Watch it Scott, You're Condescension is Showing

        Sumner thinks it's 'crazy' for me to even question Josh Barro. Barro is on such a higher plane than I am you see. I just pointed out that judging by a 1995 paper Barro wrote on AS/AD it's not clear if he understands AD. Sumner was aghast. How can I criticize Josh Barro who won a Nobel Prize. In politics we have Rudy Guliani arguing that Chris Christie couldn't have lied about not knowing about the levels of corruption going on in his own office because after all, he's so arrogant. 

        http://diaryofarepublicanhater.blogspot.com/2014/01/rudy-guilianis-chris-christy-defense.html

       So we go from Guliani who argues for truth by proof of arrogance to Sumner arguing for truth by way of credentials. Barro won a Nobel Prize and I didn't-ergo he's a brilliant super genius and I'm one of the great Unwashed who doesn't get to have any opinion about economic policy-as according to him 'there's no such thing as public opinion in economics.'

       "He understands AS/AD better than you would understand it if you spent your entire life studying the model. Barro’s point is that there are multiple versions of AS/AD, and that he doesn’t much like any of them. He’s a possible Nobel Prize winner, who has done lots of research on AS/AD. It’s crazy for you to even suggest he doesn’t understand this simple model."

      http://www.themoneyillusion.com/?p=26016&cpage=1#comment-314750

        Going by the paper though, it's not clear he gets that AD is important. I mean you tell me, but that's how I'm reading it. 

       http://college.holycross.edu/RePEc/eej/Archive/Volume20/V20N1P1_6.pdf

       Meanwhile I see that Matt Yglesias has an excellent piece on the unemployment rate and why it can be misleading right now. On this Yglesias does seem to agree with Sumner on-that the UR is misleading. 

       "Janet Yellen will make history at the end of the month when she takes office as chair of the Federal Reserve’s Board of Governors, making her the most influential female policymaker the United States has ever seen. But she also takes office under historically unique circumstances. For the first time in the Fed’s 100-year history, its chair is going to need the guts to ignore the unemployment rate, despite intense pressure to do the opposite."

 http://www.slate.com/articles/business/moneybox/2014/01/janet_yellen_should_ignore_unemployment_rate_focus_on_inflation_and_keep.html

       The trouble is that while the rate has declined a good deal between 2011 and now-from over 9% to 6.7% a good deal of this is accounted for by a drop in those seeking jobs. 

        "Unfortunately, though, the unemployment rate is a ratio. It’s the number of people out of work divided by the number of people who are looking for work. And the bulk of the action seems to be happening in the denominator. In other words, rather than finding jobs, more and more unemployed people are giving up entirely. Due to employers’ tendencies toward discrimination against the long-term unemployed, giving up isn’t an entirely irrational choice. What’s more, with congressional Republicans blocking an extension of unemployment insurance benefits, the pace of dropping out is likely to accelerate sharply. To collect unemployment insurance, you need to be actively looking for work. If you’re ineligible for benefits and know employers are putting your résumé on the fast track to the garbage bin, you have every reason to give up."

         Sumner has argued too that the UR shouldn't be part of the Evan's Rule. We have the UR close to he ER target of 6.5% but this overstates the health of the labor market at this point. Indeed, as the GOP has killed the UI extension it looks we may get a further misleading drop in the UR from that shock. Still Sumner is arguing for a slightly different reason for the drop in the level of labor force participation. 

         http://www.themoneyillusion.com/?p=25883#comments

         http://www.themoneyillusion.com/?p=25839

        I also see that Sumner finds this incredulous:

        "Yes, unemployment would be 4.7% w/o the GOP takeover."

      "BTW.  That horrible GOP takeover led (in 2011) to the 2% payroll tax cut that Krugman thinks was “useful.”

           http://www.themoneyillusion.com/?p=25810#comments

        Why is that incredible? I mean there's only three possibilities for the counterfactual:

        1. The unemployment rate would have been higher had the GOP not won in 2010

        2. It would have been lower not won in 2010

        3. It would have been exactly the same. 

        Is there a reason we have to presume only 3 is reasonable? I guess maybe in Sumner's 100% monetary offset world but not in any world we actually inhabit. In this world policies do actually have an impact. Had the GOP not won in 2010 we would not have had nearly so much austerity and this would have meant higher growth and a lower UR. 

         BTW, without the horrible GOP takeover of 2010 we would have had a policy that was as good or better than the 2% payroll tax holiday-at a minimum it would still be in place now. 

         UPDATE: Even a busted clock is right twice a day and in that vein Patrick Sullivan points out that I have the wrong Barro here-I mean, of course, Robert Barro not Josh Barro.  Sorry Josh, you know what AD is.