John Cochrane hates Krugman. There's been a real feud between these two that goes back to when Krugman went after him for going after Christy Romer and accusing her of using 'shlock economics' during the stimulus debate of 2009.
http://noahpinionblog.blogspot.com/2014/12/krugman-cochrane-feud-is-getting-out-of.html
Scott Sumner as is typical of his tactics tries to represent himself as the Sensible Centrist in the Room. So he arbitrates the Cochrane-Krugman feud.
"Some economists are really good at zeroing in the the proper tool to employ in a given situation. Paul Krugman is perhaps the best in the macro blogosphere. Among academics, Bennett McCallum is excellent. Keep in mind that this is just one skill among many. Thus about 90% of the time I would agree with John Cochrane on policy issues more than with Paul Krugman, and yet on methodological issues I’m far closer to Krugman. I tend to think the profession overrates the importance of things like micro foundations and general equilibrium, although for certain problems a GE model is appropriate."
http://www.themoneyillusion.com/?p=28248
Ok. Let's unpack that for a minute if we could. According to Sumner Krugman uses the better methodology and yet Cochrane is right on policy issues vs. Krugman 90% of the time? You might wonder how that happens. I mean if Cochrane uses the wrong methodology how does he get policy so consistently right?
However, this is what Sumner does so well. After this rather ambiguous pronouncement, he goes on to praise Cochrane for skewering Krigman.
"In this op ed, John Cochrane shows off one of his best skills, brutally skewering Keynesianism"
So this piece is not about methodology but policy? Yes, Cochrane doesn't address his piece specifically to Krugman but to Keynesianism but as Noahpinion notes, for Cochrane Krugman=Keynesianism.
http://noahpinionblog.blogspot.com/2014/12/krugman-cochrane-feud-is-getting-out-of.html
When you read Cohrane's piece it's a bit confusing. He lambastes Krugman-Keynesianism-'Where is the deflation?' but, of course, never sees fit to tell us where the inflation is. I mean to hear Cochrane, he's never been wrong about anything before. He's clearly actually copying Sumner here with his talk of Keynesianism being dead-with a really tasteful image of Keynes himself resting in peace at the top of the page. Again, if you could take Sumner's talk about methodology in any way seriously, how does he get from A to B-from agreeing with Krugman on methodology to agreeing with this rather silly attempt by Cochrane to 'skewer' Krugman? Again, in Cochrane's mind Krugman and Keynesianism are the same thing.
Then again, what further confuses me is that Summer agrees with Cohrane here that Keynesianism is dead because it allegedly got notable predictions wrong yet Sumner also likes to say that making wrong predictions in no way discredit a model.
"And of course Friedman made some bad predictions in the 1980s (but since when do bad predictions discredit a model?)"
http://www.themoneyillusion.com/?p=28226
So bad predictions discredit Keynesianism but when we're discussing Monetarism they in no way discredit it as you don't judge a model by it's predictions-unless it's a Keynesian model.
UPDATE: Sumner answered my comment on his blog about wrong predictions by saying this:
"Mike Sax, Actually old monetarism is almost dead."
See, this is what I mean by calling Sumner's style sophistical. His answer really doesn't answer my point. So if old monetarism is almost dead-I guess Keynesianism is all dead?-does this mean that wrong predictions do discredit a model? You see how he keeps shifting the ground of discussion?
Another big part of Cochrane's piece seems to be saying that Keynesianism is wrong because no policymakers anywhere in the world use it. Well, might that explain why we've had such a slow recovery? I mean Europe even now is struggling to get out. I love how 6 years later when we finally get some good news-just some-in the US economy this proves we shouldn't have done stimulus.
He also lifts Sumner's claim that the sequester disproves Keynesianism once and for all. This is a tired argument that has never made any sense. For one thing Sumner suddenly 'forgets' the economists' credo: correlation doesn't prove causation.' Just because X and Y are both present doesn't mean X caused Y, but Sumner does just this when discussing the sequester. For more on why the sequester doesn't prove anything see the Angry Bear Blog:
http://angrybearblog.com/2014/12/on-smith-on-cowan.html
A lot of what Cochrane muses about just makes him seem muddled. He often just confounds the policy ideas of Keynesianism-of course he never differentiates what Keynesian school he has in mind but again he is mostly thinking about Krugman-with the policy ideas of liberals during political debates between Democrats and Republicans. He claims that because Keynesians say that WWII mobilization was the stimulus that finally got the U.S. economy back to booming this means that Keynesians are inconsistent charlatans who need to shut up because they have since called for cuts in military spending.
Look, this point is so simple you just wonder about Cochrane-there is different ways to stimulate the economy through spending. The Nazis were able to do it via forced labor-this doesn't mean that Keynesians either have to defend forced labor or admit they are wrong. Same thing with Cochrane's silly gibing over the XL pipeline-Keynesians are shown to be fakes to the extent that they don't want to do XL. Again, he's confounding Keynesians vs. liberals. The former regard economics the latter politics. What a liberal says about politics doesn't have a direct bearing about what a Keynesian says about politics.
There are all kinds of things that a Keynesian might agree would be stimulative but would nevertheless be bad public policy on noneconomic grounds. So what? There are many ways to stimulate the economy-that one opposes using forced labor or destroying the environment to do it is not any great paradox.
Yet even while John Cochrane is shocked by the all the alleged errors of Krugman-presumably believing he himself has none-David Frum is pulling a Matt Dowd.
http://www.nytimes.com/2007/04/01/washington/01adviser.html?pagewanted=all
Just as Dowd ended up wondering if Kerry was right, now Frum has finally come to the realization that maybe Krugman was right after all as well.
"When a former former speechwriter for George W. Bush says nice things about Paul Krugman it’s worth taking notice. Krugman was one of Bush’s toughest critics; to suggest that he was correct in his savage evisceration of Bush’s economic policies is apostasy of the highest order."
http://www.salon.com/2011/08/05/paul_krugman_and_david_frum/
Maybe part of the problem with conservatives is they still act like their fighting leftists who believe in Communism while that position has been gone for years. The reality is that the 'Left' such as is even left in American politics is pretty centrist. I in no way believe in Communism though I know there are still holdouts with some of the firebaggers.
http://news.firedoglake.com/2014/11/10/gorbachev-warns-of-us-triumphalism-and-new-cold-war-at-25th-anniversary-of-fall-of-soviet-union/
Anyway, I think the question of who won the econ debates of the last 6 years is difficult as you can get two conservatives like Frum and Cochrane with too such different takes. There is an argument that Keynesianism is dead and an argument that it is triumphant.
My belief is that 'Keynesanism'-is broadly right-though you get into debates about what is real Keynesianism-but as to whether it's triumphant that is hard to say.
I think it's right but just how much the econ world is convinced of this is hard to say. It also hinges on what you mean by Keynesian.. I do think that Keynesians won some important skirmishes though of course conservatives keep coming back to deflation-which is more a New Keynesian belief that a Post or Paleo Keynesian might question-but these same conservatives can't explain why there was no inflation.
Sumner will continue to trumpet that Market Monetarists have been right about everything though no one in the econ profession seems too impressed. His commentators believe in him with cultish devotion but Sumner himself always says what matters is what other economists think-'there is no public opinion in economics'-and they don't seem that impressed.
Sumner's childish sniffing about winning a bet against Krugman makes him something of an embarrassment among other economists.
http://noahpinionblog.blogspot.com/2014/12/krugman-cochrane-feud-is-getting-out-of.html
Scott Sumner as is typical of his tactics tries to represent himself as the Sensible Centrist in the Room. So he arbitrates the Cochrane-Krugman feud.
"Some economists are really good at zeroing in the the proper tool to employ in a given situation. Paul Krugman is perhaps the best in the macro blogosphere. Among academics, Bennett McCallum is excellent. Keep in mind that this is just one skill among many. Thus about 90% of the time I would agree with John Cochrane on policy issues more than with Paul Krugman, and yet on methodological issues I’m far closer to Krugman. I tend to think the profession overrates the importance of things like micro foundations and general equilibrium, although for certain problems a GE model is appropriate."
http://www.themoneyillusion.com/?p=28248
Ok. Let's unpack that for a minute if we could. According to Sumner Krugman uses the better methodology and yet Cochrane is right on policy issues vs. Krugman 90% of the time? You might wonder how that happens. I mean if Cochrane uses the wrong methodology how does he get policy so consistently right?
However, this is what Sumner does so well. After this rather ambiguous pronouncement, he goes on to praise Cochrane for skewering Krigman.
"In this op ed, John Cochrane shows off one of his best skills, brutally skewering Keynesianism"
So this piece is not about methodology but policy? Yes, Cochrane doesn't address his piece specifically to Krugman but to Keynesianism but as Noahpinion notes, for Cochrane Krugman=Keynesianism.
http://noahpinionblog.blogspot.com/2014/12/krugman-cochrane-feud-is-getting-out-of.html
When you read Cohrane's piece it's a bit confusing. He lambastes Krugman-Keynesianism-'Where is the deflation?' but, of course, never sees fit to tell us where the inflation is. I mean to hear Cochrane, he's never been wrong about anything before. He's clearly actually copying Sumner here with his talk of Keynesianism being dead-with a really tasteful image of Keynes himself resting in peace at the top of the page. Again, if you could take Sumner's talk about methodology in any way seriously, how does he get from A to B-from agreeing with Krugman on methodology to agreeing with this rather silly attempt by Cochrane to 'skewer' Krugman? Again, in Cochrane's mind Krugman and Keynesianism are the same thing.
Then again, what further confuses me is that Summer agrees with Cohrane here that Keynesianism is dead because it allegedly got notable predictions wrong yet Sumner also likes to say that making wrong predictions in no way discredit a model.
"And of course Friedman made some bad predictions in the 1980s (but since when do bad predictions discredit a model?)"
http://www.themoneyillusion.com/?p=28226
So bad predictions discredit Keynesianism but when we're discussing Monetarism they in no way discredit it as you don't judge a model by it's predictions-unless it's a Keynesian model.
UPDATE: Sumner answered my comment on his blog about wrong predictions by saying this:
"Mike Sax, Actually old monetarism is almost dead."
See, this is what I mean by calling Sumner's style sophistical. His answer really doesn't answer my point. So if old monetarism is almost dead-I guess Keynesianism is all dead?-does this mean that wrong predictions do discredit a model? You see how he keeps shifting the ground of discussion?
Another big part of Cochrane's piece seems to be saying that Keynesianism is wrong because no policymakers anywhere in the world use it. Well, might that explain why we've had such a slow recovery? I mean Europe even now is struggling to get out. I love how 6 years later when we finally get some good news-just some-in the US economy this proves we shouldn't have done stimulus.
He also lifts Sumner's claim that the sequester disproves Keynesianism once and for all. This is a tired argument that has never made any sense. For one thing Sumner suddenly 'forgets' the economists' credo: correlation doesn't prove causation.' Just because X and Y are both present doesn't mean X caused Y, but Sumner does just this when discussing the sequester. For more on why the sequester doesn't prove anything see the Angry Bear Blog:
http://angrybearblog.com/2014/12/on-smith-on-cowan.html
A lot of what Cochrane muses about just makes him seem muddled. He often just confounds the policy ideas of Keynesianism-of course he never differentiates what Keynesian school he has in mind but again he is mostly thinking about Krugman-with the policy ideas of liberals during political debates between Democrats and Republicans. He claims that because Keynesians say that WWII mobilization was the stimulus that finally got the U.S. economy back to booming this means that Keynesians are inconsistent charlatans who need to shut up because they have since called for cuts in military spending.
Look, this point is so simple you just wonder about Cochrane-there is different ways to stimulate the economy through spending. The Nazis were able to do it via forced labor-this doesn't mean that Keynesians either have to defend forced labor or admit they are wrong. Same thing with Cochrane's silly gibing over the XL pipeline-Keynesians are shown to be fakes to the extent that they don't want to do XL. Again, he's confounding Keynesians vs. liberals. The former regard economics the latter politics. What a liberal says about politics doesn't have a direct bearing about what a Keynesian says about politics.
There are all kinds of things that a Keynesian might agree would be stimulative but would nevertheless be bad public policy on noneconomic grounds. So what? There are many ways to stimulate the economy-that one opposes using forced labor or destroying the environment to do it is not any great paradox.
Yet even while John Cochrane is shocked by the all the alleged errors of Krugman-presumably believing he himself has none-David Frum is pulling a Matt Dowd.
http://www.nytimes.com/2007/04/01/washington/01adviser.html?pagewanted=all
Just as Dowd ended up wondering if Kerry was right, now Frum has finally come to the realization that maybe Krugman was right after all as well.
"When a former former speechwriter for George W. Bush says nice things about Paul Krugman it’s worth taking notice. Krugman was one of Bush’s toughest critics; to suggest that he was correct in his savage evisceration of Bush’s economic policies is apostasy of the highest order."
"But Frum goes even further than that in his post “Were Our Enemies Right?” Frum suggests that the entire conservative movement has fundamentally misunderstood how to manage the economy, and he compares it to how the “left” failed to understand the true nature of Soviet Communism."
"First he quotes a famous question posed by Susan Sontag in 1982:
Imagine, if you will, someone who read only the Reader’s Digest between 1950 and 1970, and someone in the same period who read only The Nation or The New Statesman. Which reader would have been better informed about the realities of Communism? The answer, I think, should give us pause. Can it be that our enemies were right?
"Then he offers his Krugman parallel:
Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? The answer, I think, should give us pause. Can it be that our enemies were right?
"Frum’s point is interesting and provocative and I think it holds up. Yes, portions of the American left clung to unrealistic views of Soviet Communism in the ’50s and ’60s, and yes, the same can easily be said about the doctrinaire right’s dogma about economic policy in the first decade of this century."
"But here’s where the parallel breaks down. Frum argues that Sontag’s question “contributed to the rise of a healthier, more realistic left much less tempted to make excuses for ‘progressive’ dictatorships than the left of the last generation.” But that’s because the American left changed its views in response to reality. There is precious little evidence that the conservative camp — outside of a few ostracized-and-excommunicated conservatives like Frum or Bruce Bartlett — has changed its views on economic issues one whit."
http://www.salon.com/2011/08/05/paul_krugman_and_david_frum/
Maybe part of the problem with conservatives is they still act like their fighting leftists who believe in Communism while that position has been gone for years. The reality is that the 'Left' such as is even left in American politics is pretty centrist. I in no way believe in Communism though I know there are still holdouts with some of the firebaggers.
http://news.firedoglake.com/2014/11/10/gorbachev-warns-of-us-triumphalism-and-new-cold-war-at-25th-anniversary-of-fall-of-soviet-union/
Anyway, I think the question of who won the econ debates of the last 6 years is difficult as you can get two conservatives like Frum and Cochrane with too such different takes. There is an argument that Keynesianism is dead and an argument that it is triumphant.
My belief is that 'Keynesanism'-is broadly right-though you get into debates about what is real Keynesianism-but as to whether it's triumphant that is hard to say.
I think it's right but just how much the econ world is convinced of this is hard to say. It also hinges on what you mean by Keynesian.. I do think that Keynesians won some important skirmishes though of course conservatives keep coming back to deflation-which is more a New Keynesian belief that a Post or Paleo Keynesian might question-but these same conservatives can't explain why there was no inflation.
Sumner will continue to trumpet that Market Monetarists have been right about everything though no one in the econ profession seems too impressed. His commentators believe in him with cultish devotion but Sumner himself always says what matters is what other economists think-'there is no public opinion in economics'-and they don't seem that impressed.
Sumner's childish sniffing about winning a bet against Krugman makes him something of an embarrassment among other economists.
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