09 Jan 2015

Explaining the Mysterious Sachs to DeLong and Wren-Lewis

DeLong 18 Comments

[UPDATE below.]

Jeffrey Sachs wrote a post critical of Paul Krugman, who lately has been running victory laps over the Obama recovery without acknowledging that he (Krugman) has spent the last two years warning of the horrible effects of sequestration. As you can imagine, the Keynesian bloggers were none too happy about it. Right now, I won’t tackle the big-picture issues. Instead I want to reassure two of the bloggers because they seem really mystified by a particular statement from Sachs.

Specifically, Simon Wren-Lewis wrote (and he was clearly referring to Sachs’ post): “[I]t is a sad day when anyone thinks that 2.3% growth is “brisk” when we are recovering from a deep recession and interest rates have remained at the ZLB. It is so very dangerous when these diminished expectations become internalised by the elite.”

That wasn’t original with him. He had been reading Krugman who had linked to Brad DeLong, who published the following post (and this is the whole thing, I haven’t cut any of it out):

2015.01.05 DeLong on Sachs

I wouldn’t have called it a “sad day,” let alone suggested Sachs had “lost his mind,” but I can see why Wren-Lewis and DeLong are puzzled. It is odd that Sachs would put so much weight on a lackluster 2.2% (or 2.3%) GDP growth rate, calling it “brisk.”

But you know, that Sachs quotation in DeLong’s post has a bunch of ellipses in it. I wonder what would happen if we filled in the parts from Sachs’ post that DeLong edited out? Just for fun, let’s try it:

Yet, rather than a new recession, or an ongoing depression, the US unemployment rate has fallen from 8.6% in November 2011 to 5.8% in November 2014. Real economic growth in 2011 stood at 1.6%, and the IMF expects it to be 2.2% for 2014 as a whole. GDP in the third quarter of 2014 grew at a vigorous 5% annual rate, suggesting that aggregate growth for all of 2015 will be above 3%.
So much for Krugman’s predictions. Not one of his New York Times commentaries in the first half of 2013, when “austerian” deficit cutting was taking effect, forecast a major reduction in unemployment or that economic growth would recover to brisk rates.

Paints a different picture of Sachs’ mental health, doesn’t it? And Mr. Wren-Lewis, turn that frown upside down–it’s a happy day after all! Nobody was suggesting that 2.2% (or 2.3%) GDP growth was “brisk.”

UPDATE: Without there being any evidence in his comments as to whom he is responding (I don’t mean to me, I mean if someone raised this issue in the comments, that comment is not there), DeLong addresses the concerns I have raised in this post in this manner:

5% for one quarter does not imply >3% is likely for all of 2015. Certainly the bond market does not see such growth. You have moved from “growth has been brisk” to “growth will be sorta-semi-kinda-brisk”.

But, seriously, how many moles do I have to whack here? How many moles are you going to demand that I whack here? I try to edit quotes so that they are far and short and focused on the main point…

18 Responses to “Explaining the Mysterious Sachs to DeLong and Wren-Lewis”

  1. Major.Freedom says:

    Of course the usual suspects in the Keynesian blogosphere have to fall back on linguistic prescriptivism and create a sideshow around the word “brisk”.

    We didn’t have another 1937, but we’re not supposed to be optimistic and positive about it because there was austerity, whatever that is supposed to mean for political purposes of the day, and that in turn means it was not the Treasury that prevented another 1937. If we’re optimistic about something the Treasury didn’t do, that reduces their political clout, and makes it more difficult for Keynesians to be the high priests of economic health.

  2. Andrew says:

    That is one of the worst hack jobs I’ve ever seen. He even switched the case of the letter R in “Real” in order to make it appear that it came in the same sentence as the word “Yet.” And it’s not like including the entire paragraph would take up way too much space (as you show above). If he wanted to emphasize the parts that he quoted he could have bolded them and done the “[emphasis mine]” thing.

    This type of mischaracterizing of source material would get you an F on a college paper. I think Brad should be suspended from the Internet for 1 month without pay.

    • Major.Freedom says:

      DeKrugman must have free speech.

      After all, the more they speak, the more they help our case, lol.

    • Bob Roddis says:

      I submit that the Keynesian narrative is similar to all of the current phony narratives of the regime. Think of the narrative about Ukraine. There is no acknowledgement ever in the MSM that the US conducted the coup that overthrew the elected head of state or that the plotting of the coup was broadcast 3 weeks in advance over youtube (Scott Horton interviews Ray McGovern here and there’s a link to McGovern’s receipt article on the subject):


      Similarly, the Keynesian narrative starts in the middle of the story leaving out the part where central bank shenanigans starting back during WWI were the cause the problems in 1936 and not the market.

      I submit that the mainstream response to every aspect of libertarian and Austrian analysis has been distortion and suppression of our position and a total refusal to seriously engage it.

      Since this occurs 100% of the time, additional episodes of this phenomenon should come as no surprise.

  3. Tel says:

    The sequester was not a big cut, I doubt it made much difference at all in the scheme of things. The IMF gets a lot of stuff wrong, especially predictions, so I wouldn’t count those GDP chickens just yet. The unemployment figures look better than they really are because so many people have just abandoned the idea of every finding work again, and because part time low wage jobs are growing faster than real jobs.

    Anyhow, I agree that economically the USA has bounced back a little bit. Better than a punch in the eye.

    For sake of argument, let’s suppose that Sachs did regard 2.2% real growth as “brisk”, under the circumstances how crazy would that be? What sort of crazy would be a suitable comparison?

    Here’s what Krugman said about that relatively small cut knows as the sequester: “one of the worst policy ideas in our nation’s history”“fiscal doomsday machine that would inflict gratuitous damage on the nation through spending cuts”“almost everyone now agrees was a really bad idea”“a double whammy, reducing growth while increasing injustice”“the sequester is relatively small potatoes”

    Also (elsewhere): “This was designed to be stupid.”“It’s insane, top to bottom.”

    Yeah, I used a few ellipsis there to cut up what Krugman said so it does not flow as a meaningful narrative (as least I admit it, unlikely Brad ever will). The intention is to give a flavour of the sort of adjectives Krugman has been throwing out there (remember, Sachs just used one word “brisk”). And yeah, he really did use “worst policy ideas in our nation’s history” and “relatively small potatoes” to refer to the same policy, in the same article — but I had to include the “small potatoes” phrase because it’s one of the few bit Krugman got right.

  4. Bob Roddis says:

    Left leaning Robert Parry noted that Krugman has joined the herd in distorting the actual truth about Ukraine:

    Krugman, who is quickly jettisoning his reputation for thoughtfulness [???], published a second column on this topic in a row, showing that he has fully bought into all the propaganda “themes” emanating from the U.S. State Department and the compliant U.S. mainstream news media.

    In Krugman’s mind, it was Putin who instigated the crisis with the goal of plundering Ukraine. Operating from that false hypothesis, Krugman then spins off this question: “why did Mr. Putin do something so stupid?

    What is really so different about Krugman’s writing on Ukraine vs. his writing on the economy?

  5. Bob Roddis says:
  6. GabbyD says:

    but what was he referring to when he described “brisk” growth? is it not 2.2%? what is it?

    • Zack says:

      From Scott Sumner:

      “Simon Wren-Lewis also gets the GDP growth data wrong, in a way that makes austerity look worse. He claims that RGDP growth was 2.3% in 2012 and 2.2% in 2013 (the year of austerity in the US.) But that’s annual y-o-y data, and since the austerity began on January 1st 2013, you need Q4 over Q4 data. In fact, RGDP growth in 2012, Q4 over Q4, was only 1.67%, whereas growth in the austerity year of 2013 nearly doubled to 3.13%.”


    • Bob Murphy says:

      Probably the thing closer in the paragraph, and much more sensible? Namely 5% growth in 3q and above 3% growth for 2015.

  7. Yancey Ward says:

    I am sure Daniel Kuehn will be along shortly to translate this lying into truth.

    • Bob Murphy says:

      Yancey, you may be surprised to learn that Daniel (with no prodding from me) on FB brought this up, and was publicly surprised that DeLong made this move.

      • Yancey Ward says:

        Then he should do it explicitly to DeLong’s face by asking for a correction on DeLong’s site. I grant that DeLong may well delete such a request or never publish it, but perhaps Daniel can share the experience with the rest of us.

        • Daniel Kuehn says:

          Seriously, can you believe it Yancey!

          Why WOULDN’T I be chomping at the bit to share my thoughts in great detail with people like you who constantly harangue me, assume the worst about me, and fail to offer reasonable and insightful discussion opportunities?

          I saw your comment initially. It was nice for Bob to reply, but why the hell would I bother?

          I talked about this with other people at length on facebook, but it’s true you weren’t in on the conversation.

          • Bob Murphy says:

            Daniel, I believe the phrase is “champing at the bit.” Mises would have known that.

  8. John Becker says:

    Thanks for calling them out on their horrible intellectual dishonesty. You should lose all credibility if you willfully misquote another person’s views to your readers.

    • Bob Murphy says:

      John, in fairness, it’s possible that Simon Wren-Lewis was relying on DeLong’s post, and so he (Wren-Lewis) was not part of the skullduggery.

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