Two Snarky Comments on Sumner
With all of my traveling this summer, I worry that Scott Sumner feels I am neglecting him. (After all, I have a weekly podcast devoted to Krugman–have I forgotten my Market Monetarist friends?)
So as to partially rectify my benign neglect, here are two snarky comments on recent Sumner posts:
==> In this post responding to a critic of his NGDP targeting plan, Scott explains that he just needs half a billion dollars to show how awesome his proposal is–are you really going to deny him that? Well, now that he thinks about it some more, Bill Woolsey’s idea is better. But stop pestering him with these details; Scott can fix the world economy.
==> In this post on Irish GDP, Scott writes:
I’ve argued that NGDP targeting is not always appropriate for small open economies, citing examples such as Australia and Kuwait. Actually, it’s probably much more appropriate for Australia than Ireland. The key is whether NGDP tracks total labor compensation fairly closely. Where it does, as in the US, then NGDP targeting is appropriate. Where it doesn’t, as in Kuwait, then you want to target total labor compensation, perhaps per capita.
Those remarks got me thinking: Imagine at the Mercatus Center one day, people are sitting around drinking coffee in the lounge. Then Bryan Caplan runs in and says, “Guys! Awesome news! I got a small country with new political leadership to agree to completely open borders! They’re expecting enormous rates of immigration! Critics are predicting massive crashes in wage rates for existing workers, but this experiment will prove those fears to be baseless once and for all!”
Everyone says, “That’s great Bryan! Well done!”
Then Scott Sumner bursts into the room. “Guys! Awesome news! I got a country with new political leadership to agree to set total nominal GDP to 5% annual growth!”
Everyone goes white. Scott can’t understand why they aren’t happy for him.
If economists wrote sitcoms…
I think Scott would have said “total labor compensation” here, but I get the general idea.
This goes back to the fundamental problem of all macro-economics, which is that we have no way to measure the overall well being of any large group of people, nor has anyone been able to propose a framework where such a question is even meaningful to ask.
However despite the gaping hole, everyone just ploughs onward… don’t worry about the weirdness.
Tel, the joke here is that Bryan and Scott presumably persuaded the same government, but Scott was unaware of Bryan’s scheme. Bryan’s scheme makes Scott’s a disaster, for he *would* have recommended the labor compensation scheme, had he known what Bryan was scheming.
As I was reading Scott’s article on Brexit and the Beckworth post that he links to I started getting the sense that, essentially, NGDP was little different from Keynesian stimulation.
http://econlog.econlib.org/archives/2016/06/brexit_is_not_a.html