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Why isn't there more consensus among economists?
Clive Crook asks that question about the fiscal stimulus (by the way, Paul Krugman responds to the part of the column about him). I do think there is more of a consensus than the current debates in the media, and the blogosphere, might imply. I take the general consensus of macroeconomics to be not too far from the position articulated by Alice Rivlin. That means accelerate the truly stimulative parts of the proposal and ponder the rest at greater length, plus emphasize aid to state and local governments. I'm not suggesting that you have to bow down and yield to that view, only that the view makes sense to a large number of macroeconomists.
In part the appearance of so much disagreement is driven by the fact that both MSM and the blogosphere select for opinions which deviate from the mainstream. Many segments of MSM are willing to represent the mainstream opinion, but there is then a sense that some new point of view must be offered, if only to hold the interest of the reader or viewer. And some parts of MSM are openly partisan and thus they skew toward extreme points of view. In the blogosphere libertarians are overrepresented, relative to their numbers in the profession. On the Democratic side, Paul Krugman is the most influential figure, and I would place him to the left of most Democratic economists. Progressives, like libertarians, are overrepresented on the web, relative to their numbers in the economics profession or elsewhere.
It is good that so many different points of view are being reflected, but we need to keep the biases of our filters in mind. Repeating a moderate view, again and again and again, isn't always the best way to attract or keep an audience.
Posted by Tyler Cowen on February 10, 2009 at 09:57 AM in Economics | Permalink
Comments
There's consensus in large part because consensus is a manufactured product of the academic filter which gives us "macroeconomists".
Economists who find this stuff beyond pale the what they can produce as "science" without embarrassment or discomfort self-select themselves out of this field.
You can hear microeconomists expressing these discomfort and embarrassment constantly.
So we end up with a self-selected theocracy comfortable with the "science" of either "macro" tinker-toy model and macroeconometrics.
Not everyone can swallow this stuff -- and only those with the stomach to swallow the program become "macroeconomists".
So in large measure we have a manufactured "consensus" produced by a self-selected cohort.
Posted by: Greg Ransom at Feb 10, 2009 10:10:04 AM
Classical political economy was "political economy" ... With the separation of Positive Economics and Business Policy, the concept was lost and the sense of the economy
Posted by: Marco Moreno at Feb 10, 2009 10:23:19 AM
your also assuming that a moderate position is in some way the correct one... otherwise, you'd be angrier (or happier) about fiscal stimulus.
Posted by: Zach at Feb 10, 2009 10:31:04 AM
> That means accelerate the truly stimulative parts of the proposal and ponder the rest at greater length, plus emphasize aid to state and local governments.
Yes, if Prez would insist on something simple like this perhaps he could avoid a messy political process.
Posted by: babar at Feb 10, 2009 10:31:53 AM
How can there be consensus where macro is more or less like bible study! It is still has not managed to shift from religion to science. This is pretty sad.
Posted by: Torben at Feb 10, 2009 10:39:28 AM
I am very explicitly not assuming that the consensus view is the correct one...
Posted by: Tyler Cowen at Feb 10, 2009 10:41:12 AM
I'm not sure that continually repeating a moderate view would be bad for building traffic. I'd love to see someone who could compellingly talk about a moderate viewpoint.
Posted by: Troy at Feb 10, 2009 10:50:20 AM
Robert Barro's explanation. It certainly describes my views:
Most economists haven't really been thinking about this issue, they haven't really focused on it. It's not their specialty. Most economists today, they haven't really been thinking about this kind of multiplier issue. Which goes back to that first question you asked about how come now we're so worried about this. I don't think most economists are focused on this, or that they're familiar with the empirical evidence. I don't think they've really worked on the theory. So I don't know, maybe they have some opinion that they got from graduate school or something.
Posted by: david at Feb 10, 2009 10:55:29 AM
Agree completely. Variations on the theme of "capitalism is dead! We need a new paradigm!" are the most irritating to me. Yet this seems to be the way that the British media, at least, are choosing to style their coverage and op-eds. For example:
http://news.bbc.co.uk/2/hi/business/7874667.stm
http://www.timesonline.co.uk/tol/comment/columnists/article5689642.ece
Posted by: Jim at Feb 10, 2009 10:58:12 AM
"Yes, if Prez would insist on something simple like this perhaps he could avoid a messy political process."
A dubious proposition. This process would always be messy, as Republicans and Democrats firmly disagree about what is the right thing to do. There is no agreement on what is truly stimulative. Democrats will never believe that $3 trillion of tax cuts (read this, not sure if accurate) is truly stimulative, and Republicans will never agree that the current stimulus bill is truly stimulative.
Even if economists did agree on funding to the states, public works, ... politicians won't, because it is not necessarily in their personal and political best interests to agree. As Rush has said, the Republican goal is not a package that works, it is that Obama fail.
Politics is always messy. A halfway compromise is $1.5 trillion of tax cuts and a $450 billion package of spending and more tax cuts. In my opinion, a truly bad outcome. So let the politicians fight, let it be messy, and hope for the best.
FYI, the Crook article mystifies me in that he seems to not understand a fairly straight-forward article by Krugman. Whether or not Crook believes that in the short run protectionism can have beneficial effects on a country despite its long-term destructive effects (and I find it hard to believe that someone could not believe this), it doesn't seem very hard to understand what Krugman is saying, and Crook doesn't seem to. Furthermore, Crook doesn't seem to understand Krugman's larger point, that because there can be beneficial short-term effects, politicians will be tempted to indulge in it despite the problems it will create down the road. All in all, Crook seems to have been half asleep when he wrote his column.
Posted by: es3200 at Feb 10, 2009 11:00:15 AM
I find the "consensus" statement fairly accurate - regardless of whether it can be supported by religion or science, both, or neither. The self-selected critics stating extreme positions do serve a function, particularly since we cannot really support the consensus view with anything resembling evidence. However, the real tragedy is that the public is left in true ignorance - the stimulus looks free to them, except for those that object on ideological grounds. I truly believe that the public does not believe there are any costs to a massive stimulus package. That is why the politics trumps the economics (as usual) - eventually a massive stimulus package will be passed and Rivlin's wise position will fall by the wayside as numerous other agendas are pursued.
Posted by: dale at Feb 10, 2009 11:00:27 AM
Are there any good betting markets on the effectiveness of "the stimulus?"
Posted by: josh at Feb 10, 2009 11:29:04 AM
Is even Rivlin's degree of support for stimulus mainstream? Could you please link to some non-administration pro-stimulus economists? I'm having a hard time finding any besides Profs. Krugman and DeLong, and there seem to be lots of academic economists against the stimulus bill. Am I missing something? Maybe there are lots of them, but where are the op-eds, blog posts, and open letters?
Posted by: Eric Rasmusen at Feb 10, 2009 11:37:44 AM
A bit of topic here, but can we please stop referring to people like Krugman and DeLong as "progressives"? This is an appalling euphemism which implies that those who are opposed to their view of coercive government intervention are somehow standing against "progress". The word liberal has already been stolen from us and distorted beyond imagination -- we should put our foot down this time and refuse to refer to them as they wish.
Posted by: thomas at Feb 10, 2009 12:55:56 PM
thomas,
Yes semantically progressive means one thing. However, in the american political context, the "Progressive" movement is at least a 100 years old.
Posted by: Tushar at Feb 10, 2009 1:25:00 PM
Paul Krugman == not a macroeconomist.
But he plays one in a terribly unreliable and politically corrupt newspaper.
Posted by: Greg Ransom at Feb 10, 2009 2:16:20 PM
Few other occupations with this type of a consensus problem come to mind. Dieticians and nutritionists. Astrologists. Alchemists. Homeopaths. Ayurveda followers. Also, Siberian shamans use different patterns of gong-beating…
I think Jonathan Swift nailed it long time ago.
Posted by: Ozornik at Feb 10, 2009 2:17:42 PM
Ozornik: How about all other social scientists, and philosophers.
Posted by: WillJ at Feb 10, 2009 3:21:52 PM
I think the problem is not the macro arguments. I think that it is possible to create a "stimulus" bill that (as Christina Romer predicts) can drop the unemployment rate by 1% versus non-stimulus for 2.5 years. I'm not sure this is that bill, but let's imagine you could do this.
The question is whether that benefit is worth the cost. It will cost my household (based on income tax incidence) around $50,000 NPV. That's around the loss I'd take if one of my household temporarily lost a job for a few months. On the other hand, the stimulus only reduces chances of unemployment by around 10%, so I'd really need it to cost $5,000 NPV to be worth my while.
Thus, I am against it!
Posted by: Mr. Econotarian at Feb 10, 2009 3:26:21 PM
Other occupations to add to that list: Medicine, Chemistry, Physics, Biology, Geography, Philosophy. The difference with that list is that those are now "Mature" fields where a consensus is now (by and large) present. Even in recent years, wonkish doctors have caused major public dispute and had major effects on public perceptions of medicine specifically and science in general, for instance the MMR vaccine debacle in the UK, but these incident do not mean that we should start seeking a new medical paradigm with the only selection criterion being that all its practitioners agree on all points.
Similarly, we shouldn't abandon the accumulated knowledge base of macroeconomists just because they disagree, but rather parse it, analyse it and attempt to build new and better theories. We may need to loosen our focus on Pareto optimality in order to build any kind of unity, but being able to agree on generalities would hugely improve the public image of Economists.
For my part, I think a large part of our collective problem in forming any consensus on macroeconomics is in our focus on optimum solutions.
Posted by: Leo at Feb 10, 2009 4:14:31 PM
A bit of topic here, but can we please stop referring to people like Krugman and DeLong as "progressives"? This is an appalling euphemism which implies that those who are opposed to their view of coercive government intervention are somehow standing against "progress". The word liberal has already been stolen from us and distorted beyond imagination -- we should put our foot down this time and refuse to refer to them as they wish.
AMEN!
Posted by: Superheater at Feb 10, 2009 5:00:05 PM
"Paul Krugman == not a macroeconomist.
But he plays one in a terribly unreliable and politically corrupt newspaper."
I disagree, he's worked in international finance and trade issues before, and that to me is considered to be macroeconomics.
Your insults to the NY times lacks any substance.
Posted by: Brian at Feb 10, 2009 5:14:11 PM
It's clear that many of the leading macroeconomists in the country don't consider Krugman to be a macroeconomist.
I think a lot of economists are reluctant to say what they really think of the Krugman whose mostly abandoned economics for journalism.
Posted by: Greg Ransom at Feb 10, 2009 6:13:16 PM
To Leo at Feb 10, 2009 4:14:31 PM
So some pursuits managed to turn themselves into sciences (alchemy – to chemistry or natural philosophy – to physics). How? By a) introducing rigor; b) realizing boundaries of the discipline (no search for philosopher's stone or perpetual mobile machines)
Isn't it time for the same in Economics? Crises like the current one should instigate self-reflection, which in turn starts from employing at least some modesty if not downright humility. I see very little of it so far. Majority of economists still exercise mostly in vanity and self-aggrandizing.
Posted by: Ozornik at Feb 10, 2009 7:02:36 PM
Give me an account of science that includes Darwin, then we can talk.
Explanatory power and non-magical causal mechanisms are what really matter in complex sciences like Darwinian biology and macroeconomics.
Keynesian economics doesn't make the non-magical causal mechanism cut, if you understand the choice theoretic logic of non-permanent productive resources, and the rest of microeconomics.
This is what Hayek meant went he pointed out that the "causal" interaction of Keynesian macro aggregates makes no sense, if we assume a system produced by human beings, and in which scarcity of any sort exists.
"Macroeconomists" are still trying to come to terms with this, not not doing a very good job of it.
Posted by: Greg Ransom at Feb 10, 2009 7:27:12 PM
