Winner of the New Statesman SPERI Prize in Political Economy 2016

Sunday, 17 May 2015

Blaming Keynes

A few people have asked me to respond to this FT piece from Niall Ferguson. I was reluctant to, because it is really just a bit of triumphalist Tory tosh. That such things get published in the Financial Times is unfortunate but I’m afraid not surprising in this case. However I want to write later about something else that made reference to it, so saying a few things here first might be useful.

The most important point concerns style. This is not the kind of thing an academic should want to write. It makes no attempt to be true to evidence, and just cherry picks numbers to support its argument. I know a small number of academics think they can drop their normal standards when it comes to writing political propaganda, but I think they are wrong to do so. Take this paragraph, designed to show how good UK macro performance has been compared to the dire warnings of those Keynesians.
“The UK had the best performing of the G7 economies last year, with a real gross domestic product growth rate of 2.6 per cent. In 2009, the last full year of Labour government, the figure was minus 4.3 per cent. Moreover, far from being in depression, the UK economy has generated more than 1.9m jobs since May 2010. UK unemployment is now 5.6 per cent, roughly half the rates in Italy and France. Weekly earnings are up by more than 8 per cent; in the private sector, the figure is above 10 per cent. Inflation is below 2 per cent and falling.”
The first sentence is correct. But why compare that to 2009, which apart from being the ‘last full year of Labour government’ also happened to be the year of the recession that followed the global financial crisis. As I have mentioned before, growth in GDP per head under Labour averaged 1.5% even though it included this recession, but average growth from 2010 to 2014 was only 1% when we should have been seeing a rapid recovery. The jobs figures are mentioned, but the awful productivity performance that they imply is not. Earnings growth over the whole period is quoted (but without saying it is nominal growth), but only inflation over the last year! Presumably this is done to create the impression of real wage growth, when in reality this period has seen unprecedented falls in real wages.

A paragraph like that might earn Ferguson a job as a speechwriter for a Conservative politician, but if a first year undergraduate wrote it as part of an essay it would have red ink scrawled all over it, no matter whether the marker was an economist or historian. As for the general idea that the election result represented a disaster for the Keynesian model, I wonder whether Ferguson realises that most/all central banks base monetary policy on Keynesian economics? If the idea is that taking an anti-austerity line is a vote loser, why not note that the Scottish National Party adopted a clear anti-austerity rhetoric? (This letter in response to Ferguson’s article from Sam Wills makes much more sense on the election result. My own take is here.)

It is possible for someone to try and make a serious academic case in defence of the coalition government’s macroeconomic record, but this is not it. This kind of nonsense polemic is of course not just the preserve of the anti-Keynesian right. But what this kind of thing does illustrate is how problematic public debate on macroeconomic policy is. It is difficult to think about many other academic subjects where people who seem to have little idea of what they are talking about can write such obvious rubbish in a quality newspaper.

65 comments:

  1. Good response, as I thought even trying to respond to this would be a non-starter. I am sure NF's piece raises as many eyebrows to informed people on the right as it does on the left (I do not think Milton Friedman for example would have been impressed). It is amazing how someone can be so casual in his selection and interpretation of data and draw such huge conclusions - it and can only be put down to the tenure system. Anyway, although few people will parade NF's article around, your efforts to take on this type of nonsense is appreciated, and for public debate, essential.

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    1. For the few of you who do not read Krugman regularly, the face of the right is represented by people, even Harvard professors who are hacks even though there are excellent right-leaning economists, such as N. Gregory Mankiw. Not that everyone would agree with Friedman, but standards have pluminited.

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    2. You would think the tenure system would allow Ferguson do some proper work and not have to worry about the pressures of capitalism - like most of us do. But I guess by pleasing certain powerful moneyed interests, capitalism works a different way here through strong incentives driven by greed.

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    3. Rob sol-

      Excellent economist....Gregory Mankiw.....HAHAHAHAHAHAHAHA. This is a guy whose textbook is one of the leading sources of mainstream economics mythology that infects the populace.

      Loanable funds\money multiplier myth. (banks do not and cannot lend reserves to non-banks)
      rational agents garbage
      ricardian equivalence garbage
      deficits drive up interest rates garbage
      and on and on

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    4. Mankiw's textbook is almost indistinguishable from Krugman's. It is quite even-handed and presents ideas like Ricardian Equivalence as theories not as fact.

      I am quite leftward leaning (liberal in the American sense of the word) and I assign Mankiw to my students both at the Principles Micro/Macro and Intermediate Macro level.

      There are some things to dislike about Mankiw, but his textbooks are not one of them.

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    5. Mankiw is indeed a clownish flak for the radical right wing, and his intro macro text is grossly inferior to Krugman's intro macro for AP. He presents discredited right-wing hand-waving as truth in almost every chapter.

      As Auburn Parks says above, it's sad that students taking intro Econ as an elective only are being exposed to Mankiw's garbage instead of real economics - his books are propaganda tools for Republican kooks.

      And Mankiw knows he's fobbing Republican propaganda as "economics", and he's doing it because he's the only reputed economist who can still get a job as an economic adviser for a Republican presidential candidate, and he wants those job offers to keep coming in.

      I eagerly await the next edition of his text where he explains that Adam rode a dinosaur, climate change is a plot by organized labour, and gay marriage is socialist.

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    6. Mankiew's textbook isn't that bad. It's actually pretty standard in terms of basic modelling. However, retrospectively, I'd say that using his textbook was a waste of time and money. Sorenson and Whitta-Jacobson offer a much more interesting work and it's only midly more technical. At least, their modelling strategy is WAY closer to what actual graduate level macroeconomics works with and, as I said, it's clear, concise and not much harder to get.

      As a side note, I must admit that all textbooks I have encountered in economics annoy me to some degree. It's a science, but nearly all you can find in them is modelling... At some point, giving at least a full chapter to applying the models to real data would be nice -- and be surprised because, most of the time, it's not very demanding technically.

      If it keeps bugging me, I'll end up writting one myself -- just wait a decade or so.

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    7. Victor Matheson18 May 2015 at 07:26
      "Mankiw's textbook is almost indistinguishable from Krugman's."

      Quite right. Mankiw even explains IS/LM, whereas Krugman doesn't even try -although he claims in his blog that IS/LM explains everything. Very odd.

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    8. "even though there are excellent right-leaning economists, such as N. Gregory Mankiw. "
      Hahaha!

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    9. The whole point of Ferguson's frequent right-wing rants is to boost his speaking fees. That's where he makes his real money. You don't think his high six-figure salary from Harvard is enough for him to be concerned about, do you? By the way, does he actually teach classes? Like David Brooks teaches classes on Humility?

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  2. Ferguson's strategy is a cynical one. He is not interested in serious argument, anyway he would not know how - time and time again we have seen the limitations of his statistical and economic knowledge and even intuition (and here he does it again, takes his selection period from the beginning of a trough in a business cycle). That is something that no economist or anyone dealing with historical and times series data should get away with. But he knows the right is strongly positioned at the moment. All we need now is a major right wing victory in the US for events in the 1980s to be played out all over again. His view is that the public has made its verdict and the right has won. And he knows that this can be done with misinformation and poor quality work because few people will call him out.

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    1. Yes. And if he were only doing this from ignorance we should be content to only mention that fact in passing but he knows that what he writes is inchoate partisanship. At what point do we get to point, laugh and call him dishonest for doing that?

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  3. Spot on! The 2009 contextless statistic was absolutely disgraceful!

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  4. Is being selective with figures not what the political class and their appologists are masters at. The problem for the rest of us is finding the information to see the full story and draw our own conclusions. That's a problem always with newspapers they essentially peddle text based info, so to support your case you pick figures which allow you to show your self in the most favorable light. Its why I find this blog a much better source of info because SWL uses graphs in most of his posts and you cannot be as selective with a graph as you can with text. The trends and results are displayed to greater effect and are much more difficult to spin in to a tissue of lies.

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  5. Keynes was writing in the time of my childhood offering an intellectual structure to thinking related to the economies, social structures and government of that period. Looking around me I am not in the same world any longer although many of his ideas are worth adapting, one way or another. Relying on him might be like taking the Foreign Policies of the Prime Minister the 2nd Early Grey of the 1830's and applying them to the international crises of the early 20th Century. Oh dear, wasn't it Grey that got us into the First World War?

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    1. No Keynes was talking about issues that are still relevant today: basically the government can do thing to improve the economy and help bring about prosperity. The time to pay down the debt is during the boom, not during recovery.

      Unfortunately the conservatives and free marketers are all following the script of Keynes's opponents. They're not unlike Lionel Robbins and the liquidationists. Those who forget history are doomed to repeat it.

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    2. The laws of economics are like the laws of physics: they do not change over time. Since the Industrial Revolution, the more things changed the more they remained the same. (New technology making old jobs obsolete, etc.)

      Although economics is currently pre-Copernican, there exists an economic system that best utilizes physical and human resources to produce the most real prosperity in a stable and sustainable manner.

      Our present economic collapse (aka, the conundrum of "secular stagnation") was caused, directly, by a number of free-market reforms implemented over the past 35 years that were actually promised to increase prosperity. (Free trade, deregulation, 2% inflation targeting, tax cuts, social spending cuts, etc.)

      Of course, as long policy failures are praised as "economic miracles," there is no chance of actual progress being made. Considering civilization is founded on economics (how people interact and treat one another in aggregates,) deeply flawed economy ideology will eventually cause civilization to collapse.

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    3. The main point Keynes made was that demand drives the economy always and everywhere. And that the Govt can always add demand to the economy to fight cyclical fluctuations. Its one of the most obvious and basic economics concepts, its like saying the sky is blue.

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    4. A very succinctly and well made point. However, what worries me is that through the miss-use that is media macro they will try and convince the majority (or at least 37% or so of the electorate) that we're doing better than is actually the case, especially when other 'things' are taken into account. 'Things' being anything that meets their political agenda. Not exactly an Orwellian war, but I'm sure you can think of possible mitigating factors : European economies failing, U.S. full in GDP, oil price rise, some of them genuine causes, it's just that they will e over played while more relevant reasons are left unmentioned. Many of these 'analyses' penned by Niall Ferguson et. al.
      Shaun T.

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  6. I wonder what the impact of the Murdochisation of the WSJ has been on the standards of the FT?

    I see also that Bloomberg is extending its reach in London.

    Competition in this marketplace seems to lead not to better information but to the magnification of special political pleading.

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  7. Ferguson is no a fool he's just sold his soul to the devil. Financially it makes sense, he will be ridiculed by most people knowledgeable about macro, but there is plenty of demand and pay on offer from right wing (and not so right wing) media and other organisations for this sort of stuff. Personally, I've been a professional economist for 25 years, I work in the City and frequently interpret data and develop arguments along lines that I have no belief in. That's the reality of life as a professional economist – the words of Radiohead – “a job that slowly kills you” always spring to mind.

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    1. Yep, you nailed it, you simply end up saying what the customer wants to hear. It's corrosive because over the long run it has undermined the public perception of economists, but in the meantime – he who pays the piper…..


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    2. "That's the reality of life as a professional economist – the words of Radiohead – “a job that slowly kills you” always spring to mind."

      Yep, join the club. Well, it pays the bills. I guess its the same for journalists too.

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    3. The US media is the perfect stage for a blowhard like Ferguson.

      On another note people...leave the City !! Plenty of other stuff to do in the world but take the Waterloo and City line in the morning.

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    4. “On another note people...leave the City !! Plenty of other stuff to do in the world but take the Waterloo and City line in the morning.”
      I've been taking the Drain since 1986 – that in itself probably suggests that there is something wrong with me. Anyway you're right of course, but when you're a middle aged, grumpy and cynical male economist – who the hell else would employ you!

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    5. "On another note people...leave the City !! Plenty of other stuff to do in the world but take the Waterloo and City line in the morning."

      But the ones that succeed at playing the game do exactly that. I know Goldman Sachs partners who retired at 36, left the country, bought villas in Tuscany or the South of France and spend their winters in their apartments or chalets in French and Italian mountain resorts.

      The quick and successful way out of the City is stick it out for a few years, forget your ideals, play the game, get out as a winner and enjoy the rest of your life of leisure.

      Honestly, this is the way it is done. How many workers do you see in the City over 40? This way of early retirement with such rewards is simply not open to either government economists, academics or people who are really interested in the social good. You go there to make money (the quick way) for you and the bosses at your firm.

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    6. To the various anonymous economists who are self-declared sell-outs, what you're doing (or did) is unethical and harmful. Obviously you feel some sense of shame but not enough. You can't pretend to yourselves that you would have starved to death if you'd tried to make an honest living. Thank you for helping to make the world a slightly worse place.

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    7. To Sam at 02:57. Aren't they at least being candid enough to say – the job title may be economist but really they are sales people so caveat emptor. Does anyone take any notice of economists anyway – not even other economists in my experience.

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    8. Anonymous18 May 2015 at 03:26. But that is exactly the problem. For the many that a really trying to understand how the economy works, the activities of others gives us all a bad name.

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    9. corrupt...I can't believe what I've just read.

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    10. Simon you make the noble point about trying to understand how the economy works. But I would suggest that for the majority of economists that has got nothing to do with it. I would also say that it's got nothing to do with politics, ideology or personal beliefs - just depends on what you're selling and who you're selling to.

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  8. "Ferguson" and "academic" should not be used together in the same universe.

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    1. Yes, definitely an example of an oxymoron.
      Shaun T.

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  9. The Financial Times must have missed Matt O'Brien's Atlantic piece from 2013 titled

    "Truth in the Age of Niallism"

    http://www.theatlantic.com/business/archive/2013/10/truth-in-the-age-of-niallism/280507/

    "If the idea is that taking an anti-austerity line is a vote loser, why not note that the Scottish National Party adopted a clear anti-austerity rhetoric? "

    Also the pro-austerity Liberal Democrats were wiped out.

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  10. I think Anonymous at 7.38 makes the most important point. Is the economy working correctly if it makes economic sense for Ferguson and some professional economists to sell right wing arguments and live well, Others make correct arguments and not only starve but are not mentioned on Economics blogs.

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  11. Ferguson has been an academic in name only for a long time now, certainly since his move to the US. He's never been an economist.

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    1. Quite, he clearly wants to replace Hitchens in the US media galaxy (but lacks the intelligence and rapier wit), as he tirelessly parades the Islamophobic screeds of his wife Hirsi Ali, pens Neocon rubbish and 6th form economic tripe. Does he mention Osborne's doubling the national debt...why not ?

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  12. I'd glad you linked to that August 2012 piece on Mankiw and Taylor shilling for Romney. I knew back then that they were doing that. I only wish I'd started reading your excellent blog back then, Well done!

    On Niall Ferguson. He may have learned this style of writing from folks like Stephen Moore, Art Laffer, and Lawrence Kudlow who have been praising St. Reagan's economy for the past generation. Of course Paul Krugman calls this trio the Three Stooges.

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  13. That piece highlights the few mental steps that the general audience needs to make, and that economists need to promote, while talking about economics.
    1. real values instead of nominal values
    2. regression to the mean (an economic recovery should show more growth than stable times)
    3. the general vs. the particular (global performance, especially the 2008 crash vs. performance of the UK economy in comparison to other countries)
    4. preference of long-term perspectives over cherry-picked single years

    By the way, Niall Ferguson might have turned into a joke to his academic peers, but he still gets space in major publications, even here in Germany. It must be his tenure at Harvard...

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    1. The German financial establishment also liked Rogoff and Reinhart, awarding them the Duestche Bank Economic Book Prize.

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  14. "It is difficult to think about many other academic subjects where people who seem to have little idea of what they are talking about can write such obvious rubbish in a quality newspaper."

    I tend to agree with many things you say, but this isn't exactly true. I haven't yet met anyone with any expertise that doesn't think the media write complete rubbish about their subject.

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    1. It is true. The media produces tendentious garbage on a lot of things - and they tend, like financial markets, to act as a pack. Pressures from capitalism and power? Animal Spirits?

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    2. True (and I too am constantly disappointed by what I read in the fields I am competent in), but whereas in many fields the rubbish comes from gross oversimplification, in Economics you read a lot of straight upside-down drivel. I am yet to read an oversimplified physics article claiming that massive bodies repel each other in proportion to their mass, or a medical one explaining that it matters little what type of food you eat, what you need to do is to eat one type only.

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  15. If economics was a science, there would be no debate over which economic system worked best: communist, mixed-market (developed by Keynes) or free-market (resurrected by Friedman.) It would be shown in the data, of which there is probably more than what paleontologists have to work with. (More than a century of various governments implementing policies across the left-right economic spectrum.)

    But why would an economist want to prove something with hard evidence when they have the freedom of Aristotle and Augustine to make all sorts of statements that support their existing beliefs and cultural framework they inherited from whatever educational institution they were inculcated at?

    I imagine if I was an economist, I would prefer the free-and-easy ways of philosophers and theologians. Life would be much easier. There would be more time for golf.

    Scientists have it hard. They have to keep up with an ever-changing body of definite knowledge. They have to develop hypotheses that are falsifiable.

    Imagine spending a lot of time and effort on a paper that could be shown to be worthless? Or finding out your entire career was wasted on an idea proven false (like steady-state cosmology)? Bummer man!

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    1. Absolutely agree. Economists (and idiots like Ferguson) have all sorts of fantastic historical data and primary evidence to work with. Neither, for different reasons do not make the most of it and really role up the sleeves and look into what the data and look deeply at what the history is saying. Its too messy for them. An economist just looks casually at it, just gets a model or runs off some silly random walk tests and says - this is the history or what is going on. Look at any top journal. Lots of model, very little historical analysis. Ferguson, though, is even more callous than that!

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    2. Ferguson (a flaky historian) is a glaring example of how economics is the agenda-driven science. (Which, of course, is to say it isn't.) Like politics, it's all about personal biases.

      Economics is (thankfully) constrained to a single dimension along a left-right spectrum. A person's economic bias is based on how they believe society should be structured. Left-leaning are egalitarian. Right-leaning believe in a strong hierarchy. Actual centrists believe in moderate levels in inequality.

      Since each economic policy can be placed in the spectrum, there exists an optimal position for each policy. Take public education. Clearly it can be placed on the far left (people don't pay for their kids' education.) A right-wing public education model would be much less effective at producing a capable workforce. That would affect social mobility and productivity. Etc. There also exists an optimal position for PSE.

      When humanity finally gets around to developing the field of economic science, these biases will have to be acknowledged and dealt with in order to make progress. There is no other science that has these kind of prejudices.

      Also everything known about economics is based on unfounded hypotheses, self-serving assumptions and tautological ideology. Which means everything would have to be thrown out. Scientists would have to start from scratch. Take physics and cosmology. It was a very long road between Copernicus and today's standard models of particle physics and cosmology. If one step was skipped, it never would've happened. Since economists skip whatever steps they want, it is all junk science.

      A good place to start is with the question: does the Sun revolve around the Earth or the Earth the Sun. Which in economic terms is the difference between Say's Law and Keynes' Law. Say's Law says the supply creates the demand. Keynes' Law says the demand creates the supply.

      In this context, I believe Keynes is the Copernicus of economic science. (Of course, belief is worthless. It has to be proven one way or the other.) Like theologians are bad at science — even though it took one to start the scientific revolution — economists will make for terrible economic scientists.

      Like real scientists, economic scientists will have to be merciless with charlatans who pretend to be among their ranks. There can be no fooling around.

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    3. Although he is a defender of ISLM, I think Krugman largely agrees with you and thinks there needs to be big changes in the way macro-economics is done. But he sees charlatans like Ferguson and Rogoff as strengthening the (representative agent based macro) orthodoxy because they can point to the sloppiness of their work as a reason why you cannot move away from that basic model. And so he is absolutely ruthless with them.

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    4. I would add that although Krugman re-raises charlatans who have long been dead in the water after having their reputations shred to smithereens, only to resubmerge and rehumiliate the corpses, does not want to align with what he sees as the "truth is what you make of it and therefore anything goes" heterodoxy either. LIke Gordon he thinks that macro theory was progressing fine until 1978 when it was taken off the rails by a cynical political and/or whacky agenda. But maybe economics like a few other social sciences a decade or so ago (and some already re-need to), needs to go through a Critical Theory revolution and deep soul-searching if it is really going to emerge strong again. Certainly I think a case can be made that it needs to reengage with the classics of the discipline, particularly the General Theory.

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    5. I'm very impressed with Krugman. Although I don't think ISLM is his worst choice in macroeconomic hypotheses. (That would have to be when he likened Ricardo to Darwin. Ricardo was another Aristotle. He never bothered to gather evidence to support his macroeconomic musings.) Krugman also doesn't use ISLM as an absolute.

      ISLM, from what I understand of it, seems to be a useful way at looking at the economy. Perhaps its biggest weakness (and I could be wrong in this interpretation) is that it focuses entirely on monetary policy as a means of controlling the economy (stimulating and dampening demand or economic activity.)

      The way I look at the economy, it's a machine with many levers that either accelerate it or decelerate it. These levers can be broken down into three categories: monetary, fiscal and regulatory. The purist ideologues want to cut democratic government out of the process and put the economic machine on autopilot -- of course, without bothering to first figure out how it actually works. So it's not really surprising these efforts (2% inflation targeting) eventually made a train wreck of the Western economy.

      Therefore, any serious economic-science framework will include all three kinds of economic control, as Keynes did.

      The way Krugman simplifies the economy (in monetary terms) using the baby-sitting coop example is also a fallacy when looking at post-war economic history. From 1950 to 2000, all recessions were caused by the central bank trying to reel in apparent cyclical inflation with high interest rates. So a mixed-market economy does not fall into recession on its own. It takes action from the central bank or economic catastrophe to cause recession. This also shows the concept of stagflation is junk economics.

      Krugman's worst idea he still holds today is accelerating inflation. This is something for which there is no solid evidence. Not only that, it is very harmful to the economy. It means that the central bank must always keep its boot on the throat of inflation or else inflation will spiral out of control and it will have to inflict years and years of hardship on the population to unwind inflation.

      But it was actually the central bank putting its boot on the throat of the economy that eventually caused its collapse. In the US, for example, 2% inflation targeting, which was put in place around 1989, caused the economic ship to run aground by 2001. That's when zero-bound interest rates were needed to spur a recovery.

      So clearly this "Great Moderation" didn't last long. And it brought back pre-Keynesian boom-to-bust business cycles. After the dot com bubble burst in 2001, another bubble economy formed which collapsed in 2008. (7 years later, still no recovery. But a good guess is that another bubble will form if the recovery ever begins.) So it's clearly insane that "Keynesian" economists pat themselves on the back for the Great Moderation when it was an abject policy failure.

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    6. So I think Krugman is really a J.J. Thompson or Max Planck. Someone who belongs to the old order who can never really fit in with what needs to be done in developing the field of economic science. Like quantum mechanics, it will bear little resemblance to the classical ideas that preceded it.

      BTW, the high inflation of the 1970s doesn't need accelerating prices to explain it. There were two massive (external) inflation spikes in 1973 and 1979 caused by oil supply shocks. From 1972 to 1980, the nominal price of oil rose 900%. Prices rose 100%. What's surprising is that they only rose 100%, back before the electronics revolution when oil had a much bigger influence over the economy.

      So 8 years is a long time when you are in the middle of economic and political hysteria. It's a very short time when looked back on 4 decades later. IMO, economic scientists will use Occam's Razor to cut out accelerating inflation. The reality is that incomes grew exponentially from 1945 to 1973 which eventually made the economy sensitive to inflation and external price shocks. As incomes grow, the growth becomes less and less real. The difference between nominal and real growth is inflation. The central banks actually tried tackling 1970s inflation by lowering the employment rate and lowering real incomes. Real male incomes in the US (age 25 - 34) are presently at 1963 levels. (Of course, whether a central bank or economic meltdown causes a recession, real incomes and employment will be lowered, whether a central bank wants it or not.)

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  16. This guy has a track record. It isn't pretty.Shame he has a job at Harvard. If I see his byline I move along.

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  17. If we believe that economics is not at present an exact scientific discipline, would it not better to use the term ‘political economy'? This would then show that there can be many different views, none of which are not necessarily correct.

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  18. In a similar vein, we hear reported today that the bosses at JCB think we'd do fine outside of the Euro and that:

    What is needed is a lot less red tape and bureaucracy. Some of it is costly for us and quite frankly ridiculous. Whether that means renegotiating or exiting, I don’t think it can carry on as it is. It’s a burden on our business and it’s easier selling to North America than to Europe sometimes.” He said reducing red tape for business was Cameron’s most important task when seeking concessions from other EU leaders.

    But as usual, no journalist ever seems interested in pinpointing what the problems are.
    Surely, one might think, it's not too much to ask what are the regulations causing such problems?
    I fear we're in for an even more distorted debate than the mediamacro one.

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    1. "A recent survey by the IoD, the business organisation representing a range of large and medium-sized companies across the UK, found 60% of their members said staying in the EU depended on successful reform in key areas, notably employment regulations." - the Guardian.

      Simple version: they want to pay people less money for working more hours in worse conditions.

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  19. And then there are those who claim that printing a load more money will make us all richer.
    MrSauce.

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    1. Well, if you gave to me and my chums from school it would certainly make us a lot richer.

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  20. Is productivity growth a measure on which we should the coalition's economic record?

    Even if we could measure it accurately, which I doubt, surely changes in productivity have very long run leads and lags that have much deeper causes than mere short term changes in the macro-environment?

    It looks like something changed in 2008, for sure, but no-one seems to know what. For a good survey, although a puzzling one as they don't consider increased labour supply as a factor, even though they do see it.
    http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q201.pdf


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    1. Maybe pre-2008 an awful lot of the UK 'productivity' was really people selling each other fantastic amounts of worthless investments and insurance.
      When that bubble popped we found out where we really are.
      MrSauce.

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  21. And the FT thinks it's better than Pravda?

    The one time historian has descended into mere economic historiography, and what he's economic with, is the truth!

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  22. To it's shame, The Huffington Post has also allowed Ferguson to publish a similarly misleading piece of propaganda..

    http://www.huffingtonpost.com/niall-ferguson/the-rise-and-fall-of-krugmania-in-the-uk_b_7257236.html

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    1. And notice that according to Huffpost, Ferguson's screed is in this section:

      "Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors"

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  23. Niall Ferguson: Blowhard & fraud?! Who could've imagined???!!!

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  24. Mankiw's textbooks are pretty damn bad. They are full of nonsense and they act as if the nonsense is supported by evidence (without citing any evidence, of course).

    Given this, the fact that he's one of the *best* right-wing economists out there says something about right-wing economists in general. The others are *much worse*. There is no legitimate "right-wing" economics.

    And I know why. Right-wing economics, like all other right-wing disciplines, has the political agenda of making the rich & powerful richer and more powerful while keeping the lower classes "in their place" (suppressed). If they openly admitted their values, they would be able to do solid intellectual work, explaining how deflation increases the value of the hoards of the rich while impoverishing the poor, how high unemployment makes it easier to get obedient servants, etc. Back in the days of Louis XIV, they *would* say this sort of stuff outright, in public.

    But nowadays they aren't willing to admit it, because this pro-inequality, pro-hierarchy, pro-oppression agenda is unpopular (for very obvious reasons). Therefore they lie. And once they've started lying, it becomes impossible for them to do honest intellectual work.

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  25. It is quite clear from the posts in this comments section, that the economics literati in the U.K. have pinned Ferguson for the the shameless poseur and self-promoter that he is.

    I choke on my morning bite as I find the man solemnly commenting on this piece on Violence and mathematics of Extreme Values: http://www.fooledbyrandomness.com/violence.pdf

    The attraction for Ferguson, other than the symbols in it, could very well be the memoryless processes employed. The man clearly forgets the thrashing he endures regularly in blogs frequented by those with brains intact. I speculate with comfort that the man has neither the training nor intuition, to engage in mathematics or statistics.

    Anonymous18 May 2015 at 01:04, perhaps makes a great point. If NF is trying to claim Hitchen's vacated spot, he is making an awful hash of it.

    On a more serious since Professor Wren-Lewis and others lament the misdeeds of NF, I would implore them to collectively write a piece for a major U.S. newspaper, exposing the man for the fraud he is.

    The rest of us on this side of the pond can then proceed with breakfast without further incident.

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  26. The Keynesian policies disappeared from European economic policy in the mid-70s.
    Do not forget that in 1976 James Callaghan signed an agreement with the International Monetary Fund in which he pledged to; reduce public spending, adopt anti-inflationary policies, and develop the laissez-faire. This started the privatization of public enterprises
    Later, Margaret Thatcher undermined the whole economic base in the UK. With the advent of neoliberalism, from 1979, it was ended Keynesian policies that gave priority to employment stability and quality work. Accusing Keynes, confirms the profound historical ignorance Ferguson
    http://mamvas.blogspot.com/2008/09/y-ahora-qu.html

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