Rose Friedman

Somehow I hadn't realized that Rose Friedman died this fall. John Taylor has a good one-page note on her and "TV Ears". She sounds like such a fun person to know.

Marxists Obituarized Admiringly: Andrew Glyn

(April 30--revised, see below) From National Review:

Andrew Glyn is not a household name, and until I read his obituary yesterday in The Times of London I had never heard of him. But what an illuminating document that obituary proves to be, a perfect little insight into the age. The opening sentence informs that Glyn “was one of Britain's most prominent Marxist economists who produced searching critiques of capitalism,” going on to salute him as “one of the finest of Oxford dons.”... Think of the abuse of privilege. Think of the false pretences. Think of the damage he did spouting rubbish year after year to students who would be expected to parrot it back to him. To one student, he is supposed to have said, “the three greatest men who ever lived were Lenin, Trotsky and Charlie Parker,” - a sentence that the obituary writer hilariously links to “his depth of knowledge.” Some of the unfortunate students will have recovered freedom to think for themselves, but some will be permanently damaged. The obituary writer does in the end concede that Glyn “will to some extent be deemed to have backed the wrong ideological horse” — that “to some extent” is a qualification that goes so far beyond hilarious that it is almost majestic.

Dr. Stern writes in an AER article:

This is dedicated to my close friend, distinctive and distinguished economist and fine man, Andrew Glyn, who died on December 22, 2007, and whose funeral took place in Oxford, UK, on the same day as the Ely Lecture, January 4, 2008.

I decided to delete my strong comments on Dr. Glyn. I don't believe in De mortuis nil nisi bonum, but I don't know why he was divorced. I am skeptical, though, of how good and kind a person is if I then discover that he is divorced. Lots of people are charming when being charming has low cost and aids their social position, but cheat on their wives, molest their children, and neglect their parents.

I also think it is important not to praise someone as a good teacher when he teaches pernicious rubbish, even if he teaches it persuasively. A person can be nice and still be a Leninist, just as he can be nice and still be a Nazi. The comparison is by no means too strong. In fact, there is much more excuse for someone who was a Nazi in the 1930s than a Leninist in the 1980s. In the 1930's the Nazis were thuggish and autocratic, but the horrors of WW 2 and the Holocaust were still to come. By now the excesses of Communism-- not just the political murders, but the millions killed by collectivization-- are well known. In fact, even by 1922 the crimes of Lenin and Trotsky were well known. I can understand why Communists would praise Dr. Glyn, but those of us who fall into one of the categories of people his heroes liked to kill shouldn't praise him.

Pro-Monopoly Economists

As Prof. Mankiw notes, it's strange to see well-known economists supporting the bill in Congress to eliminate the secret ballot in union elections, allowing instead for the union organizers to pressure workers to sign cards publicly that the organizers then collect and turn in. I wonder if those economists would also oppose the secret ballot in Congressional elections?

As Prof. Mankiw notes, unions are cartels of labors, so a second question is why economists like those cartels. Unions get a special exemption from anti-trust laws, but they are just monopoly sellers of labor. They aren't even cartels that redistribute income from rich to poor--- they do the opposite. Unionized workers are, I think, on average richer than the average person, so when they get higher wages by restricting the amount of labor hired those workers who lose their jobs in the industry end up with lower wages, and also end up paying the higher prices for things such as cars that the unions produce.

Anyway, here are the economists who signed the open letter that I've heard of in a scholarly context:

Katharine Abraham, University of Maryland
Philippe Aghion, Massachusetts Institute of Technology
Kenneth Arrow, Stanford University
Jagdish Bhagwati, Columbia University
Rebecca Blank, Brookings Institution
Joseph Blasi, Rutgers University
Alan S. Blinder, Princeton University
William A. Darity, Duke University
Brad DeLong, University of California/Berkeley
John DiNardo, University of Michigan
Henry Farber, Princeton University
Robert H. Frank, Cornell University
Richard Freeman, Harvard University
James K. Galbraith, University of Texas
Robert J. Gordon, Northwestern University
Lawrence Katz, Harvard University
Dani Rodrik, Harvard University
Jeffrey D. Sachs, Columbia University
Robert M. Solow, Massachusetts Institute of Technology
Joseph E. Stiglitz, Columbia University
Peter Temin, Massachusetts Institute of Technology
Lester C. Thurow, Massachusetts Institute of Technology
David Weil, Boston University
 

Posner and Judicial Writing

It seems that Judge Posner is having a good influence on judicial writing. The 7th Circuit Lott v. Levitt opinion (via Volokh Con.) written by Evans with Ripple and Sykes signing on, is clear, pleasant, and uses contractions, even in an opinion whose subject is the fine detail of choice of law and writing pleadings:

The principle of waiver is designed to prohibit this very type of gamesmanship—Lott is not entitled to get a free peek at how his dispute will shake out under Illinois law and, when things don’t go his way, ask for a mulligan under the laws of a different jurisdiction. In law (actually in love and most everything else in life), timing is often everything. The time for Lott to ask for the application of Virginia law had passed—the train had left the station.

Krugman, Barro, and Crook

Clive Crook wrote an FT column about economists blogging, citing Barro and Krugman as examples of economists who went to extremes. Part was this:

I had thought they would at least agree that raising trade barriers at a time like this must be a bad idea. Then I read Paul Krugman, Nobel laureate, Princeton professor, and New York Times columnist, explain that raising tariffs – though perhaps unwise for other reasons – “can make the world better off”. “There is a short-run case for protectionism,” he went on, “and that case will increase in force if we don’t have an effective economic recovery programme.” What are his readers to make of this? Are all the economists who say otherwise just wrong?

This impression of disarray – that economics has nothing clear to say on these questions – is not the fault of economics as such. It is a mostly false impression created by some of its leading public intellectuals, Mr Krugman among them.

Economics outside the academy has become the continuation of politics by other means. If you wish to know what Mr Krugman thinks on any policy question, do not read his scholarly writings; see which policies are advocated by the progressive wing of the Democratic party. Mr Krugman agrees with liberal Democrats about most things, and for the rest gives as much cover as the discipline of economics can provide – which, given its scientific limitations, is plenty. He does this even on matters where, if his scholarly work is any guide, the economics is firmly against his allies. Liberal Democrats are protectionists. Mr Krugman is not, but politics comes first.

The syndrome affects economists on the right as much as on the left. Just as there is a consensus among economists that protectionism should be opposed, most economists believe that a powerful fiscal stimulus is both possible and desirable in present circumstances, and that the best stimulus would include big increases in public spending. Yet recently, Robert Barro, a scholar with conservative sympathies, wrote in the Wall Street Journal that this view was an appeal to “magic”.

The problem is not that Mr Krugman questions the consensus on trade (if indeed he does), or that Mr Barro questions the consensus on fiscal policy (as he certainly does). It is that both set the consensus aside so carelessly. In doing so, these stars of the profession destroy the credibility of their own discipline. Mr Krugman gives liberals the economics they want. Mr Barro gives conservatives the same service. They narrow or deny the common ground. Why does this matter? Because the views of readers inclined to one side or the other are further polarised; and in the middle, those of no decided allegiance conclude that economics is bunk.

What is interesting is not that article (which is wrong on Barro, I think), but the responses of Professors Krugman and Barro. Mr. Crook displays the correspondence in The Atlantic. Barro and Crook had a polite exchange of emails discussing their disagreements. Krugman said,

Clive used to be a reasonable guy; in his mind he probably still is a reasonable guy. But he has misunderstood what it means to be reasonable. He now apparently believes that it means declaring, in all circumstances, that Democrats and Republicans are equally in the wrong, even if the Democrats are talking Econ 101 and the Republicans are being led by the crazy 36.

And it means hysterical attacks on yours truly for actually taking sides in this debate, with the ostensible basis for the denunciation being a wonkish blog post -- it says so in the title -- in which I acknowledge that there is a potential short-run argument for protectionism, while making it clear that I'm not in favor of acting on that argument. He doesn't actually take on my argument; he just insists that the only reason I might possibly have said anything like this is partisan bias, as opposed to an attempt to be intellectually honest.

That's interesting in itself. But now let us proceed to Paul Krugman's argument for protectionism.

Should we be upset about the buy-American provisions in the stimulus bill? Is there an economic case for such provisions? The answer is yes and yes. And I do think it’s important to be honest about the second yes.

So Krugman not only thinks that there is an economic case for buy-American, but that it's important to stress it. And while we should "be upset" about the buy-American policy, that's just an emotional response-- the "economic case" is in favor of it.

The economic case against protectionism is that it distorts incentives: each country produces goods in which it has a comparative disadvantage, and consumes too little of imported goods. And under normal conditions that’s the end of the story.

But these are not normal conditions. We’re in the midst of a global slump, with governments everywhere having trouble coming up with an effective response.

Okay-- so the economic case against protectionism is not determinative here-- we are in a special situation.

And one part of the problem facing the world is that there are major policy externalities. My fiscal stimulus helps your economy, by increasing your exports — but you don’t share in my addition to government debt. As I explained a while back, this means that the bang per buck on stimulus for any one country is less than it is for the world as a whole. And this in turn means that if macro policy isn’t coordinated internationally — and it isn’t — we’ll tend to end up with too little fiscal stimulus, everywhere. Now ask, how would this change if each country adopted protectionist measures that “contained” the effects of fiscal expansion within its domestic economy? Then everyone would adopt a more expansionary policy — and the world would get closer to full employment than it would have otherwise. Yes, trade would be more distorted, which is a cost; but the distortion caused by a severely underemployed world economy would be reduced. And as the late James Tobin liked to say, it takes a lot of Harberger triangles to fill an Okun gap. Let’s be clear: this isn’t an argument for beggaring thy neighbor, it’s an argument that protectionism can make the world as a whole better off. It’s a second-best argument — coordinated policy is the first-best answer. But it needs to be taken seriously.

Let me restate his argument. Every country needs fiscal stimulus because of the recession, and that's the most important thing. But countries won't enact fiscal stimulus unless they can be protectionist too, because they're selfish. So, since protectionism isn't as bad as lack of government spending, it's worth having trade barriers so as to get the government spending.

This is, actually, saying that beggar-thy-neighbor policies are a good thing. He is saying that if every country tries to beggar every other by buy-domestic policies, they'll all be better off in the end than if they didn't. He'd prefer having the same amount of government spending without the buy-domestic policies, but he doesn't think that's possible politically.

After a couple more paragraphs saying that we have to consider the political economy, we come to his bottom line:

But there is a short-run case for protectionism — and that case will increase in force if we don’t have an effective economic recovery program.

His argument has three problems (aside from its premise that the stimulus package is a good thing and should pass). First, it's not plausible that the stimulus package will shrink much if it is less protectionist, and his argument depends on there being enough shrinkage to counteract the bad allocative effect of protectionism. Second, if we're talking political economy, we should bring in the fact that allowing protectionism into a stimulus bill will result in it being more distorted to serve special interests rather than having the single objective of serving the public interest of Keynesian stimulus. Third, an economist should start by making the economic arguments clear, rather than mingling them with the politicking, compromise, and buying-off-of-interests arguments. Politics requires compromise, but an op-ed piece does not. In fact, even in politics, you start off the bargaining by taking your preferred position-- you don't start by offering your opponent something halfway towards his position. In fact, you might want to start with something more extreme than your preferred position.

In this particular case, of course, the buy-American provisions weren't in there to garner moderate and conservative support for a bill that wouldn't pass otherwise-- they were an actual hindrance towards compromise. Krugman's got it exactly backwards-- the buy-American was bad economics *and* bad politics.

Note what Greg Mankiw says,

Matthew Yglesias says that my stimulus proposal is "a pretty good idea" but also says "it’s wildly impractical" because it is "so outside the ballpark of what congress is prepared to consider." Let me reply by quoting Milton Friedman:

The role of the economist in discussions of public policy seems to me to be to prescribe what should be done in light of what can be done, politics aside, and not to predict what is "politically feasible" and then to recommend it.

Economists Opposing Massive Fiscal Stimulus

UPDATE, JANUARY 14. I discovered that Professor Miron and Congressman Boehner have already been putting together a list of stimulus skeptics, with comments by them. It's up at: http://republicanleader.house.gov/blog/?p=399

I think I'm going to start collecting the names of economists who oppose the Obama plan of spending $700 billion or so for a Keynesian fiscal stimulus. I hear the media saying that economists across a wide array of views have a consensus in favor of it, and I bet that's completely wrong. There's Eric Rasmusen, and Greg Mankiw, and Robert Lucas, and Tyler Cowen, for starters.

I think part of the problem is that a lot of discussion by economists is about what sort of fiscal policy is best *if* we are going to spend $700 billion. That's different from *whether* we should. In fact, even a devotedly Keynesian economist might oppose having a government stimulus if Congress and Obama get to design it, not an academic economist. If we are thinking of having a Keynesian stimulus, I suppose giving $500 to each American is a good way to do it, especially if we make it a gift certificate that they have to spend within six months or lose. But my saying that doesn't mean I support the idea, much less that I support $700 billion in porkbarrel spending.

I'll add to this list as I come across names with links.

1. David Backus
2. Gary Becker (Chicago)
3. Willem Buiter
4. Tyler Cowen (George Mason)
5. Kevin Hassett (AEI)
6. David Henderson
7. Robert A. Lucas (Chicago)
8. Greg Mankiw (Harvard)
9. Eric Rasmusen (author of this post) (Indiana)
10. Hal Varian