

    http://krugman.blogs.nytimes.com/2013/12/14/tpp-and-ip-a-brief-note/

    Everyone is wrong sometimes. I think whether we classify this as a simple mistake or nutiness depends a lot about what happens next. Do you acknowledge the error? Do you seek out more information and either clarify or change your position based upon what you learn? Or do you double down and cherry pick data to justify your position just to avoid admitting you are wrong?

    (For the record, Krugman has not yet gotten back to us regarding the TPP. I really wish he would.)

  35. Chris. Just apologise for the false equivalence, say ‘lesson learned’, and mean it. You are not old media with commercial imperatives to be all things to all people, hence advertisers. Your Internet imperative is to gain a reputation for avoiding false equivalence. I might have bookmarked you if you weren’t pathetically pretending to be ‘balanced’. My No.1 Internet filter is honesty and you don’t honestly think that Krugman has ever descended into nuttiness.

    ps You had a point. Pity you obscured it.

    • Well said AlanDownunder (and Andrew Burton earlier). Chris’ failure to apologise is making him look both stubborn and foolish.

      People don’t pay attention to what Krugman says just because he once won a prize, as you can clearly see from the fact that everyone obviously thinks this Prescott guy is a total nutcase. They do so because he has a convincing model for understanding the current economy, which has been extremely successful at both predicting and explaining the effects of policy over the past few years. (While most others have been making fools of themselves by continually predicting either imminent recovery or runaway inflation.)

      Intelligent people do not accept arguments from authority. They use their brains to decide which arguments make most sense (and best fit the evidence). They also admit it when they make a mistake.

    • Wow. Withhold your bookmark. That plus a condescending lecture. Way to teach him a lesson.

      Who are you to act as overlord of the internet and dictate people’s imperatives?

      Not ‘he had a point’. He has a point. You choose to focus on a single sentence. If that is going to blow your mind, then so be it.

  36. Chris, The reason so many people are impassioned about “a single sentence” is not their worship of Krugman. Conservatives and the Republican party these days have become violently anti-science and anti-empirical. Their constant use of false equivalences or outright nonsense is, from the point of view of non-conservatives, the means they use to cover up the weaknesses in their position. Thus evolution is a “theory”, there’s a “debate” in the scientific community about global warming, Ted Cruz and Al Franken are similarly silly. The argument that Obama is an anti-colonial socialist influenced by the Mau Mau (never mind that his father was Luo, and had nothing to do with the Mau Mau, an almost entirely Kikuyu and in no way socialist movement, and his grandfather was fairly collaborationist) suggests that Democrats are somehow as extreme as Republicans.
    Your single sentence seems to fit right into this pattern- never mind the rest of your position. “Prescott can be nutty but so can Krugman” is a faults-on-both-sides argument that doesn’t hold water. You know it, but you’re upset about the violence of some of the attacks. Several people have admitted and even endorsed your greater point (I’m one), but the single sentence cannot be taken out of the context of the current political situation. THAT’s what the brouhaha is about. Cheers, Sasha

  37. The people that are screaming “false equivalence” are the only ones looking at this piece through the lens of political affiliation. If you look at most of Chris’ blog posts so far, they are mostly about somewhat esoteric questions of the methodology of economics. This blog isn’t titled, “Conscience of a Liberal” — it clearly isn’t meant to be a polarizing political economics blog. Chris said nothing that directly implies he picked Krugman as an example because he wanted to fill a “liberal quota” to show that “everyone does it.” To me, it just seemed he picked Krugman because he is well-known and a lot of people listen to him on a wide variety of issues. When I first read this, I didn’t even think of the political orientations of the economists he mentioned. I just viewed Prescott, Krugman, Lucas, and Diamond as fairly well-known Nobel Laureates.

    Professors who are reading this, please correct me if I’m wrong. However, I’ve talked to academic economists who don’t like certain blogging economists’ politicization the economic debate, and they often mention bloggers who have the same political orientation as themselves. While there are certainly disagreements within the profession, they don’t seem to make economics as much of a two team sport as it seems to the general public. Of course, it is not possible to completely avoid politics when discussing economics, but it seems that politics was the primary lens that many of the commenters here were reading this post, whereas the primary lens that Chris was writing it through was not politics. I highly doubt he was trying to make a statement of political equivalence when he wrote this.

    • John, there’s a significant problem with this point of view. The problem is that Milton Friedman is essentially a political figure rather than an economist. Paul Krugman has become a political figure. Macroeconomics is inherently political. The largest mistakes in macroeconomics are made by those who don’t recognize the political implications of their ideas.

      When people look at statistics and correlations and make seemingly inane comments about them, they need to be aware that those correlations represent people. If you don’t like that about economics, you should probably go into physics or engineering or mathematics.

      You simply cannot escape the political aspect of macroeconomics.

      This was the first post from Chris that I’ve read. From this post alone, I think I understand Chris and I think he’s probably pretty smart. He’s probably a good economist. However, statistics can be a dangerous political tool, and when a person relies only upon empirical, statistical facts to form ideas that affect huge populations of people, they need to prepare themselves for attack!

      • I said, “of course, it is not possible to completely avoid politics when discussing economics.” If, as Chris’s critics are saying, every single sentence is important, then that rule should apply to me as well.

        There is a significant difference between the level of politicalization in a post about the strengths and weaknesses of DSGE models than a post about why Paul Ryan is intellectually dishonest and views about austerity and monetary policy are ideologically driven. This blog’s posts take the tone of the former, and there are many economics blogs that take the tone of the latter. I personally think there is room for both, but people who comment on blogs should be cognizant of what they’re commenting on.

        Chris actually clearly states his motivation for blogging here: https://orderstatistic.wordpress.com/2014/01/09/the-social-value-of-blogging/

      • Statistics can be a dangerous political tool is correct. I am costantly reminded of the declaration that a poor economist uses statistics like a drunk person. For support, rather than illumination.

        But Chris is not using statistics as a tool here. There is no politics in his argument. Protestors are inferring politics. That is, they are seeing threats and slights where there are none. They are trying to politicse an apolitical blog post.

        I am sure Chris would rather have used ‘inaccurate’ or ‘incorrect’ instead of ‘nutty’, if only to not aggravate his more passionate readers. But his point was apolitical. The point is we are all human. There are gaps in the knowledge of all economists and commentators. And we need should refrain from deferring to ‘experts’ unless their expertise in a field is beyond question.

        The choice of Krugman in the post reflects the fact that he is the best at what he does. This makes him an obvious choice to drive home the point. Political affiliations are irrelevant.

        Now, some economist bloggers are partisan. Krugman is one. But many aren’t. There is nothing in any of Chris House’s posts that suggest how he votes. Just a desire to elucidate some economic concepts. This post is a tangential concern. That expertise is so hard won that a Nobel is signal of knowing a lot about something, but not everything.

        Krugman is decent guy. Decent enough to accept this post in the spirit in which it was written.

      • Funny thing is, if it is correct that Milton Friedman is “essentially a political figure” and that “macroeconomics is inherently political” then my earlier comment about PK’s post about Friedman being an extended footnote in the history of economic thought becomes “nuttier.” The overall importance of Friedman’s contributions to economic science is much more debatable than his influence on American political thought.

    • “The people that are screaming “false equivalence” are the only ones looking at this piece through the lens of political affiliation.”

      No, Chris’ post introduced the politics, and with it the dishonesty. He doesn’t really think that Krugman descends into nuttiness, but he feels some political need to pretend that someone allegedly left of centre does and picks a convenient Nobelist.

      That’s why I’m screaming at him. He’s writing through the lens of pretend political non-affiliation which operates as, if not betrays, actual affiliation.

      • Unsurprisingly, Krugman puts it better at http://krugman.blogs.nytimes.com/2014/02/04/moderate-me-me-me-blogging/

        “So where does the notion that I’m way out there come from? Politics, of course. But if you look at the examples people give of me supposedly saying something wild about economics, you’ll almost always find that they’re doing one or both of two things: citing an example where I was wrong (which is by no means the same as being nutty — it happens to everyone), and/or quoting something where I was being playful to get readers’ attention for a larger point. Space aliens? Hello?

        In fact, in a way the impression that I’m some kind of far-out thinker largely comes from my willingness to go with what mainstream macroeconomics actually says, rather than shading my views and language to appease the Very Serious People. “

  38. Agree with the points about false equivalence. It is painful to read reasonable and sincere people falling into the trap that “basically we are all reasonable and sincere.” To be an American conservative now is to be a guerrilla warrior fighting for a cause. If you don’t have the facts make it up. If you get caught making it up change the subject. If you are not able to change the subject then attack the credibility of your opponents. None of this is accidental. Conservative institutes have all the policy they need so are now all about pushing though The Answer by any means necessary. Their insistence, always and forever, that the solution is low taxes for rich people and deregulate everything because rich people are incorruptible (their wealth self-evident proof of their inherent godliness) has become a joke.
    I think some points have been missed about Krug:
    1) He was a well-regarded commentator for over a decade before “the Swedish thingie”. If there is evidence of Krug going all imperial on us since I haven’t seen it.
    2) Krugman’s popularity has at least as much to do with his ability to make clear, logical, data dense arguments as with his credentials. His PhD matters, but for an unusual reason: For decades the right has gotten away with rhetorical murder by patronizing the left for their lack of understanding of business and economics. Sure, it would be nice to do something about poor people or tax rich people more, but as you didn’t study economics or run a business you don’t understand how things “really work”. Krugman rams a stake into that vampire argument, delighting liberals, driving conservatives insane, which delights liberals all the more.
    3) Krugman writes a lot. As he might say, to pick out a couple of odd remarks without considering the volume of material it comes from is sad.
    4) He is interested in a lot of issues, reads widely technical material, is very smart, and writes like a friend sharing interesting observations rather than a demi-god handing down truths from Mt Olympus. To not at least listen to his thoughts on anything that has caught his attention is either an act of self-delusion or self-abuse.
    5) Krugman puts up with a lot of crap. That he does not more often lose his sense of decorum and say something impolitic is remarkable. The way it looks to me is Krugman is of the sort to be interested in how things work rather than knowing how things work and interested in getting enough crazy people on board to push through an agenda. Much of his exasperation seems not with failure to convince opponents but failure to get a thinking argument out of them. He lays out his case for X based on data Y and model Z then innocently awaits for someone to present the case for not-X based on data Y’ and model Z’ but is instead forever being dragged into idiot, hack-politics arguments like “you said this but 10 years ago you said that! Ha Ha!”, or forced to comment on some zombie idea like tax cuts paying for themselves. After being exposed as relentless hacks they theatrically throw up their arms, declare that Krugman believes the government can spend us into prosperity, and go home, job well done.

    • Wow, you and the pack of lunatics commenting at the bottom really do live in sad times if the embarrassing ramblings of an old guy off his meds counts as a “nailing”. From this expose I learned that the proper response to someone invited to give a talk is to start out arguing he is not qualified to be there (then bark like a dog when called on it), that “saving is good” (always! Well argued!) and that when you dare to say that helping the unemployed at the expense of “robbing” bond holders 3% pa sounds like a good trade the “nailing” response is to change the subject and pretend you were being attacked for hating the poor.

      Thanks for the link. Krug was intelligent, informed, and far more gracious than he needed to be.

      • I’m trying to work out what the difference is between Chris House and Pedro Schwartz. Enlightenment would be welcome. Both esteemed and well-credentialled economists, but at least Pedro didn’t accuse Paul of nuttiness. I guess that’s a start.

  39. Pingback: A Well-Known Liberal Bias | Orderstatistic

  40. You mean Livia, Anthony? I thought her take on inflation was decidedly mainstream, moderate and centrist. Nice of Pedro to absolve her, and incidentally himself, of any moral opprobrium that a nutty liberal like Krugman may have intemperately implied.

    • Sorry to be repeditive, but what Pedro did was take a play out of the Big Book of Hack Political Argumentitiveness: If you have no response then make it all about you and put on a big show about being offended. Thanks for the name correction though. I was kind of distracted and didn’t catch much of what she said…

      • T’s ok Anthony. Maybe I need to restrain my antipodean facetiousness.

        I agree with your every observation, most of all your testimonial to Krugman’s intellectual honesty and his restraint in the face of the vituperation, or worse, patronising, he gets in lieu of rational engagement.

        I’ll add to my invitation for someone, anyone, to distinguish between the rhetorical methods of Chris House and Pedro Schwartz another invitation: to distinguish between the intellectual depths of Livia on one hand and, on the other, the likes of Trichet, Merkel, and US Fed board members who are still happy to see 2% inflation as a ceiling rather than even a target average.

      • Alan, apologies for the misunderstanding. As a Canadian my sense of irony is usually better. I blame excessive converstations with Americans – the land where irony goes to die.

        How did you guys end up with a great word like “antipodean”?

  41. Still looking for an example of anything Paul Krugman has said–or Peter Diamond, or even Robert Lucas–that is within two orders of magnitude as nutty as Ed Prescott.

    Come on, Chris House. You must have had something in mind. You believe that Nobel Prize winners are prone to say nutty things, and when you went for examples of Nobel Prize winners who said nutty things, the first names that came to your mind were Prescott, Krugman, Diamond, and Lucas.

    Or did you not have anything in mind at all? Did you think: “I can’t just say Prescott says nutty things–conservatives will get mad. So I have to say ‘Prescott and Krugman’. But I don’t want to appear to be judging Prescott and Krugman, so I have to add Peter Diamond. But then I shouldn’t give more liberal examples than conservative one, so I have to add Lucas on.”

    Your unwillingness to give examples makes me think that, in retrospect, you don’t mean what you wrote, and that the [strike] tag is called for. It’s very useful…

  42. Didn’t Paul recently say that he thought Friedman would be relegated to an extended footnote in the history of economic thought? I think that some people would think of that as being a little nutty. Actually, when I wrote the blog post I didn’t have something specific in mind. I was just aware that when I read him, every now he would write something that seemed a bit weird (over the top, exaggerated, excessively facetious, excessively certain, etc.). Sometimes Krugman will say something that sounds crazy just to get people’s attention — that’s fine but how do you know that Prescott isn’t doing the same thing? The fact that Prescott says offbeat things sometimes (often?) doesn’t really tell us that much. We are the ones who determine how to value and interpret Prescott’s work. Even if he believes in some completely crazy idea, his Nobel Prize is awarded for the work he did that *we* value. We simply ignore the ideas that we don’t value.

    And I didn’t say that Nobel Prize winners are prone to say nutty things. I said they were people who think unusual thoughts and we should keep this in mind when we ask for their opinions (particularly on areas outside of their expertise).

    • I think I get it, Chris. It’s not a matter of the rhetorical devices – unparticularised accusations of nuttiness and temptation to credentialism – but rather the tone with which they are deployed. I’m sure Krugman values your professional courtesy, as he does Schwartz’. Nothing you’ve written could possibly give those gentlemen over at Zero Hedge or the Wall Street Journal the wrong idea.

    • The Friedman line is from here http://krugman.blogs.nytimes.com/2013/08/08/milton-friedman-unperson/. As it appears at the end of a long argument, part of which is to blame conservatives for not having a place for him because of insufficient unreasonableness, I am curious where Krug goes off the rails. I am not sure who has to be warned off from this apparent nuttiness, as most people do not know or care who Friedman is and those who do will have their own oppinions. Anyway, I am ready to back off (I know, yippie), as “nutty” has been degraded to “over the top, exaggerated, excessively facetious, excessively certain, etc.” I hate it when people say, “I don’t care what you meant, this is what you said!”

      Again, the last line is not that interesting. We listen to these unusual people not be be deluded but in the hopes that they will say something interesting/provocative. I think the more important point is to be on guard for looking in the words of the credentialled comments that support our biases rather than worry about creating new ones.

    • Ah, so we are finally getting somewhere!

      Chris House: “Didn’t Paul recently say that he thought Friedman would be relegated to an extended footnote in the history of economic thought? I think that some people would think of that as being a little nutty.”

      So do you–not “some people” but you–think that http://krugman.blogs.nytimes.com/2013/08/08/milton-friedman-unperson/ is, in your words, a “rather nutty thing”?

      If so, why? I thought the column was insightful and informative. What in it do you think is wrong? What place in the history of economic thought do you think Friedman will have in 50 years? What relevance do you think Friedman has in the current policy scene?

      If not, why is this the example you set forward when asked what things Krugman says that are “rather nutty”?

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  45. A smartly conceived post, Chris! I just passed it around. I would disagree that Nobel laureates lack wisdom outside their narrow swath of achievement. The 200m champion is generally awesome at the 400m, 200m, and long jump too. The same holds in our field. The bigger issue is personality. Nobelists and those near that rung frequently have huge hubris verging on god complexes. They forget the critical importance of scientific humility that got them there in the first place, the insight that all ,models are wrong, etc. This is the Achilles Heel of Krugman, Prescott, and many near Nobelists. In the end, it proved their undoing. There are exceptions (Dale Mortensen, eg. was one, but even he was quite self confident).

    • There is surely continuity in wisdom. I guess the issue is how fast your expertise drops off as you move away from your area of expertise. The 200m champion will be good at the 400m but what about a marathon? Triathalon? Tour de France? Baseball, Ice Hockey, gymnastics, … I’m sure that comparing a 200m champ vs. an ordinary person in terms of their ability to do ballroom dancing you would probably do OK betting on the athlete but clearly they are going to be well out of their element.

      I totally agree on the “God Complex” problem. To add to this problem, I suspect that their are people who intentionally give the impression that their conclusions are more certain than they really are for political reasons. Krugman might be an example of this. He knows that a lot of the policy assessments he makes are not certainties but if he is candid about these limitations, it’s possible that political opponents will use the admission to seize an opportunity to advocate other policies.

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