There is no understanding of economics without a theoretical scaffold. That is true of Keynesiacs. That is also true of rational people.
AnonymousAugust 11, 2009 at 9:44 pm
It is interesting that only a fraction of the stimulus money has been distributed or spent and Krugman and others are already claiming that it is aiding in the recovery. Is this the new Post-Keynesian economic theory?
Heads: I win; Tails: You Lose….seems to sum of Keynes quite well.
AnonymousAugust 12, 2009 at 3:37 am
If Krugman were passionate about individual liberty, then Rizzo would be right in saying: “He [Krugman] should have said big government can work when it is run by people who themselves determine how well it works”
But no one can serious view Krugman as a champion of individual liberty.
AnonymousAugust 12, 2009 at 10:13 am
I think he meant that as a bad thing – that when the people running government get to evaluate themselves, of course they’re going to conclude they look good.
I agree with that general thrust. I’m not as pessimistic as he is about ultimately finding out that it will work – and I’d guess it’s had some minor positive effect even now – but it ultimately needs to be evaluated by outsiders, and with the passage of time and better data.
Actually, I found it a little funny that he harped on the phrase he did. Krugman’s point demonstrated his understanding of the risk posed by government to liberty and the risk of poorly managing large government. It wasn’t a libertarian statement, to be sure – but it was a statement consistent with the founders’ understanding of the tenuous relationship between meaningful government and liberty, and the associated risks.
AnonymousAugust 12, 2009 at 12:40 pm
Daniel,
In the name of Keynesian fiscal policy, Krugman is arguing that: 1) the governmental spending in “stimulus one” has “created jobs”; and (ergo) 2) that “stimulus one” was too small. This is exactly what Krugman “SHOULD” have said IF he were a dyed in the wool socialist trying to persuade people that Joe Biden was right in arguing that the only way for governments to avoid bankruptcy is by spending more. At the levels of aggregation Krugman is discussing things, there is wiggle room for you to tell stories about what Krugman “meant”. But Occam’s razor is generally a better approach than ad hoc spin doctoring: Put Krugman’s remarks in this case in the context of his patterned pronoucements (See: Klein and Barlett’s analysis in Econ Journal Watch, January issue 2008, entitled “Left Out: A Critique of Paul Krugman Based on a Comprehensive Account of His New York Time Columns, 1997 through 2006). If you are REALLY interested in what Krugman is about in general, then this truly comprehensive analysis of Klein’s and Barlett’s will inform. If you are want to spin ad hoc stories, on the other hand, no thinking person will listen.
AnonymousAugust 12, 2009 at 12:56 pm
I didn’t mention anything about Krugman’s thoughts on fiscal policy – but now that you bring it up I do think his response is too cocksure. The first stimulus was a good bet to make given the absence of a crystal ball, and we’ll see how it does. Krugman’s absolute confidence that it wasn’t enough may be justified by some abstract rule like Okun’s law – but it hardly seems like a wise policy to jump into to me.
Either way – I think you’re mistaken if you’re assuming that “dyed in the wool socialists” are the only people that think about fiscal policy that way.
You misquote Biden – he said that it’s necessary to keep the nation out of bankruptcy, not the government. It’s an odd turn of phrase because obviously the nation can’t go into bankruptcy. So I personally wouldn’t read too much into it for that reason alone. But if you take it as a general statement of “we need to spend to get out of the recession”, then again – I hope you aren’t under the impression that a dyed in the wool socialist is the only kind of person that thinks like that.
I’ll take a look at Klein and Bartlett. Thanks for the citation. But generally speaking I didn’t enjoy this particular column of his. I’m guessing he wrote it the way he did to combat an equally distorted negative stereotype of government – but that doesn’t make it good analysis. As I’ve said in the past, I think Krugman’s blog is usually more worth reading than his columns.
AnonymousAugust 12, 2009 at 4:04 pm
There may be others who think that simplistic (unspecified as to where $ is spent) Keynesian fiscal policies make sense aside from “dyed in the wool socialists”. I do not, and did not, deny it. So what? The point is that put Krugman in context (i.e., read the comprehensive analysis of his NYT columns by Klein/Bartlett) and there is little puzzle about Krugman’s propensities. I disagree with your statement that “the first stimulus was a good bet to make”; this is the kind of thing Krugman would agree with (and by extension a garden variety, dyed in the wool socialist). Think Daniel, why do you thing the left loves Krugman anyway? Because is a staunch defender of individual freedom to make their own choices writ large and live with the profit or losses that arise therefrom???? Hell no; come on Daniel stop the ad hoc spins and see the “forest” (the big picture that Klein/Bartlett’s comprehensive analysis provides).
AnonymousAugust 12, 2009 at 6:05 pm
On a deductively related story, I urinated in the ocean and conclude that this explains the warming of the oceans. I’m submitting my findings to the Journal of Keynesian Oceanography.
Their regular dealings with broad pronouncements about how downturns are derived from private, behind closed doors decision making to inject foreign material into an otherwise well functioning environment, along with their instinctive, epistemological disinclination to test their theories empirically against data is more akin to the story you’re describing.
Speaking of Keynesian oceanography, he actually did have something to say:
“Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again”
AnonymousAugust 12, 2009 at 4:22 pm
Unspecified as to where the dollars are spent?
Now you’re just setting up a straw man and putting words in people’s mouths. It’s a nice political strategy, but not a good analytical one.
AnonymousAugust 12, 2009 at 4:40 pm
Daniel,
Did you know that the state of PA spent millions creating and deploying signs to indicate things like: “this highway rebuilt with stimulus dollars”. Yes labor was employed to produce and deploy these; so what? Does it matter where money is spent? Of course it does. There are actually some economists arguing that it does not matter in the least what is the composition of G [the "G" is not for God, it is for aggregated government expenditure in the Keynesian C + I + G + (X-M) ]. Analytically, actions based upon such sentiment can properly be called, in your lingo, “bad bets.” How is this “a nice political strategy”? Your posts make less and less sense as we continue.
AnonymousAugust 12, 2009 at 4:44 pm
It’s a nice political strategy for you to identify that unthinking reaction to what spending is done with the opposition. Straw men do a great job at getting people’s heads to nod.
It’s not that useful analytically because people actually invested in the real debate care a great deal about how it is spent, the Pennsylvania Department of Transportation notwithstanding.
AnonymousAugust 12, 2009 at 4:58 pm
Yes straw men do a great job at getting people’s head to nod; so what? This correct statement does not make it unthinking to think about the alternative consequences of spending money on superfluous PA signage versus alternatives. Again it has nothing to do with politics, your insistence to the contrary notwithstanding.
People “invested in the real debate”; who are these and what have they invested? What are their incentives? Who monitors the monitor? These are the analytical unspecifieds in your seat of the pants spinning. Believing that “good” people in government will do “good” things will get some heads nodding, but not mine.
AnonymousAugust 12, 2009 at 5:19 pm
You confuse my point. You are invested in the debate. I like to think of myself as being invested in the debate. I’m not talking about government employees telling us what to do.
People who are actually involved in the debate care very deeply about exactly where the stimulus money is spent. I don’t know anything about this Pennsylvania situation, but they’re not a stand in for stimulus proponents.
AnonymousAugust 12, 2009 at 6:50 pm
Yes I misunderstood about who you were referring to as “invested people” in the debate. But that doesn’t alter the importance of the analytics of the incentives of the government’s agents who are actually deciding upon the composition and administration and oversight of the enormous amount of G. For example, Milton Friedman’s youtube video explains the 4 ways of spending money:
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{ 16 comments }
There is no understanding of economics without a theoretical scaffold. That is true of Keynesiacs. That is also true of rational people.
It is interesting that only a fraction of the stimulus money has been distributed or spent and Krugman and others are already claiming that it is aiding in the recovery. Is this the new Post-Keynesian economic theory?
Heads: I win; Tails: You Lose….seems to sum of Keynes quite well.
If Krugman were passionate about individual liberty, then Rizzo would be right in saying: “He [Krugman] should have said big government can work when it is run by people who themselves determine how well it works”
But no one can serious view Krugman as a champion of individual liberty.
I think he meant that as a bad thing – that when the people running government get to evaluate themselves, of course they’re going to conclude they look good.
I agree with that general thrust. I’m not as pessimistic as he is about ultimately finding out that it will work – and I’d guess it’s had some minor positive effect even now – but it ultimately needs to be evaluated by outsiders, and with the passage of time and better data.
Actually, I found it a little funny that he harped on the phrase he did. Krugman’s point demonstrated his understanding of the risk posed by government to liberty and the risk of poorly managing large government. It wasn’t a libertarian statement, to be sure – but it was a statement consistent with the founders’ understanding of the tenuous relationship between meaningful government and liberty, and the associated risks.
Daniel,
In the name of Keynesian fiscal policy, Krugman is arguing that: 1) the governmental spending in “stimulus one” has “created jobs”; and (ergo) 2) that “stimulus one” was too small. This is exactly what Krugman “SHOULD” have said IF he were a dyed in the wool socialist trying to persuade people that Joe Biden was right in arguing that the only way for governments to avoid bankruptcy is by spending more. At the levels of aggregation Krugman is discussing things, there is wiggle room for you to tell stories about what Krugman “meant”. But Occam’s razor is generally a better approach than ad hoc spin doctoring: Put Krugman’s remarks in this case in the context of his patterned pronoucements (See: Klein and Barlett’s analysis in Econ Journal Watch, January issue 2008, entitled “Left Out: A Critique of Paul Krugman Based on a Comprehensive Account of His New York Time Columns, 1997 through 2006). If you are REALLY interested in what Krugman is about in general, then this truly comprehensive analysis of Klein’s and Barlett’s will inform. If you are want to spin ad hoc stories, on the other hand, no thinking person will listen.
I didn’t mention anything about Krugman’s thoughts on fiscal policy – but now that you bring it up I do think his response is too cocksure. The first stimulus was a good bet to make given the absence of a crystal ball, and we’ll see how it does. Krugman’s absolute confidence that it wasn’t enough may be justified by some abstract rule like Okun’s law – but it hardly seems like a wise policy to jump into to me.
Either way – I think you’re mistaken if you’re assuming that “dyed in the wool socialists” are the only people that think about fiscal policy that way.
You misquote Biden – he said that it’s necessary to keep the nation out of bankruptcy, not the government. It’s an odd turn of phrase because obviously the nation can’t go into bankruptcy. So I personally wouldn’t read too much into it for that reason alone. But if you take it as a general statement of “we need to spend to get out of the recession”, then again – I hope you aren’t under the impression that a dyed in the wool socialist is the only kind of person that thinks like that.
I’ll take a look at Klein and Bartlett. Thanks for the citation. But generally speaking I didn’t enjoy this particular column of his. I’m guessing he wrote it the way he did to combat an equally distorted negative stereotype of government – but that doesn’t make it good analysis. As I’ve said in the past, I think Krugman’s blog is usually more worth reading than his columns.
There may be others who think that simplistic (unspecified as to where $ is spent) Keynesian fiscal policies make sense aside from “dyed in the wool socialists”. I do not, and did not, deny it. So what? The point is that put Krugman in context (i.e., read the comprehensive analysis of his NYT columns by Klein/Bartlett) and there is little puzzle about Krugman’s propensities. I disagree with your statement that “the first stimulus was a good bet to make”; this is the kind of thing Krugman would agree with (and by extension a garden variety, dyed in the wool socialist). Think Daniel, why do you thing the left loves Krugman anyway? Because is a staunch defender of individual freedom to make their own choices writ large and live with the profit or losses that arise therefrom???? Hell no; come on Daniel stop the ad hoc spins and see the “forest” (the big picture that Klein/Bartlett’s comprehensive analysis provides).
On a deductively related story, I urinated in the ocean and conclude that this explains the warming of the oceans. I’m submitting my findings to the Journal of Keynesian Oceanography.
These people might be more interested: http://mises.org/periodical.aspx?Id=4
Their regular dealings with broad pronouncements about how downturns are derived from private, behind closed doors decision making to inject foreign material into an otherwise well functioning environment, along with their instinctive, epistemological disinclination to test their theories empirically against data is more akin to the story you’re describing.
Speaking of Keynesian oceanography, he actually did have something to say:
“Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again”
Unspecified as to where the dollars are spent?
Now you’re just setting up a straw man and putting words in people’s mouths. It’s a nice political strategy, but not a good analytical one.
Daniel,
Did you know that the state of PA spent millions creating and deploying signs to indicate things like: “this highway rebuilt with stimulus dollars”. Yes labor was employed to produce and deploy these; so what? Does it matter where money is spent? Of course it does. There are actually some economists arguing that it does not matter in the least what is the composition of G [the "G" is not for God, it is for aggregated government expenditure in the Keynesian C + I + G + (X-M) ]. Analytically, actions based upon such sentiment can properly be called, in your lingo, “bad bets.” How is this “a nice political strategy”? Your posts make less and less sense as we continue.
It’s a nice political strategy for you to identify that unthinking reaction to what spending is done with the opposition. Straw men do a great job at getting people’s heads to nod.
It’s not that useful analytically because people actually invested in the real debate care a great deal about how it is spent, the Pennsylvania Department of Transportation notwithstanding.
Yes straw men do a great job at getting people’s head to nod; so what? This correct statement does not make it unthinking to think about the alternative consequences of spending money on superfluous PA signage versus alternatives. Again it has nothing to do with politics, your insistence to the contrary notwithstanding.
People “invested in the real debate”; who are these and what have they invested? What are their incentives? Who monitors the monitor? These are the analytical unspecifieds in your seat of the pants spinning. Believing that “good” people in government will do “good” things will get some heads nodding, but not mine.
You confuse my point. You are invested in the debate. I like to think of myself as being invested in the debate. I’m not talking about government employees telling us what to do.
People who are actually involved in the debate care very deeply about exactly where the stimulus money is spent. I don’t know anything about this Pennsylvania situation, but they’re not a stand in for stimulus proponents.
Yes I misunderstood about who you were referring to as “invested people” in the debate. But that doesn’t alter the importance of the analytics of the incentives of the government’s agents who are actually deciding upon the composition and administration and oversight of the enormous amount of G. For example, Milton Friedman’s youtube video explains the 4 ways of spending money:
http://www.youtube.com/watch?v=5RDMdc5r5z8