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I don't have time to discuss the minute points of this essay so I will just point out a couple of incredibly obvious facts: 1. The chicago school economists we

by hristov 17y ago

I don't have time to discuss the minute points of this essay so I will just point out a couple of incredibly obvious facts: 1. The chicago school economists were incredibly influential in the bush government to the exclusion of all other economists. 2. It all ended in disaster. I think Krugman is correct in pointing out that there is something very wrong with the advice these guys were providing.

steveplace 17y ago
You're assuming the policy decisions of the executive branch of the US fed government was the reason for the disaster. You're also assuming that the advice acted upon by the POTUS was based on the Chicago school. For the former point, it leaves out FNM/FRE, housing speculation, easy credit by the fed, a weak dollar, increasing debt from foreign wars, the piss-poor rating agencies, the asset bubble driven by chinese liquidity, etc. For the latter point, there were economic decisions made that do not align with that school of thought. tl;dr -- Post hoc ergo propter hoc.
snewe 17y ago
Two strong assumptions: 1. Correlation is causation? 2. It is all the Bush adminstration's fault.
chasingsparks 17y ago
Post hoc ergo propter hoc Krugman is not offering up a hypothesis that is better at explaining observations than his opponents. He is making an argument based on an ideological position while ignoring evidence suggesting, at a minimum, that his hypothesis is not supported. This is not science. As Cochrane notes in one of his "minute points", *Pretty much all we have been doing for 30 years is introducing flaws, frictions, and new behaviors, especially new models of attitudes to risk, and comparing the resulting models, qualitatively to data." This set of "we" includes the behaviorists and "complexity economists" (i.e. people who really enjoy massive simulations of simple agents).
natrius 17y ago
Regardless of what one thinks of Krugman's positions, he clearly deals in personal attacks far too often. If he's trying to educate the public, that's not helping his cause.
- jbarciauskas 17y ago
  I'm not sure what instances you are thinking of, so perhaps I am mistaken, but from what I have read, Krugman wants to promote greater accountability. When he criticizes the decision or prognostication of an economist or politician, it's to avoid the passive voice - "Mistakes were made" and identify the party responsible for the error. I think he would expect others to hold him to the same standard.
  - natrius 17y ago
    Here's one example: http://krugman.blogs.nytimes.com/2009/03/03/roots-of-evil-wonkish/ http://krugman.blogs.nytimes.com/2009/03/03/roots-of-evil-wo... Accusing people of "deliberate obtuseness" is no way to have an argument.
Perceval 17y ago
Do you have a citation for point one? The author of the article discusses not just Chicago School monetarism, but also the many other strains of economic thought over the past decades, including the 'New Keynesians.' Krugman apparently also disagrees with the New Keynesians, and the rest of the economic mainstream of the past 30 years, not just the Chicago School. What the author is getting at is that Krugman doesn't seem to be reading economics anymore, from any school of thought. Looking at the author's CV (http://faculty.chicagobooth.edu/john.cochrane/research/Papers/vitashort.doc http://faculty.chicagobooth.edu/john.cochrane/research/Paper... [DOC]), he appears to be a libertarian. Libertarians weren't exactly well-represented in the Bush administration, and CATO were among its fiercest critics on financial and foreign policy issues. The anger over Krugman's piece doesn't seem to be limited to Cochrane or Chicago School economists either. Cochrane's personal web page also links to a similar piece featured on Huffington Post rebutting Krugman: http://www.huffingtonpost.com/david-k-levine/an-open-letter-to-paul-kr_b_289768.html http://www.huffingtonpost.com/david-k-levine/an-open-letter-...

by hristov 17y ago

steveplace 17y ago

You're assuming the policy decisions of the executive branch of the US fed government was the reason for the disaster. You're also assuming that the advice acted upon by the POTUS was based on the Chicago school. For the former point, it leaves out FNM/FRE, housing speculation, easy credit by the fed, a weak dollar, increasing debt from foreign wars, the piss-poor rating agencies, the asset bubble driven by chinese liquidity, etc. For the latter point, there were economic decisions made that do not align with that school of thought. tl;dr -- Post hoc ergo propter hoc.

snewe 17y ago

Two strong assumptions: 1. Correlation is causation? 2. It is all the Bush adminstration's fault.

chasingsparks 17y ago

Post hoc ergo propter hoc Krugman is not offering up a hypothesis that is better at explaining observations than his opponents. He is making an argument based on an ideological position while ignoring evidence suggesting, at a minimum, that his hypothesis is not supported. This is not science. As Cochrane notes in one of his "minute points", *Pretty much all we have been doing for 30 years is introducing flaws, frictions, and new behaviors, especially new models of attitudes to risk, and comparing the resulting models, qualitatively to data." This set of "we" includes the behaviorists and "complexity economists" (i.e. people who really enjoy massive simulations of simple agents).

natrius 17y ago

Regardless of what one thinks of Krugman's positions, he clearly deals in personal attacks far too often. If he's trying to educate the public, that's not helping his cause.

jbarciauskas 17y ago
I'm not sure what instances you are thinking of, so perhaps I am mistaken, but from what I have read, Krugman wants to promote greater accountability. When he criticizes the decision or prognostication of an economist or politician, it's to avoid the passive voice - "Mistakes were made" and identify the party responsible for the error. I think he would expect others to hold him to the same standard.
- natrius 17y ago
  Here's one example: http://krugman.blogs.nytimes.com/2009/03/03/roots-of-evil-wonkish/ http://krugman.blogs.nytimes.com/2009/03/03/roots-of-evil-wo... Accusing people of "deliberate obtuseness" is no way to have an argument.

Perceval 17y ago

Do you have a citation for point one? The author of the article discusses not just Chicago School monetarism, but also the many other strains of economic thought over the past decades, including the 'New Keynesians.' Krugman apparently also disagrees with the New Keynesians, and the rest of the economic mainstream of the past 30 years, not just the Chicago School. What the author is getting at is that Krugman doesn't seem to be reading economics anymore, from any school of thought. Looking at the author's CV (http://faculty.chicagobooth.edu/john.cochrane/research/Papers/vitashort.doc http://faculty.chicagobooth.edu/john.cochrane/research/Paper... [DOC]), he appears to be a libertarian. Libertarians weren't exactly well-represented in the Bush administration, and CATO were among its fiercest critics on financial and foreign policy issues. The anger over Krugman's piece doesn't seem to be limited to Cochrane or Chicago School economists either. Cochrane's personal web page also links to a similar piece featured on Huffington Post rebutting Krugman: http://www.huffingtonpost.com/david-k-levine/an-open-letter-to-paul-kr_b_289768.html http://www.huffingtonpost.com/david-k-levine/an-open-letter-...