27 Apr 2013

Why Economists Will Soon Be Lynched

Economics, Federal Reserve, Krugman, Scott Sumner 13 Comments

I am going to accelerate my transition into stand-up comedy, because the public is going to turn on economists very, very soon. Look at this:

1) Krugman argues that severe US fiscal austerity explains our dismal economic growth.

2) I say no, there hasn’t been fiscal austerity. In fact, we have record-high spending, and that explains our dismal economic growth.

3) Mike Konczal says the authorities have done exactly what the market monetarists wanted: The federal government has engaged in severe fiscal austerity, while the Fed has aggressively upped its purchases. The latest GDP numbers show what an abysmal failure this has been. The Keynesians were right, after all: We need budget deficits to get out of this mess.

4) Scott Sumner says no, we haven’t gotten level targeting of NGDP, which is what the market monetarists want. But anyway, Scott continues, the government’s severe fiscal austerity and easing of monetary policy has led to the recent GDP numbers, which are better than last year’s. So the market monetarists were right, after all: We don’t need budget deficits to get out of this mess.

* * *

I don’t care whether you’re Austrian, Keynesian, or Sumnerian: The above is messed up. If Joe Schmoe tried to follow the economic debate on the blogosphere, he would be very upset, as you can understand, and rightly so.

13 Responses to “Why Economists Will Soon Be Lynched”

  1. Andrew_M_Garland says:

    The common man can do economics on a cocktail napkin just like professors at Harvard. Don’t be afraid of a few equations. They are only addition and ratios in a form that will impress your friends.

    DIY Stimulus Policy
    06/26/10 – Easy Opinions

    – –
    Fred:  What is your analysis of stimulus spending?
    Economist:  “4=2+2″ so stimulus will increase GDP and jobs.
    Fred:  Are you nuts?

    Economist:  Oh, I meant to say “GDP = All production in the U.S.”, so stimulus will increase GDP and jobs.
    Fred:  I don’t get it. That’s only a definition.

    Economist:  Oh, I meant to say “GDP = C + I + G + (X – M)”, so stimulus G will increase GDP and jobs.
    Fred:  That’s impressive.
    – –

  2. Tel says:

    A little off-topic, but I wonder what Krugman thinks about the German anti-Euro party called “Alternative für Deutschland” given what Krugman has repeatedly said about how the whole Euro concept is bad, because it prevents national governments printing money at a whim, etc.

    Krugman should be a great supporter of AfD you would think, except Krugman is strictly a supporter of mainstream parties, and AfD are probably much too dry conservative for Krugman to get along with. Besides, AfD want to reduce central bank market intervention.

    Just to perhaps get a tiny bit back to the topic of lynching economists. The leaders of AfD happen to be economists.

  3. Daniel Kuehn says:

    re: “I don’t care whether you’re Austrian, Keynesian, or Sumnerian: The above is messed up. If Joe Schmoe tried to follow the economic debate on the blogosphere, he would be very upset, as you can understand, and rightly so.”

    Wait, we’re debating?

    I’ve just been renting a chimpanzee to type out my macro posts in the hopes that he’d come up with Shakespeare.

    • Ken B says:

      Chimpanzee? There’s your mistake. Rent a bonobo.

  4. Bala says:

    Bob,

    When all these “economists” of different stripes talk of economic growth, what do they mean by that term? If, as I presume, they are all talking of percentage change in GDP from one time period to the next, why is the discussion meaningful and economic at all, at least to an Austrian? Isn’t GDP a fundamentally flawed measure of economic output given that it completely ignores capitalist saving and its critical role in production? Hasn’t Rothbard’s Fig 41 long since demonstrated that GDP is utter nonsense as an attempt to “measure” economic output? Isn’t the reason the discussion looks utterly lynch-worthy simply because 3 out of 4 “economists” in your list are not making any economic sense at all given that their “arguments” revolve around the economically meaningless and misleading concept of GDP?

    • Major_Freedom says:

      The average Joe Schmoe still believes in GDP as a reliable indicator.

      One battle at a time.

      • Bala says:

        I don’t see how other battles can be won till you win this one. As evidence, I present Lord Keynes.

        • Major_Freedom says:

          I don’t think there is an order between these two battles in terms of which one is necessary before the other can be fought.

          • Bala says:

            Not when something forms the core of an argument. Ever notice how LK always “bounces back” after every trouncing (you are probably the best witness to that having trounced him endlessly) with GDP data? I wonder what LK would do if he were forced to admit that GDP is nonsense.

  5. John B says:

    The epistemological problems in economics today are truly, truly sad. The same goes for other complex studies like climatology and the whole global warming debate. The more I read stuff like this the bigger a fan I become of Mises’s views on the value of a priori theory.

  6. Jim Hodge says:

    When considering the various forces it takes to achieve freedom a democracy must always stand vigilant. Jimhodgeblog.com

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