No doubt, he's right, that it's not about personalities:
"Fairly often I receive comments or other communications asking me to respond to X or Y, who has said Z about me and/or my arguments. For the most part, I am not going to oblige. Why?"
"The main answer is, sheer capacity constraints. In case you haven’t noticed, Krugman-bashing is a huge industry — so huge that I would feel guilty about diverting so many productive resources from other activities, if it weren’t for my strong suspicion that most of these resources would in fact be destructive in whatever else they might be doing; so I’m actually providing a public service by keeping these guys busy."
"So I just take it in stride, and you should too."
Yet, I think there's a difference between a matter of personal feuds and where a material point of principle is at stake. In the case of Rogoff-Reinhart he's probably right that there latest "letter" to him isn't really worth worrying about. The only material point of substance is R-R continue to pretend that they never gave material aid and comfort to the austerity cause.
"Your desire to blame our later 2010 paper for the stances of some politicians fails to recognize a basic reality: We were out there endorsing very different policies. Anyone with experience in these matters knows that politicians may float a citation to an academic paper if it suits their purposes. But there are limits to how much policy traction they can get with this device when the paper's authors are out offering very different policy conclusions. You can refer to the appendix to this letter for our views on policy through the financial crisis as they were stated publicly in real time. We were not silent.."
This gives us an opportunity to quote Moynihan-'you're not entitled to your own facts.'
Johnny Isakson, a Republican from Georgia and always a gentleman, stood up to ask his question: “Do we need to act this year? Is it better to act quickly?”
“Absolutely,” Rogoff said. “Not acting moves the risk closer,” he explained, because every year of not acting adds another year of debt accumulation. “You have very few levers at this point,” he warned us.
"Senator Kent Conrad, the chairman of the Senate Budget Comittee, said our current deficits were severe because we had very low revenues due to a slow economy combined with very high spending. He then offered his own stern warning to the assembled senators. Turning around in his chair in the middle of the room, he explained to his colleagues that when our high debt burden causes our economy to slow by 1 point of GDP, as Reinhart and Rogoff estimate, that doesn’t slow our economy by 1 percent by 25 to 33 percent when we are growing at only 3 to 4 GDP points a year."
"Reinhart echoed Conrad’s point and explained that countries rarely pass the 90 percent debt-to-GDP tipping point precisely because it is dangerous to let that much debt accumulate. She said, “If it is not risky to hit the 90 percent threshold, we would expect a higher incidence.”
"Senator and former governor Mike Johanns, a Republican from Nebraska, asked, “Is there a point at which the debt market rebels?”
"I don’t want to be fire and brimstone,” Rogoff said. “No one knows when this will happen. ” Yet, he added, “It takes more than two years to turn the ship around … Once you’ve waited too long, it’s hard to take radical steps.”
So any claim that they didn't actively encourage the Austerians is simply revisionist history-much like their initial history of public debt was.
Krugman has said plenty about R-R and doesn't want a personal feud. However, I think in the case of Sumner he should respond-at least sometimes. It's not about taking silly Sumner missives personally. It's just that he sometimes puts out some things that are pretty misinformed, and it's an opportunity for Krugman to set the record straight.
In that vein, I notice that Sumner is becoming a chief apologist for R-R. He praises R-R's whiny letter to Krugman claiming that they showed why fiscal stimulus is a bad idea:
"Commenter J directed me to a passage by R&R from their now famous letter to Paul Krugman:
We don’t see your attraction to fiscal largesse as a substitute. Periphery Europe cannot afford it and for Germany, which can afford it, fiscal expansion would be procyclical. Any overheating in Germany would exert pressure on the ECB to maintain a tighter monetary policy, backtracking some of the progress made by Mario Draghi. A better use of Germany’s balance sheet strength would be to agree on faster and bigger haircuts for the periphery, and to support significantly more expansionary monetary policy by the ECB.
" If Germany stimulates their economy then German inflation will tend to rise, and at least to some extent this will raise overall eurozone inflation. Now consider the fact that the ECB is supposed to be targeting eurozone inflation. German fiscal stimulus would then force a tighter ECB policy, which would reduce inflation in the non-German part of the eurozone. Because no fiscal stimulus would be occurring outside Germany (by assumption, and because they are broke) the lower non-German inflation induced by tighter ECB monetary policy would mean lower non-German NGDP and RGDP. As an analogy, think of how the US tech boom of 1998-2001 reduced Argentina’s NGDP and devastated the Argentine economy.
This is a really good example of how people thinking in terms of “trade balances” are often led astray. It seems like a booming German economy would help the rest of the eurozone. And it could, but only if generated by a more expansionary monetary policy, or by supply-side reforms."
Krugman did answer R-R on this one. Of course, Sumner had an answer for that too-Sumner is not any ordinary Krugman basher but a Krugman stalker:
"Paul Krugman has a new post criticizing Reinhart and Rogoff’s view that fiscal stimulus in Germany might be counterproductive. Here is R&R:
We don’t see your attraction to fiscal largesse as a substitute. Periphery Europe cannot afford it and for Germany, which can afford it, fiscal expansion would be procyclical. Any overheating in Germany would exert pressure on the ECB to maintain a tighter monetary policy, backtracking some of the progress made by Mario Draghi. A better use of Germany’s balance sheet strength would be to agree on faster and bigger haircuts for the periphery, and to support significantly more expansionary monetary policy by the ECB.
"Krugman has two and a half objections:
First, the half level: what, exactly, does it mean to call for expansionary monetary policy by the ECB? Like other major central banks, the ECB has near-zero policy rates, so we’re talking about some kind of unconventional monetary policy. Are we supposed to envision the ECB doing huge purchases of unconventional assets (over and above what it’s already doing in the form of lending to banks against sovereign debt and the promise of outright monetary transactions if necessary)? Alternatively, are we supposed to see a European version of Abenomics, with the ECB credibly committing to a higher inflation target? Both are strategies worth trying, but of uncertain effect — and both would surely be viewed as anathema by the Germans.
"Yes, monetary stimulus would be anathema to the Germans, but they have one vote out of 17 (although their power is admittedly greater than that ratio suggests.) But fiscal stimulus is also anathema to the Germans, and they have one vote out of one for German fiscal stimulus. Just a few years ago I was told by lots of worldly-wise commenters that the Japanese would never opt for monetary stimulus, because of the power of the elderly lobby in Japan. OK commenters, where are you now? I haven’t heard from you recently."
Sumner has been doing an awful lot of crowing lately-for what I don't get. It seems any economic news that doesn't have the economy falling off the cliff proves the fiscal multiplier is zero. As to Abenomics notice that their not doing the Sumnerian, R-R prescription-deep fiscal cuts along with monetary easing; rather they are doing fiscal stimulus along with monetary easing.
Sumner continues to play these hair splitting games. I hope Krugman continues to engage this monetary offset issue-though he'll probably leave Sumner's name out on purpose. Meanwhile, Sumner's fellow Market Monetarist has called him pretty well on his casuistry regarding the multiplier.
http://diaryofarepublicanhater.blogspot.com/2013/05/david-glasner-fiscal-multiplier-could.html
Meanwhile, the market isn't too happy today about all this talk that the Fed can begin to reduce the bond buying-the market is down 3 digits today. Then we will see job and GDP numbers at the end of the week to chew on.
