Ezra Klein: Back to the 70s

« Hillary and Likability | Main | This Is Why The English Are Better Than Us »

April 06, 2007

Back to the 70s

Really interesting comment thread over at Mark Thoma's place on supply-side economics. Bruce bartlett, one of the original supply-siders, and Paul Krugman, both get in on the action. Bartlett, in fact, makes a fairly good point in response to Thoma's critique of the supply-siders, and one that requires a certain amount of humility to advance:

think Mark misses the historical context of my analysis. In the 1970s, we were unaware of real business cycle theory or New Keynesian theory. We were confronting Old Keynesian theory. What Mark has basically done is take a current theoretical debate and superimposed it on the 1970s. That's fine if one's goal is to understand how the economy really worked in the 1970s or what the actual effects of policies taken at that time were. But as a matter of history, it is misleading. We didn't know any of this stuff because it didn't exist then. We were dealing with a far different situation in terms of what people knew about the economy (or thought they knew) and that's one reason why I believe that terms like "supply-side economics" have outlived their usefulness. The context in which the term had meaning no longer exists and therefore it has become a barrier to communication rather than a facilitator.

From there the debate goes into the true nature of the Keynesians during the 70s, how Congressional economic policy making differs from academic economic theorizing, and much more. Fascinating stuff if you're at all interested in economic history, and props to both Paul and Bruce for mixing it up a bit.

April 6, 2007 in Economics | Permalink

Comments

Yes, Ezra, an interesting discussion, and a reminder that what the economists work with (models and theories) almost always gets translated into political slogans that come nowhere near reflecting the uncertainty about the models and lack of real data to sustain them. Barlett admits that directly, and suggests that the supply side mantra be retired (which is why the conservatives threw him out the door, literally).

As much as I enjoyed those nice pretty curves, when the policy ideas hit are applied to the grinding wheel of political action, sparks do fly.

We need the economists (models, theories, data, et al), but we also need more of the Galbraiths and Krugmans who have their hands in the dishwater of the real world.

Even more, we need journalists and writers who bridge these worlds and can help the public understand how much is known, how much is competing theory without consensus, and how much is just political mumbo-jumbo (voodoo economics).

Just look at how far Barlett's prescription of a cure for a particular problem in the 70's and early 80's has turned into Bush's so-called-economically-justified cut-taxes-for-every-problem-known snake oil.

Maybe what we need is a return to the original idea of 'political economists' (Smith et al) who are comfortable and competent in both the world of economic thought and the very different world of political governance.

Posted by: JimPortlandOR | Apr 6, 2007 4:20:02 PM

so basically he's saying that economic models will always be inadequate, because by the time they become accepted they are no longer adequately descriptive of the milieu which fomented their creation? great.

economists truly are the court astrologers of the 20th and nascent 21st centuries.

Posted by: rigel | Apr 6, 2007 4:20:13 PM

I don't think it is much of a defense of Keynesianism to bemoan the discord between how Keynesianism was understood in the academic realm and how it was practiced in the political realm. That Keynesianism prescribes far greater government control on the absurd assumption that it will be determined by disinterested economic theorists and not politicians is one of the oldest criticisms of the theory.

Of course all such theorems are open to abuse but Keynesianism more than most.

Posted by: the invisible pimp hand | Apr 6, 2007 4:23:14 PM

I must say I'm amazed at how already the Republican candidates are pro-scribing tax cuts as their economic policy. You would think their party controlling all of the federal government for 6 years, and passing 3 major tax cuts, that any candidate running on further tax cuts would be open to the question "You think Bush hasn't gone far enough yet?".

Also, just because politicians sloganeer on crude interpretations of academic theory, doesn't mean the policy they generate is at that level. Usually it's much worse.

Posted by: Tony V | Apr 6, 2007 4:51:54 PM

death to all theorists. seriously. what theory ever explained the world completely, and why is it a shock to realize politics distorts?

Posted by: akaison | Apr 6, 2007 5:19:41 PM

"what theory ever explained the world completely"

"No mind, no world, no Buddha" always worked for me.

With no offense to Baker or DeLong et al, Thoma has a great blog. I have unlearned much economics there.

Posted by: bob mcmanus | Apr 6, 2007 7:34:31 PM

i think theory is about not having a mind to understand that the world is more complicated than that. i am not against theory. i am against thinking they are enough to proceed.

Posted by: akaison | Apr 6, 2007 7:50:52 PM

It seems much ado about nothing. Supply-Side was in opposition to a type of Keynesianism that, if it ever existed, doesen't today. If such remedy has been taken that in Bartlett's estimation "We are all supply siders now" then that's great news. Maybe that term can be forever retired and the insistence on tax cuts for any & all ills willf ade away forever.

Posted by: DRR | Apr 7, 2007 12:17:05 AM

糖尿病中国糖尿病网中国文秘网心脑血管糖尿病症状

Posted by: 糖尿病 | Apr 7, 2007 4:34:24 AM

That WAS an instructive post & thread,
much of it over my head.
But still useful at the 101 level.

But my take-home was that agenda are
still often masqued in techno-speak.

And some mean-spirited people do that very well.

Posted by: has_te | Apr 7, 2007 12:36:12 PM

What Did You Know, and When Did You Know It?

When the economic policies of the Nixon Administration began to unfold in 1970...

Bruce Bartlett was 19 years old.

Paul Krugman was 17 years old.

Mark Thoma was younger, perhaps 12 to 14 years old.

Brad DeLong was 10 years old.

I was 19 years old.

None of us served in the economic policymaking bodies of the Nixon Administration. Not one of us. I worked for the U.S. Government during the Nixon Administration in 1974 and during subsequent Administrations, but I worked in a different department from any which created national economic policies.

Each of you knows how old you were or weren't in 1970 and what you were doing if you had been born by then.

I say all of this with respect. At the same time, I am pointing out that with the exception of Bruce Bartlett who subsequently worked for Congressman Ron Paul in 1976 and Congressman Jack Kemp in 1977, no one commenting on the previous related thread was directly involved in the U.S. national economic policymaking of the 1970s to the best of my knowledge.

This relates to the historical context of what was unfolding during the early 1970s and what followed thereafter throughout the remainder of the 1970s. It is similarly important to make a distinction between what occurred during the 1970s and 1980s.

I ask this question: Did you watch or listen to President Nixon's Sunday, April 15, 1971 address to the Nation and did you understand the implications at that time? Did you understand the implications the next week or in the months that followed?

It's very easy to look back and critique economic events a number of decades later. But, it helps if one puts the discussions of those decisions within the context of the available national governance, economic policies, and economic theories in practice at the time. To do otherwise is to distort the realities of the period involved or to pretend that such knowledge was readily available regarding the outcomes that would result from such decisions.

If we are so good at economic and national policy analysis, we should be fully capable of reviewing current national decisions and recommending appropriate changes in national courses of action. I see only a glimmer of evidence toward that effort other than general whining and complaints - some vaild, some not, unfortunately. More importantly, I see a virtual absence of any well thought out understandings and recommendations for changes necessary to offset the apparent economic and national/state government revenue problems sitting over the horizon at, say, 2012, patiently awaiting preemptive corrective action.

But, rest assured that there will plenty of economists, clowns, and others hammering away in 2040 busily explaining what should have been done during the period, 2007-2015. There will no shortage of know-it-all young bucks barking out the errors of the past who only watch television and play video games now...
quite comfortably, I might add.

So, I ask why do economists not recommend key detailed plans for change now? Where is their boldness of spirit and reason? Where is their courage? Where, indeed...

There is nothing better in life than stepping up to the plate. We're not doing that in a serious manner. But we should. And we must.

Posted by: Movie Guy | Apr 7, 2007 6:03:59 PM

"and props to both Paul and Bruce for mixing it up a bit."

That was what was so amazing. I am pretty much a regular there and threw out some data backed snark early on in the thread. Because who knew they would put on a hockey game and have a heavyweight fight break out. That Bartlett and Krugman would engage at such depth on a blog that was established on March 6, 2005 is astonishing.

Economist's View, Angry Bear, MaxSpeak and even DeLong not that long ago used to be places where you could post opinions and even engage in flame wars and not have anyone in a position of importance notice or care. That nationally syndicated economists clearly are paying attention makes you want to think before just throwing something up, It is not your father's Econoblogosphere anymore.

At one level it is really important that these economic arguements that challenge the dominate ideology get fronted by people in a position to shape the discourse, on another it is oddly disorienting to be shoved off the playground by the Big Kids.

Posted by: Bruce Webb | Apr 8, 2007 2:16:53 AM

(3)阴虱
 湿疹
 牛皮癣
 白癜风
 皮肤癣
 鱼鳞病
 脂溢性皮炎
 脂溢性脱发
 青春痘
 带状疱疹
 斑秃脱发
 皮肤病尖锐湿疣
 阴虱
 湿疹
 牛皮癣
 白癜风
 皮肤癣
 鱼鳞病
 脂溢性皮炎
 带状疱疹
 斑秃
 糖尿病
 高血压
 高血压治疗
 高血压症状
 高血脂
 冠心病
 冠心病治疗