Sunday, July 3, 2016

The Donald Trump of Economists

Tom Brown, it seems that regarding my on again off again war with Scott Sumner is now on again. So you may have to pick up the slack in terms of comments over there.

I left a few links on his post yesterday-that seemed pretty innocuous to me. Sumner, for some reason took great offense to them. These were my exact comments/ You be the judge:

"Sort of a weird moment as some liberals say they like what Trump said about trade or at least think he identified a real problem-with wrong solutions."

"I’m not one of those liberals. I for one don’t like anything Trump says. But here’s Jared Bernstein:

“As he always does, Trump conflates swagger with an actual plan. In this case, however, he’s pointing to a real problem. We can and should have a moratorium on trade agreements. The process by which they’re negotiated is undemocratic, they uplift investor rights over sovereign rights, they reverse the order in which certain challenges should be tackled, and they fail to deal with currency issues.”

“But globalization cannot nor should not be stopped. Done right, it delivers great benefits to advanced countries through the increased supply of goods, and it helps improve the living standards of workers in developing countries through profits made from trade with wealthier nations. Trump’s tariffs would undermine all of that.”

“When trade partners manipulate their currency, two negative effects follow. First, with the terms of trade artificially tilted against us, countries with large and persistent trade surpluses subsidize a flood of imports into the United States while unfairly pricing our goods out of their markets. Second, when, in the process, trade-surplus countries send large amounts of their dollar reserves back here, that gives rise to underpriced credit, bubbles, and, ultimately, recessions.”

“Yes, we get cheap imports out of the deal, but people aren’t just consumers. They’re workers, too, and the cost of persistent trade deficits in terms of job losses and the economic “shampoo cycle” — bubble, bust, repeat — makes this a raw deal.”

"Even Larry Summers is now talking about the need for a ‘responsible nationalism.’

“The political challenge in many countries going forward is to develop a “responsible nationalism.” It is clear that there is a hunger on the part of electorates, if not the Davos set within countries, for approaches to policy that privilege local interests and local people over more cosmopolitan concerns. Channeling this hunger constructively rather than destructively is the challenge for the next decade. We now know that neither denying the hunger, nor explaining that it is based on fallacy, is a viable strategy.”

Now in total dissonance Newt Gingrich is in a Holy War against Nafta.

That was my first comment.

My second:

"In fact in 2016, the Democrats in theory may be the more pro trade party. At least if Obama and Hillary have anything to say about it."

"They are under a lot of pressure to scrap TPP though."

My third:

"In the good news is no news section, the 99% had their best year since Bill Clinton was President."

“The 99 percent just had its best year in nearly two decades.”

“The vast majority of American workers are finally seeing their incomes rise from the depths of the Great Recession, a new analysis from one of the world’s leading scholars of economic inequality suggests. But incomes for the top 1 percent continue to rise substantially faster.”

“The analysis of Internal Revenue Service data on pre-tax earnings, from UC-Berkeley economist Emmanuel Saez and published by the Washington Center for Equitable Growth think tank, finds incomes increased by 3.9 percent last year for the bottom 99 percent of U.S. families. That’s the strongest growth those workers have seen since 1998, but it’s still not enough to repair all the damage the recession wrought on those workers: As Saez notes, those families on average have only regained two-thirds of the income they lost during and after the financial crisis.”

“The top 1 percent, in contrast, have now regained almost all the income they lost during the recession. Their incomes grew by 7.7 percent, almost double the rate of the bottom 99 percent of workers, in 2015. Other work this spring has also suggested typical worker income growth is accelerating, including an analysis by former Clinton administration economic adviser Rob Shapiro that finds mounting income gains for young workers in particular in recent years.”

His post was about the effects of currency depreciation on tariffs. I brought this up as it shows that politics is turning against trade in a big way. I wasn't celebrating it, just pointing it out to him.

For some reason this generated great hostility by him.

"Mike, Not clear why you are wasting your time here."

It's the usual gibe. Allegedly, I'm hopeless, just not on his level, etc, etc.

My response:

"Not sure what led to that hostile reaction, Scott. Certainly wasn’t being rude.

"Even if you are going out of your way to insult me, I won’t rise to the bait. I do enjoy reading your blog sometimes among a number of others. That I like reading it has no impact on whether you like me reading it I guess."

"I was just pointing out that the politics is turning against trade. I wasn’t saying this was a good thing just pointing it out ."

"While I wouldn’t say you’re a stupid guy, Scott, you are maybe not such a nice guy."

"After all, I don’t worry about you calling me an idiot as I know I’m not."

"But what if I didn’t know that? What if I doubted my own basic intelligence?"

"To deliberately try to insult someone for no good reason makes you look small."

Scott responded that I am being rude:

Mike, You said:

“Certainly wasn’t being rude.”

"Yes, you were. I’ve told you many times not to leave comments here. You continue to do so. That’s rude. You have your own blog—why fill up my comment space with one useless comment after another, none of which have any bearing on this post. The purpose of comments is to comment on the post itself, not to provide a platform for your random uniformed thoughts on trade."

"Ray, Please don’t go away. At least your comments are often funny."

Now they weren't my random thoughts. They were actually the thoughts of Larry Summers and Jared Bernstein. Andy many commentators deviate from a particular post, much more blatantly than I did here. The piece on rising incomes is certainly relevant as I've seen Sumner himself write about the issue-he of course denies that incomes are stagnant.

My point was that trade is under real pressure politically. Which is not something Sumner is happy about, I know. I was giving him the opportunity to respond to Larry Summer's call for a 'responsible nationalism.'

Sumner's response is peevish snark.

I have to hand it to Ray Lopez. If nothing else he's a class guy. Sumner loves to take potshots at him, but Ray did not play into Sumner's hands here. Scott clearly was trying to divide me and Ray. I'm somehow the bad guy whereas Ray is just a nice clown or something.

"Yes, Mike Sax left a thoughtful response and Sumner butchered him. Sumner’s bipolar, seems he likes me but not Sax. Strange."

I think that's a big part of it. Sumner is bipolar. We did awhile back have an argument and he seemed to ban me. But then he later on carried on civil discussions with me in comments and has a number of times HTed me on links I left.

I usually don't link to my own blog as I figure that will antagonize him.

Anyway, whoever won the argument, it's clear I got the best line.

I left Sumner a few more comments this morning.

"Maybe Scott sees me not as a commentator but as a competitor because I have a blog, that gets a decent amount of traffic, it’s true. In fact this last month was a record."

"Again, unlike you Scott, I don’t have to be uncharitable as I lack your insecurities."

"I say insecurity as if you were really out of my league intellectually I wouldn’t get under your skin."

"Regarding my blog, many Money Illusion commentators have been turned onto it once they became aware of it."

"Scott is a good economist I agree. But he doesn’t know politics. He never thought Trump could win the GOP primary and I called it since last Summer."

"So those who want better political analysis might be tempted to come hang with me, I agree."

"Maybe that’s the source of your insecurity?"

"Another reason Scott is so insecure: we lay people give Scott credit for being an economist, but among other economists he’s sort of the Donald Trump of economists."

"Real billionaires don’t spend a lot of time thinking about Donald Trump"

Ray, you're certainly always welcome here. And you won't even be treated disrespectfully like Scott tries to do.

It will really irritate him. An added bonus.


  1. Nothing surprises me less than Scott Sumner acting like a dick.

    You are dead on about him being insecure Mike, and probably are right about the reasons....... he is the Donald Trump of economists.....or the Newt Gingrich of economists with a platform (its been said that Newt Gingrich is the dumb guys idea of what a brilliant thinker sounds like). I've never respected his contributions to any discussions. I cant say that about Nick Rowe, who I probably disagree with almost as much regarding his approach to money/macro, but at least Nick Rowe has made me think about a lot of things. Ive never read anything Scott said and thought, "Ya know he might have a point".

    I know Ive brought this up before but when he spent almost en entire comment thread trying to argue that Japan had 100x the inflation of the US and his "evidence" was that their prices had two more zeros after them compared to ours,
    I dismissed him as a dolt.

  2. Indeed Greg. Sumner has been pushing this whole NGDP futures thing and it gets no traction.

    He's quit his job as a professor at Bentley-he was never high on the food chain there-and is being financed by Ken Dudda now at the Mercantilius Center.

    But when you read the economists high on the food chain-I don't mean the heterodox guys-just guys like Krugman, Woodford, Summers, etc,-Sumner is not even in the conversation .

    So maybe he's frustrated and lashing out.

    Sumner is sort of the favorite economist to laypeople who don't know economics so well.

    1. Mike & Tom

      Speaking of Duda and NGDP futures, there was a recent post by Jason Smith where he said something a little dismissive of Market Monetarism and Sumner. It wasn't bad at all really, he said that Market Monetarism exists to dismiss the effects of fiscal stimulus. He was saying that THAT is the only real point they are trying to accomplish, to neuter fiscalism. The thing is Sumner has pretty much admitted as much.
      Well Duda felt the need to defend Market monetarism form Jasons attack and he pointed out something David Beckworth wrote. He was arguing that Market Monetarism isn't this monolithic body of thought that is politically motivated (riiiiiiiiight) but it is in fact a potentially useful way of looking at macro policy Beckworth apparently has advocated for coordinated fiscal and monetary efforts and sees neither as solely capable of moving us forward ( I agree for most part).
      What was funny to me was 2 things; 1) Duda admitted that Scotts intransigence on fiscal policy wasn't helpful (and misguided in his view)
      2) He insisted that Jason revise his statement

      So I think this is evidence maybe that Scott and his surrogates like Duda (although Sumner is Dudas surrogate financially) dont like it when smart people like Jason, or you Mike, take shots at his work. Especially shots that hit a bullseye!
      I asked Mr Duda why he felt the need to come over and castigate Jason and asked if he would insist that Scott be less dismissive of fiscal policy in his postings........ since he IS paying him after all.

      He hasnt responded yet...... he probably didn't like my tone.

    2. Duda, though, for his part, seems like an ok guy as far as I can tell. In talking to him, he's not religiously opposed to FS and he agreed that Sumner's intransigence is not helpful like he did with you.

      Duda is something of a liberal himself, and would be fine with FS.

      Sumner, you get the sense, is a very stubborn individual-he probably would say 'principled.'

      There is one criticism of fiscal policy I think has some truth in it. It's so difficult to get done politically. Understand I'm for FS. But it is very tough to get done politically when you have two parties where the party out of power-without a President in the WH-may well have the incentive-if they are as unscrupulous as the GOP-to not work with the in power party.

      The trouble is that most voters give all the credit or blame to the POTUS. In truth this is wrong: what about Congress, what about state govts, what about the Fed, what about stuff happening in Europe or China, etc.

      What about just plain old back luck and negative shocks?

      But clearly most people hold the President responsible for the economy-good or bad. So a unscrupulous GOP or similar figures why pass FS?

      If it works the President gets all the glory? If they refuse and it hurts the recovery, he gets all the blame.

      In theory, the advantage of the Fed is that you have technocrats who could just do what is needed without a worry over politics.

      Of course, the rub there is the technocratic folks at the Fed have to have the right model of the economy.

      On a purely technical basis, it shouldn't matter whether the Fed or Treasury inject lots of money into the economy.

      What is the difference between a 'helicopter drop' by the Fed or the Treasury?

      In practice we get this Holy War over fiscal vs. monetary.

    3. What's interesting, Greg, is in this case I wasn't even taking a shot-just asking him a question. I was giving him a chance to respond on the trade debate.

      For some reason this got him off the deep end.

      Like you say, maybe he just doesn't like thoughtful questions that takes him off his message.

    4. I didn't mean to imply that you had taken a shot at him recently only that you have tried to make him, in the past, defend his positions or "show you his work" He doesn't think he has to show YOU his work. You dont just blindly accept what he has to say as many of his commenters do.

      My thoughts on the ease of fiscal vs monetary is such;
      In some ways I dont want it to be easy. These are tough decisions that need to be made and we need to as an electorate have an honest discussion about the idea of public policy and the notion of public goods. These decisions dont need to be made by a small group of insulated technocrats who have their own biases and prejudices that never get properly aired. We dont know much about each Fed governor. We never hear their positions on other things other than money policy. Well money is not magic. There isn't a right amount of money that makes an economy perfect.

      Money is just a tool and its a tool of the govt and of banks, both of which have different goals when using the tool. When the govt uses the tool of money it is trying to acquire something from the private sector and is agreeing to give you income in return, when a bank uses the tool of money it is placing a value on your collateral and the reliability of your income stream and extending a line of credit to you..... for a fee. It is acting as an assessor of value and taking a portion of it, a hefty portion often times. The govt is just saying "I need you to do X and I will pay you Y... deal?"

      While I dont care about ease per se, I do want it to be fairly consistent. Fights every year about whether or not some program is going to be funded are not good for the citizens. Once we decide what we want we just fund it and leave it alone until either 1) we fixed the problem the program was designed to address or 2) New real problems emerge (not financial ones) that require a re assessment of needs

      The Sumners of the world think "prices" solve everything. Get the price right and a market will clear properly. I and others say its not so simple. Distribution and a sense of fairness are very human needs. Monetary policy doesn't address those things it sees only prices and monetary aggregates. It can never see the other important things, that would be "politicizing" the process.

      The "ease"of monetary policy isn't a plus.

    5. Yes Greg, that's the problem. I think he has read me as hostile when I'm giving him the opportunity to show his work like you put it.

      I don't come at him and say 'You're wrong' more like "interesting. Why are you right?'

      Yes, he feels he's above having to do that.

    6. "In some ways I dont want it to be easy. These are tough decisions that need to be made and we need to as an electorate have an honest discussion about the idea of public policy and the notion of public goods."

      But how do you know folks will agree? What if public opinion is too divided?

      It usually is which is the problem with Congress.

      I thnk you prefer it to go through congress on aesthetic or theoretical grounds-in theory it's more democratic.

      But the practice doesn't always hold up.

      If you had a CB run by Maynard Keynes, I'd prefer him to make the choice even if the process doesn't go through a democratic form.

      This goes to an issue I've talked about recently relative to an interesting piece by Chris Hayes.

      "The Myth of the Rational Voter is best understood in the context of a long-standing academic debate over whether democracy works. It's a question that has two related, but distinct, sub-components: Do democracies produce optimal policies for its citizens? And do democracies produce policies that accurately reflect the will of the majority?"

      Do you believe voters always know what the optimal policy is?

      Hayes acknowledges they don't.

      "The most sanguine observers say “yes” on both counts. But given that surveys consistently show that voters are distressingly ignorant about both the rudiments of policy (whether we spend more on foreign aid or social security) and politics (how many senators each state has), it's a difficult case to make."

      In that case, it's at least possible that a CB could be closer to right than public opinion on the optimal policy.

      But in your mind is the optimal policy most important or the form of the decision-wether it represents the will of the voters?

      Sometimes the will of the people goes terribly wrong. Warning: 2016 is the year to break Godwin's Law.

      Hitler was elected democratically. In no way was this stolen.

    7. "But how do you know folks will agree? What if public opinion is too divided?"

      Its mainly a matter of re programming everyone. And I think the next generation is ripe for it to be honest.

      We've spent the first 200+ yrs of our countries existence in various political fights over power and rights and in the end often times the notion of affordability of things always comes up. Once our electorate can no longer wield the "we dont have the money card" in the faces of their political opponents, which is often the last resort to settling a fight, then things will start to change. Once we truly do understand that our nation can afford to use any real resource it controls in any way it wishes we will have taken a huge step forward.

      Its finance which is holding our thinking back. Its these outdated ideas of how public works get "funded" that lead us down these rabbit holes where political fights reach these stalemates.
      "Look what this will do to interest rates!" Someone always yells. "It'll bankrupt our country!' someone else adds. And then my favorite; " We are already borrowing too much money from China!!"

      Lifting the scales of "finance" from our eyes would go a long way to putting our voters in a place where they can make real choices not fake ones.

      Id rather have Keynes as Treasury Sec and bring back Marriner Eccles to run the CB. Actually we wouldn't need a CB in the form it is now if we truly used the tool of fiat money properly.

    8. Maybe my lack of trust in Congress is based on six years of GOP rule.

      For me, I'm not an ideologue-either way. I'll take what we can get in terms of monetary-fiscal, etc.

      There are always first, second, and third best policies.

      If anything, the Democrats are actually inching towards a better view. For a long time they bought into the idea of a balanced budget. Now even in principle, the Obama Administration acknowledges a modest structural deficit is fine.

  3. No problem, I'll pick up the slack. I pretty much restrict my comments to his Trump-bashing and Brexit-skeptic articles lately (two subjects in which his personality is fun to watch in action against common enemies).

    Another thing that perhaps puts him in a bad mood: his comments section is full of Trump and Brexit supporters (the former being much more of a problem for him than the latter I think), whom he considers to be morons, racists, neo-Nazis and conspiracy lunatics. And you know what?... he's actually right about that. =)

    You never see Mark Sadowski (someone he really likes) commenting over there anymore.

  4. "Another thing that perhaps puts him in a bad mood: his comments section is full of Trump and Brexit supporters (the former being much more of a problem for him than the latter I think), whom he considers to be morons, racists, neo-Nazis and conspiracy lunatics. And you know what?... he's actually right about that. =)"

    True, but why not lash out at them, then?

    Anyway, we'll see. I probably won't be leaving comments there for the near future anyway, LOL.

    Yes, I still like his Trump stuff.

    I do think I zinged him good with the Donald Trump of the economists jibe.

  5. I do think, though, that he weirdly might see me as somehow a competitor-even when I try to agree with him-figuring how can he argue then?

    But I got a good deal of positive comments after I talked about the rise of female leaders on his blog yesterday.

    Now that I think about it, this has been what has led him to lash out at me in the past.

    That too many other commenters seemed to like what I said or were engaging with me.

    It's as if he thinks he's losing control of his blog or something.

    Anyway, his bipolar antics are as everything else is for me: a learning experience.

    If someone tries to demean or belittle you, or even humiliate you but you learn from them and gain from them anyway, the joke is on them not you.

    I'll still read though maybe a moratorium on comments for the near future.