Yes Scott Sumner, One Certainly Should Be Careful Who You Link to

     If you read the comments of Sunner's recent posts, you'll see me getting into it with some of the commentators there including Mark Sadowski. It's the first I've seen him really get pointed and personal. Yes, I agree that his powers of analyzing data is very impressive but it seems to me that there's an almost cultlike sensibility that you're starting to see at Money Illusion. Not to say it's not always been there just that it's getting stronger. In the past, it was mostly Sumner who has fallen into snark when I've questioned a point-we're not even counting Major Freedom who is a class all by himself.

    Now even Sadowski is getting snarky.

    http://www.themoneyillusion.com/?p=24180&cpage=1#comment-285267

    http://www.themoneyillusion.com/?p=24239

    http://www.themoneyillusion.com/?p=24223&cpage=1#comment-285300

    That's why you go into the Money Illusion at your own risk. I do it but admittedly those less adroit at avoiding second hand smoke may end up sounding like they've had a lobotomy. You might start to believe things like this:

    "Paul Krugman recently argued that Keynesian economics is alive and well, and linked to this paper by Greg Mankiw, which summarizes the principles of new Keynesian economics.  Unfortunately it was typed back in the Stone Age, so I can’t cut and paste.  And I’m too lazy to re-type, so I’ll summarize the gist of Mankiw’s explanation of new Keynesianism:

1.  It probably shouldn’t even be called Keynesian; don’t waste time with the General Theory.

2.  It uses lots of classical principles.

3.  Paradox of thrift?  Fugetaboutit.

4.  Similar to the economics of Hume and Friedman.

5.  Don’t do discretionary policies, follow a rule–preferably NGDP targeting.

6.  Don’t bother with fiscal stabilization policy, use monetary policy.

I will include one exact quotation from the 1991 paper:

For the purpose of analyzing economic policy, a student would be better equipped with the quantity theory of money (together with the expectations-augmented Phillips curve) than the Keynesian Cross.  In the United States today fiscal policymakers have completely abdicated responsibility for economic stabilization.  Their inability to cope with persistently large government deficits has left them unable to even imagine trying to reach consensus on countercyclical fiscal policy in a timely fashion.  All attempts at stabilization are left to monetary policy.  When a recession ensues, as it did recently in the United States, fiscal policymakers merely begin discussions of what the Federal Reserve did wrong.

   "Reading this brought tears to my eyes.  A mere 20 years ago we were in a golden age of macroeconomics.  Now a new dark age has set in, as the forces of old Keynesianism have made Mankiw’s vision seem like a distant dream."

     http://www.themoneyillusion.com/?p=12529

     That's his goal by the way-that we return to this alleged Golden Age. Only some very impressive revisiionist history considers this time in Macro a golden age. Looking at this list we see why mainstream Neoclassical macro is so uninterested in the history of economic ideas-with notable exceptions like David Glasner. 

       http://uneasymoney.com/

    Sumner does make a good point-just how much of this list would Krugman, who had cited Mankiw approvingly-agree with on this list?

       "Krugman’s post contains this comment:

What actually happened in the 70s was that the Chicago guys stopped reading anyone who wasn’t a true believer, which meant that they missed the revival of Keynesian economics (pdf) (yes, that’s a paper by Greg Mankiw), and all that went with it.

I think some Chicago economists are guilty as charged.  But I wonder whether Krugman himself read Mankiw’s paper.  If so, is this his vision of Keynesianism?

     Of course, Krugman is another who has admitted to not caring anything about the history of ideas in economics. 

     The question that begs though is why exactly Mankiw called the new school he was helping to form in 1991 "New Keynesianism' at all? I mean why use the phrase Keynesian if there is nothing of Keynes in there? If it had lots of classical principles then why not call it 'New Classicism?' Of course, there was already a school called that but this is not such a satisfying answer. IF there is nothing of Keynes why call it Keynesian? The answer is that it's not quite true that it contained nothing of Keynes. 

     True is through much bathwater out and seemingly the baby in throwing out the GT yet something remained in New Keynesianism that had not been present during the pre-Keynesian era. To put it simply, there were still elements in NK that would not have existed had GT never been written despite Mankiw's razzing of Keynes's masterpiece. So while he may say that you shouldn't even bother reading GT, if it weren''t for the GT the NK movement would never have happened.

    No doubt conservatives wish this were true. The reason for the emergence of NK DSGE was the total flop of New Classicism in the 80s and the internecine feuding between the Saltwater and Freshwater schools. Mankiw once tried to attack Keynes on the basis that he lost money in the 20s-so therefore we can ignore what he said about animal spirits, the psychology of investment, etc because he once lost money in the market. Yes, he also made money but anything less than a 1.000 batting average calls his entire intellectual edifice into question.

   I have no doubt that Sumner is telling the truth for once-I'm sure he does look back on that era with tears in his eyes. He hopes to turn back the clock despite the failure this school of thought has been. Yes, more of the same. 

   P.S. If you've read those comments you'll see there's been some real comic relief going on. This commenator is losing his mind because I said that unconventional monetary policy is not proven. He declares that by my saying this I'm personally responsible for this long downturn. 

   You know, as much as I love taking shots at the Austrians – they’re actually harmless. They’re just a bunch of kooks with zero influence.

It’s people like you, with your mindless repetition of “ZLB means no traction for monetary policy”, who are the source of today’s ills.

   http://www.themoneyillusion.com/?p=24223&cpage=2#comment-285618

   So now we have some conservative wunderkind accusing a person who has been unemployed during this recession for being personally responsible for it-talk about blaming the victim! I guess I'm all wrong about conservatives, they're full of compassion. 

    Still, it's also a kind of compliment. He seems to think that I have the influence to delude the world about this treacherous liquidity trap. 

   So yes, be careful what you link too, even more careful what you read, you may morph into a Daniel.