Spotted on the excellent WUNC (North Carolina public radio) this afternoon in the “Talk of the Nations” show: an interview  of Randy Olson on his book “don’t be such a scientist. ” The talk is titled “explaining science with substance…and style.”

Randy Olson is a former marine biologist from the university of New Hampshire turned into a film maker. In the bits of the interview I got in my car, I understood that he’s been sitting in hollywood acting, performing and/or directing classes for several years and that he subsequently realized how this kind of formation would be useful for scholars.

Among the subjects tackled  during the fifteen minutes I was listening

-his fellow scientists’ reaction: “Olson is saying that we should abandon part of our scientific accuracy for the sake of communicability, that’s a shame.” The author retorts that he of course doesn’t say so, and that it is possible to reach 100% “accuracy” (that’s word used in the talk) while presenting result is a more “sexy”/appealing/”funny” ways

-as a former member of a community where scientific expertise deals with hot current issues (namely climate change), he constrast two documentary on this subject, one made by scientist whose title I couldn’t catch and Al Gore’s “An Unconvenient Truth,” of which he says no scientist was involved in. The inattention for the former and the success of the later calls for a reexamination of how scientists communicate, and  also  part of scientific inner culture. All the problem is which film would you prefer to have done: the accurate unknown or the unscientific successful one.  I guess similar questions may have been raised after Sylvia Nasar issued “A beautiful Mind” and have it turned into a Hollywood blockbuster, although I was not yet interested in
HET and therefore have no idea of the discussion raised by the book in our community.

-a comparison of the situation some scientists currently found themselves and the communication issues faced by the military a few years ago in Irak. The comparison appeals to me (with all its limitations), not only because economists may face a crisis situation today in which they prove unable to react to the attacks of those, insiders or oustiders, willing to change the contents and methods of their science, but because I know from private experience how the military in some countries are concerned with communication and are having at least some basic seminars on how to talk to journalists in the ground in periods of crisis (whatever the results).

-a reference to the new media scientists can afford on the web (twitter, blogs). He doesn”t see scientists as understanding the benefits they can draw from such opportunity. I’m not sure this would apply to the economists community.

All in all, I have no idea about the quality of the book, and this is merely a sketchy account of a sketch of an interview. And I haven’t checked on the reactions of the scientific community before writing the post. But since I don’t how long the podcast of the interview will stay online, better give the information the sooner.

Here is the page of the interview, where you can listen to it, and here is the podcast homepage (it is not on yet). Have a good ride.

Suppose you are going through a encyclopedia or a handbook trying to document yourself on the Chicago School of Economics.

You browse through the ‘monetarism’, ‘monetary history’, ‘Chicago macroeconomics’, ‘Chicago price theory’, ‘neoliberalism’, ‘Chicago methodology’, and ‘Chicago boys and Chile’ entries, all of which of course contain lengthy sections on Friedman’s works and beliefs.

In fact, you can reconstruct an exhaustive biography and bibliography from these various pieces.

Hence the two following question:

1) is there any need in such book for a specific ‘Friedman’ entry?

2) if so, what do you expect/want to find in it (although you may read my own tentative response in the formulation of the problem)?

In a previous post, Pedro told us about the two first rounds of the lynching of macroeconomics in these times of crisis: the Economist debate in which Lucas engaged, and a “letter to the Queen” bringing to light the dissent with the british economic community. What comes next, Pedro asked.

What comes next, of course, is Krugman’s article on “how did economists get it so wrong” in the NYT and the additional comments he made last week and today on his blog on “mathematics and economists.”

Essentially, economists got it so wrong, he says, 1) « because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth » and 2) because Keynes-like realistic vision of markets and especially financial markets was replaced by the « elegant, convenient, and lucrative » efficient market and rationality hypotheses, two hypotheses that even the skeptical pragmatic new keynesiens were unable to relinquish decisively. « Economics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system ,» he concludes, arguing that economists should rediscover Keynes, and pay more attention to behavioral finance/economics.

He subsequently clarified/ qualified his position on his blog. He is not against mathematics, « they served an essential function — that of clarifying though », but against equating mathematical elegance with truth (like in these « silly », but « seductive » RBC models)

On unrealistic hypothese,« neoclassical economics radically oversimplifies both the individuals and the system — and gets a lot of mileage by doing that; I, for one, am not going to banish maximization-and-equilibrium from my toolbox. But the temptation is always to keep on applying these extreme simplifications, even where the evidence clearly shows that they’re wrong. What economists have to do is learn to resist that temptation. But doing so will, inevitably, lead to a much messier, less pretty view. »

An interesting exercise is to compare these statements with two biographical essays Krugman wrote for the American Economist in 1993 (“how I work and rules for research”) and for a book in 1995.

His rules for research were

1)“listen to the gentiles” (pay attention to empirical evidence). Nevertheless,

“ I have no sympathy for those people who criticize the unrealistic simplifications of model-builders, and imagine that they achieve greater sophistication by avoiding stating their assumptions clearly. The point is to realize that economic models are metaphors, not truth. By all means express your thoughts in models, as pretty as possible. But always remember that you may have gotten the metaphor wrong, and that someone else with a different metaphor may be seeing something that you are missing. “

2) question the question (try to get back to simple question so as to write not too “messy” models)

3) Dare to be silly (in your assumptions)

“What seems terribly hard for many economists to accept is that all our models involve silly assumptions. Given what we know about cognitive psychology, utility maximization is a ludicrous concept; equilibrium pretty foolish outside of financial markets; perfect competition a howler for most industries. The reason for making these assumptions is not that they are reasonable but that they seem to help us produce models that are helpful metaphors for things that we think happen in the real world.”

4) Simplify, simplify

In the NYT piece, it now seems that there are two silliness. The good one (using small-scale, but real examples), and the bad one (the RBC type ). And that economists should accept more “messy” models.

But OK, the rules for research were written 15 years ago. The problem is that Krugman did it again. Last year, in the middle of the crisis, during his Nobel prize speech. Published in the AER in June. There, as befits a Nobel prize, he attemps to “samuelsonize” his work, that is, to establish the historical canon for his own discoveries. And he tells a fairy-tale history. At the beginning there were empirical puzzles (the growth of similar-similar trade) which could not be explained by the “old” theory of trade rooted in perfect competition. When the first models of monopolistic competition offered the possibility to integrate increasing return to scale into models in the late 70, Krugman proved able, with simple models, to account for intrasectorial trade, drawing on comparative advantages and increasing returns. This “new” theory of trade was made possible by a whole generation of economists’ “new willingness to explore the implications of illuminating special cases rather than trying to prove general results”, e.g., focusing on “silly-seeming cases” (quoting the rule again). On the unrealisticness of his assumptions, he interestingly notes that “The use of deliberately unrealistic assumptions is, of course, common in much of economics. Nonetheless, I can report from early experience that the new style of modeling was met with considerable hostility at first. Some discussants dismissed the whole enterprise as obviously pointless, given the unrealism of the setup.” The same historical pattern is seen in his research in “new” geographical economics. At the end of the story, “the impossible complexity that had previously daunted economists contemplating a major revision of trade theory had vanished, replaced by a surprisingly simple and elegant structure.

Economists’ claim that their positive science is in principle independent from values have made them seemingly schizophrenic, and proudly so. So far, contemporary economists have coped with the pretty and elegant silliness of doctor Paul and the messy realisticness of Mister Krugman. Here is for instance how Ed Gleaser is coping:

“In his public role, Paul Krugman is often a polarizing figure, loved by millions but also intensely disliked by his political opponents. I still chuckle over an old New Yorker cartoon with one plutocrat saying to another that he gets some satisfaction from the fact that his vote will cancel out the vote of Paul Krugman. Within the less divided world of the academy, Mr. Krugman’s economic research has generated plenty of light, but far less heat. His papers are universally acknowledged to be immense contributions that helped to create two distinct fields.”

But how long will it last?

Edit: Sumner, Cochrane, and Altig responses to Krugman.

Edit 2: also of interest is Krugman’s 1998 piece in the Economic Journal, “two cheers for formalism.”

The following is a comment sent by Tim Leonard in reaction to a post by Clement published in early June.

————————

Broadly speaking, social Darwinism refers to the use of Darwinian and other ideas about evolution, notably “survival of the fittest,” to explain or to justify aspects of human society. Were the term neutral, the “social” qualifier would be superfluous, since Darwin himself believed that his theory of evolution by natural selection encompassed the human animal too. But “social Darwinism” has, in fact, rarely been a neutral term. Since its first English-language appearance circa 1877, “social Darwinism” has been a term of abuse used by critics to discredit views they opposed.
Darwinism’s reputation has ebbed and flowed in the 150 years since the publication of the Origin of Species, but social Darwinism remains a slur, used only by critics. I know of no one who has ever described his or her own views as social Darwinist. As historians, this tells us something important. We might wish that “social Darwinism” could be made neutral and refer to ideas that Darwin actually endorsed; but concepts are path-dependent, and, if the past is any guide, “social Darwinism” will survive, and will continue to function an epithet.

2.

While “social Darwinism” has always been used to discredit ideas critics dislike, critics have disliked different things (as Bellomy rightly observed). Thus “social Darwinism” has been applied to phenomena as diverse as plutocracy, racism, eugenics, militarism (especially in the name of national superiority), imperialism, and laissez-faire capitalism. That’s a lot of semantic freight, and the set of intellectuals who endorsed all these things is essentially empty.
Today, “social Darwinism” is most commonly associated with an evolutionary defense of free markets, premised on the critic’s view that economic competition is brutish and amoral, just as competition in nature is “red in tooth and claw.”
The identification of social Darwinism with free markets we owe to Richard Hofstadter’s (1944) Social Darwinism in American Thought, 1860-1915. It is Hofstadter who gave “social Darwinism” its currency and who made Herbert Spencer and William Graham Sumner into the arch-social Darwinists. Both Spencer and Sumner defended free markets, and both were, as a result, targets for reform-minded progressives (such as Hofstadter) hostile to individualism and free markets.
(Try this parlor game: ask a scholarly friend to name three social Darwinists. I wager that most (specialists excluded) will not be able to come up with three, but that most will be able to come up with two, and, moreover, that those two will be Spencer and Sumner – a measure of Hofstadter’s success, or, rather the success of a narrow reading of Hofstadter).
Hofstadter’s (or, rather, the narrow reading of Hofstadter’s) mistake was two-fold. First, neither Spencer nor Sumner were especially Darwinian. Spencer was a Lamarckian who preached “bootstraps” self-improvement over natural selection, and who ardently believed in human progress. Sumner’s pro-market arguments were only patchily upholstered with Darwinian sentiments. What is more, Spencer and Sumner were both opponents of imperialism, militarism, plutocracy and other ideas that have been associated with social Darwinism.

Second, Darwin did not see nature as red in tooth and claw. To the contrary, Darwin insisted that the natural competition sometimes called the Struggle for Existence need not involve conflict, much less violence: cooperation could well be the fittest strategy. Darwinian fitness meant far more than mere physical strength, as evidenced by the evolutionary success of a relatively weak species, homo sapiens.
Hofstadter judged the American Gilded-Age economic order a jungle, and therefore judged any defense of it as “Darwinist,” whatever its particulars – “social Darwinism” was simply Hofstadter’s synecdoche for the charge that, as Bannister had it, Spencer and Sumner “wrongly apologized for power and privilege (1979: xvii), where, in the Gilded Age, power and privilege were assumed to reside with the plutocratic captains of industry, and not (yet) with the captains of the ship of state” (Leonard 2009).

3.

None of this is to argue that evolutionary ideas were unimportant to Progressive Era social science. The opposite is true. Ideas drawn from evolutionary science profoundly influenced Progressive Era social science – one could hardly make sense of the eugenic influences upon economics otherwise.
But Darwin was not the only scientific source of evolutionary thought, and laissez-faire economics was not the only corner of social science influenced. This, then, is the [double-sided] myth: that Darwin was the sole source and that Spencer and Sumner (qua paragons of free-market economics) were the sole exegetes.
Progressive Era evolutionary thought was not very Darwinian – indeed, historians of biology refer to the period as the eclipse of Darwinism – natural selection in particular was a minority view until the “Darwinian synthesis” of the 1940s. Progressive Era evolutionary science was protean, fragmented and plural, enabling scholars to enlist evolutionary ideas in support of diverse, even opposed positions in political economy. Many social scientists, including those who cast Spencer and Sumner as bête noirs, were influenced by Darwinian and other evolutionary ideas.
Hofstadter (1944), incidentally, was alert to the latter point – he even had a term for the use of evolutionary ideas by reformers, Darwinist collectivism. (It didn’t catch on). Hofstadter preferred planning to laissez-faire and he preferred cultural to biological explanations in social science. This made for ambivalence with respect to the progressives, who also championed reform, but trafficked heavily in biological explanations.
The burden of Leonard (2009) is two-fold: first, that “there are, in effect, two Hofstadters present in SDAT. The first (call him Hofstadter1) could safely disparage biological justification of laissez-faire, for this was, in his view, doubly wrong . . . .The second Hofstadter (call him Hofstadter2) documented, however incompletely, the [biological] underside of progressive reform: racism, eugenics and imperialism.” Second, in 1944 Hofstadter1’s contempt for free markets was far more developed than Hofstadter2’s still incipient skepticism regarding progressivism, an asymmetry that had consequences for the subsequent fate of ‘social Darwinism’ in social science.
Hofstadter did not make the myth alone – stories are altered in their retelling. But I think it’s fair to say that Hofstadter (as Hoftstadter1) played a leading role in discrediting free-market economics as social Darwinism, and, thereby, wrongly implicating Spencer and Sumner (and sundry plutocrats) as Darwinists and as the social Darwinists. (Geoff Hodgson, incidentally, gives prior credit to Talcott Parsons’ 1930s efforts to purge biology from sociology).
At the same time, however, Hofstadter2 debunked the notion that Darwin influenced only laissez-faire economics. (This is SDAT’s ambiguous legacy). Hofstadter2 showed that some of what looked reactionary to mid-20th century liberal eyes (“collective Darwinism”) had been called progressive forty years earlier. But, perhaps because Hofstadter2’s ideas were undeveloped relative to those of Hofstadter1, it was decades before historians took up the tentative connections Hofstadter2 made between progressivism and eugenics, racism and imperialism.
Debunking the myth of “social Darwinism,” then, does not mean ignoring evolutionary influences on Progressive Era social science. To the contrary, debunking requires documenting evolutionary influences on Progressive Era social science, which were, contrary to myth, plural in origin and diverse in effect.

– Tim Leonard

At the next HISRECO meeting at Antwerp, Belgium in June, I predict that this game would largely outsell the books and journals usually displayed on their tables outside the conference rooms.

It features the perfect cocktail of enthusiasm for a past historical event and an extremely poor level of playability that scholars would rightly expect from a boardgame. It is called “1960: The Making of the President” and reenacts the campaign that opposed Nixon to Kennedy.

1960: The making of the President

The following teaser shouldn’t let your soul of historian at rest until you spent nights playing the game:

“As with any election campaign, the challenge is to adapt your game plan as the ground shifts out from under you. There are never enough resources or time to do everything, but you need to make the tough calls to propel yourself into the White House. This fast-playing strategy game for two players challenges you to run for the most powerful elective office in the world, at one of its most unique crossroads. Will you recreate history, or rewrite it? 1960: The Making of the President provides you the opportunity to do both.”

Recreating and rewriting history comes to an effort, as we know well. With “The Making of a President”, you will have to swallow a 16-pages booklet of game rules, and from personal experience I can guarantee that your first game will surely last more than 5 hours. A long time, considering that the coin toss attributed me the depressing task of bringing Nixon to the White House.

Me playing, yesterday night

Each card features historical events, from the incidental (Nixon knee injury which prevented him from actively campaigning for two weeks) to the more consequential (the media consequences of the the U2 pilot trial in USSR) which each made a contribution to the final outcome. One of the three stakes of the campaign is “the economy” (along civil rights and defense), so I  had a distinct competitive advantage here, which did not prevent me from loosing the TV debate on this topic, in the 6th round of the game.

With a remarkable rating of 7.89 / 10 on boardgamegeek.com, this is a must-buy for each member of our profession specializing in 1950 history and after. I can’t be 100% affirmative though: we stopped as we got so bored after 4 hours playing.

Reviewing (i.e. bashing) David Warsh’s Knowledge and the Wealth of Nations for the Journal of the History of Economic Thought, Philip Mirowski (2007: 492), concluded:

I pity the poor student of modern economics, trying to make some sense of what can only appear to the outsider as cryptic oracular pronouncements emitted from people who claim to be experts in the nature and validity of knowledge.* But when you get your news from Jon Stewart, your history from Paul Krugman, and your research facts from Wikipedia, maybe the nature of knowledge has itself changed.

The end of the sentence is tinged with what I believe is Mirowski’s utter disdain for popular culture. It takes, however, just a few days for a non-American person to realize that Jon Stewart’s Daily Show is certainly a better source of information than any other cable news (CNN included …), though I personally prefer the Colbert Report.

But my question is: what about Wikipedia? I have to confess I use it quite frequently,  for some basic research at work as well as for some more silly inquiry about music, cinema or celebrities at home.  Of course, I never take the information that is given there as granted and I think it is rather crucial to double check it with a more formal source of information, but I have largely benefited from the bibliography that is often provided at the end of articles. I am fairly impressed by the fact that some anonymous people have spent some time writing on E. Roy Weintraub or Waldemar Kaempffert, sometimes advertising the works of others without any reward. All in all, there is an underlying model of disinterestedness scientists should be proud (or envious?) of … Why, on the contrary, they spend so much time bashing it is therefore a mistery to me. Where does this idea that an increasing dissemination of knowledge corresponds to a degeneration of its substance come from? Jealousy? Elitism?  Declinism? Conservatism? Repugnance for the “neoliberal” ideology they think such modes of dissemination sustain?

PS: Thanks to Wikipedia, for example, I learned that philosopher of science Susan Oyama has been married to the late great contemporary composer Luciano Berio from 1966 to 1972. Pretty interesting …

* I should point out that Mirowski is not referring to David Warsh here but to Paul Krugman, though his using the plural of “experts” is quite intriguing.

For those who wants to know who are the greatest political economists ever and what they would say about our present situation, there is just one place to go and it is here: http://www.ft.com/cms/s/0/5e61e20c-0f44-11de-ba10-0000779fd2ac,dwp_uuid=ae1104cc-f82e-11dd-aae8-000077b07658.html?nclick_check=1

There is a nice cartoon as well, see it for yourself below.

In the previous post, Yann showed how our scientific myths are invoked or sentenced in the present crisis context. Another interesting setting where history of science canons, not to say mythical figures, are put forward is the debate surrounding the current reform of French universities. In some intellectuals’ attempts to ward off the govermental threats to scientific integrity, independance, or survival, the thinest pieces of scientific history emerge, often just a name, a theory and date, sometimes an anecdote.

Against the proposal of increasing the teaching load of researcher who do not publish enough (with the alleged implicit notion that older researchers get less productive),writer and university teacher Pierre Jourde bluntly reminds that Pasteur discovered the rabies virus at 63, Plank the quantas at 41, that Foucault published La Volonté de Savoir at 50 and the fashionable Darwin An Origin of Species at 50. When the profitability of fundamental research is questioned, you find a blogger defending researchers’ independance by pointing that  for the “discovery of DNA double-helix, Crick and Watson were not part of a full-time subsidized lab, they had chosen this subject out of passion (as told in Crick’s autobiography)” (comment to a post by French writer and journalist Pierre Assouline ) or C.H. Llewellyn Smith, former Director-General of CERN, arguing that it is difficult to predict the spin-offs of foundamental research in those terms:

“If Rutherford, who discovered the nucleus, could not foresee nuclear power, could a government committee do better? Who could have foreseen warm superconductors, fullerenes, or the World Wide Web? Earlier I suggested that Faraday might have foreseen the applications of electricity but in 1867, nine years after Faraday’s death, a meeting of British scientists pronounced that “Although we cannot say what remains to be invented, we can say that there seems to be no reason to believe that electricity will be used as a practical mode of power“. In a similar vein, it is well known that Thomas Watson, the creator of IBM, said in 1947 that a single computer “could solve all the important scientific problems of the world involving scientific calculations” but that he did not foresee other uses for computers. »

These thin (or rather popular, or what?) historical reminders being often published on intellectual’s blogs hosted by  newpapers websites, they have no pretense to scientific truth (except for Llewellyn’s). Their briefs appeals to the collective memory of their community is nevertheless significant, if only because those articles seem circulated and referenced.

I found little discussion of the University reform on popular economic blogs, and no mention of glorious ancestors to defend such and such organisation of research.

NB: Whether the persons I quote are active researchers, teachers, public intellectual, academics-journalists , phd students, or else, the interpretation of what I read change radically. But there I face two problems:

(1) Identities are often blurred, bloggers and surfers often hold several status. How do you face this?

(2)Trying to assess the origin, context, status and popularity of this kind of web content is terribly time consuming, and ghoogle rank/delicious/wikio and other tools do not always give good results. What tools do you use?

Sometimes, we tend to focus so much on the decline of our discipline that finding names like Keynes and Hayek quoted by a newspaper’s columnist appears as a very exotic discovery. Historical arguments might not be used anymore by members of the economics profession but, obviously, some (Republican) media pundits think they’re still useful, especially when a financial crisis seems to unblock the road to socialism (or serfdom, depending on your opinion on current issues).

So here is reproduced, without further comment, Dick Armey’s column published on Feburary, 4th by the Wall Street Journal:

“In the long run, we are all dead,” John Maynard Keynes once quipped. An influential British economist, Keynes used the line to dodge the problematic long-term implications of his policy proposals. His analysis of the Great Depression redefined economics in the 1930s and asserted that increased government spending during a downturn could revive the economy.

President Barack Obama and congressional Democrats (very few of whom likely have read Keynes’s 1936 book “The General Theory of Employment, Interest and Money”) have dug up the dead economist’s convenient justification for deficit spending in defense of their bloated stimulus legislation. But none ask the most important question: Was Keynes right?

According to Nobel economist Friedrich Hayek, a contemporary of Keynes and perhaps his greatest critic, Keynes “was guided by one central idea . . . that general employment was always positively correlated with the aggregate demand for consumer goods.” Keynes argued that government should intervene in the economy to maintain aggregate demand and full employment, with the goal of smoothing out business cycles. During recessions, he asserted, government should borrow money and spend it.

Keynes’s thinking was a decisive departure from classical economics, because arbitrary “macro” constructs like aggregate demand had no basis in the microeconomic science of human action. As Hayek observed, “some of the most orthodox disciples of Keynes appear consistently to have thrown overboard all the traditional theory of price determination and of distribution, all that used to be the backbone of economic theory, and in consequence, in my opinion, to have ceased to understand any economics.”

Classical economists up to that time had emphasized a balanced budget and government restraint as the primary goals of fiscal policy. The simplistic notion that “aggregate demand” drove investment and employment threw all of that out the window, but it had one particular convenience for policy makers. Government spending is, according to Keynes’s construct, a key component in determining aggregate demand, so more spending, even to resod the Capitol Mall or distribute free contraception, drives the economy in the short run.

A father of public choice economics, Nobel laureate James Buchanan, argues that the great flaw in Keynesianism is that it ignores the obvious, self-interested incentives of government actors implementing fiscal policy and creates intellectual cover for what would otherwise be viewed as self-serving and irresponsible behavior by politicians. It is also very difficult to turn off the spigot in better economic times, and Keynes blithely ignored the long-term effects of financing an expanded deficit.

It’s clear why Keynes’s popularity endures in Congress. Intellectual cover for a spending spree will always be appreciated there. But it’s harder to see any justification for the perverse form of fiscal child abuse that heaps massive debts on future generations.

Today, one problem with manipulating the economy through “discretionary” spending — that part of the budget not mandated by one entitlement or another — is that entitlements have grown large enough to influence the economy, a phenomenon unheard of when Keynes was alive. Medicaid, Medicare, Social Security and other entitlements are becoming larger factors in economic decision making than what Congress spends on, say, roads. Discretionary spending is becoming irrelevant as a fiscal tool.

Of course, despite Mr. Obama’s campaign promises to adhere to “Pay As You Go” budgeting, no one seems terribly worried about paying for what will likely be a trillion-dollar stimulus package. What everyone should agree on is that the money has to come from somewhere, either through higher taxes, borrowing or printing.

If the government borrows the money for the stimulus, then it will either have to print money later or raise taxes to pay it back. If the government raises taxes to pay for the stimulus, it will, in effect, be robbing Peter to pay Paul. If the government prints the money, it will increase inflation, which will decrease the value of the dollar. That would, in effect, rob Paul to pay Paul back with devalued currency.

Taking money out of the private economy — either through taxes or inflation — and spending it in a way that doesn’t offset the loss of money with real economic gains is worse than doing nothing.

Years ago I developed the “Armey Curve” to explain the negative burden government has on prosperity. The idea, borrowing liberally from Arthur Laffer’s curve (which demonstrates that tax revenues fall when the tax burden gets so high that it no longer pays to work), is that at some point the burden of government spending exceeds the private economy’s ability to carry it. “Stimulus” spending often does more harm than good, because it takes more money out of the system than it creates and thereby destroys jobs and leads to stagnation and diminished prosperity for all.

Hayek, who famously debated Keynes in a series of articles after the release of “General Theory,” gave what I believe to be the most devastating critique of government action to stimulate “aggregate demand.” Hayek viewed the boom and bust of the business cycle as primarily a monetary phenomenon created by governments’ artificial inflation of money and credit.

Sound money policy, conversely, allowed the disparate knowledge of millions of economic actors to be conveyed through the price system, rationally allocating capital and labor through relative prices. The problem with government attempts to manipulate the economy through fiscal policy — spending that takes resources away from those who are productive and redistributes it to politically favored interests — is that it is audacious. It assumes that government knows better how to spend and invest than individuals acting in their families’ best interest.

“The real question,” according to Hayek, “is not whether man is, or ought to be, guided by selfish motives but whether we can allow him to be guided in his actions by those immediate consequences which we can know and care for or whether he ought to be made to do what seems appropriate to somebody else who is supposed to possess a fuller comprehension of the significance of these actions to society as a whole.”

In reality, no one spends someone else’s money better than they spend their own. The charade of the current stimulus package, chockablock with earmarks to favored pet constituencies and virtually devoid of national policy considerations, is the logical consequence of Keynesianism in action. It is about politics and power, not sound economics, and I believe that the American people will reject it.

And because, it is even more unlikely to encounter the signature of a historian of economics in the popular press, here is Kevin Hoover’s response, published as a letter in the February 10th issue of the WSJ:

Regarding Dick Armey’s “Washington Could Use Less Keynes and More Hayek,” (Feb. 4): A wholly justified admiration for Friedrich von Hayek should not encourage Mr. Armey to quote John Maynard Keynes out of context. His most famous quotation comes from his “Tract on Monetary Reform” (1923) — perhaps his most orthodox economic work and a favorite of Milton Friedman. It is offered not as a justification for ignoring the ultimate consequences of the policies thought to follow from his more famous “General Theory” (1936), but as an observation that monetary policy is not neutral but has real effects (for example, on output and employment) in the short run — a point fully supported by Friedman. Rendered more fully, it says: “But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past, the ocean is flat again.”

It’s a fact: We live in the short run. Keynes’s point, to which Mr. Armey surely assents, is that what matters about a hurricane is whether the house collapses on the family. Mr. Armey could be right that some future short runs will be worse if we follow Keynesian demand-management policies. Houses will collapse in future hurricanes, but the issue is still what happens in some short run.

A little while ago, I posted something on Mundell and chess and Chicago boy in his comment rightly pointed out to me that at least one leading economist, besides Mundell, had a long-time relationship with chess, that is Ken Rogoff. This relationship indeed resurfaced in the most unexpected location: Davos.

See by yourself:

http://www.chessbase.com/newsdetail.asp?newsid=5192

I don’t know how rarely it is that a Nobel Prize winner has a piece published in a magazine that is devoted to pop culture in the larger sense of the term – I guess Playboy may have published that kind of stuff, too, and I also understand that Krugman has already published a few anti-Bush articles in RS before he received the Nobel-Prize -, but here it is in the last issue of Rolling Stone: Paul Krugman’s advice to the new President.

I will not comment the article to a large extent and want to leave it for your consideration. However, I have just two or three remarks. It is quite striking that Krugman cites a lot of politicians but not one economist (not even Keynes) to strengthen his argument. He doesn’t even cites his sources when he provides figures (though he refers to the Center on Budget and Policy Priorities at the beginning of his article). It strikes me, but doesn’t hurt me, either … after all, Krugman is known as a sharp columnist by a large audience and a columnist is not supposed to cite any technical material or refer to the state of the art in the discipline he writes about. That is fine, except that Krugman is not presented by RS as the New York Times columnist but as the “Nobel-Prize-winning economist” who “examines the profound challenges facing [the] new president” (my emphasis). Should his new Prize give him a different kind of authority and then responsibility as an economic writer? I was having a look at a small paperback volume called Economics From The Heart: A Samuelson Sampler and it shows that Samuelson’s columns in Newsweek were far less polemical and often referred to some economists (his colleague Robert Solow, but also his former  teacher at Harvard Alvin Hansen, as well as the alternative Newsweek columnist, Milton Friedman). Whereas Samuelson’s columns aimed at showing the powers of economics as a prescriptive science, Krugman harshly criticizes Bush’s economics (and even goes further at the end of his article) and, like many other polemicists, invokes the Great Depression as the example everybody must look at to solve the current crisis (two pictures that are not reproduced in the electronic version of RS emphasize this parallel).

A few weeks ago, I saw Joe Scarborough, the host of MSNBC Morning Joe, calling Krugman a “very hateful guy” who is “weighed down by his Nobel Prize”. It seems that Krugman’s turning into a political pundit doesn’t please much his new colleagues.

PS: I think I should say something about the comic strip above. It is called “This Modern World” and is drawn by Tom Tomorrow, the pen name of editorial cartoonist Dan Perkins. This cartoon is regularly published in The Independant Weekly, a liberal tabloid distributed throughout the Durham-Raleigh area. This is not the first time I see Krugman being mentioned in it.

As everyone, I tend to read different books at the same time. And sometimes these different texts unexpectedly relate, even strengthen one another. Janos Kornai’s powerful autobiography By Force of Thought – Irregular Memoirs of an Intelectual Journey (2006), wants to be everything that the older Jorge Borges in my collections of short stories does not want to be: factual, rationally reconstructive, and clear. In addition the author claims to lack the literary talent to sketch characters, historical circumstances, and emotions.

Compare that to the erudite-intellectual-if-ever-there-was-one Borges. Literature as the constant balancing act between realism and what lies beyond. With a different companion, I would have thought Kornai a nice historical source, but dull and academic. Equally, my snobbish academic ego again would have fallen wholeheartedly for Borges. But this time I could not but admire Kornai for analyzing his own past as he would have analyzed the Soviet Union, while being slightly annoyed by Borges’ over-the-top literary tours de force. It males one hope for more economic autobiographies.

The Economist has just published a list of ten names of young economists who, according to “leading authorities”, represent the future of the discipline  It does so every ten years and prides itself on singling out Paul Krugman twenty years ago and Steven Levitt ten years ago.

But is there any interest in reading such article beyond the “who’s who and who’s doing what” we perform as members of the profession, any relevant feature for the historian?

By naming what they see as the most “promising” young economists, the profession attempts to redefine itself and to build a suitable historical canons for that purpose (with the limit that we can’t separate the economists’ words from the journalists’). Interesting features of the paper include the insistance on the use of data, the wit in their use and the ability to reach counterintuitive results as the major criterion for scientific brightness, the focus field and experimental research rather that theoretical work and the defintion of economics by its empirical character rather than its subject matter or method; the end of macro, the emergence of “granular” thinking and the generalisation of the micro-behavioral-problem solving approach; the “medical” analogy (or at least reference, although it is unclear whether it stem from economists themselves or journalists); Frank Ramsey as the hero of this generation (and an excellent prospect for Pedro); the golden age of development economics, and the nascent public exposition of economists through blogs (and the associated willingness how sexy and fun economic research is?)

I wonder whether such exercice reflect or influence the shape of economics, but also how it might inform our historical outlook on it. For such building of a future is not only an interesting historical object in itself. It challenges our tendancy to write the history of general equilibrium, monetary economics, macroeconomics, e.g. big bodies and let subfields such as development economics underresearched, to focus on Chicago and Cowles while Harvard and MIT appear as leading places, it requires an understanding of the reasons why the heros, the advertising strategy evolve.

If you definitely want to prevent an undergrad from doing research in HET, you just have to show him Box 1 of Patinkin’s papers at the Duke Library. This is where are stored the raw materials Patinkin has collected to write his 1973 AER piece on Frank Knight’s “Wheel of Wealth”.  The archives show that Patinkin has looked at many books, textbooks and documents to find the origin of the diagram Knight used in the classroom and in his Economic Organization to represent the allocative functions of the price system in a capitalist economy.

The list of books Patinkin has scanned for this research is pretty impressive: it goes from Cantillon to Taussig and includes the works of Bastiat, Cannan, Marshall, Ely among many others. Most often, it ended up with a “no relevant diagram or text” scribbled under the reference. Then he went on with the books and textbooks that contain diagrams and pointed them out, noting the relevant pages and adding some stark comments: “some diagrams are pictures, not analytical diagrams” (on Fisher’s introductory text), “a lot of diagrams” (on Marshall’s Principles, which he didn’t bother to enumerate). He wrote to the University of Chicago’s archivist, obtained some copies of Knight’s unpublished manuscripts, wrote to Samuelson (the letter is mentioned in Knight’s article on “Frank Knight as Teacher”, which is also included in the same issue of the AER, but is not in the archives at Duke), wrote to McGraw-Hill, scanned the first eight editions of Economics, observed that Knight is not mentioned (except in the 2nd edition).

As you can expect, the result of all that is rather meager. The 1973 article does not locate the origin of Knight’s Wheel of Wealth, noting that it is possible that “it seems to have been original to him” (p. 1044). For the contemporary historian of economics – especially for the author of these lines -, it is also very frustrating. Like the 1973 piece, the archives show that Patinkin was fascinated (if not obsessed) by Knight’s diagrams but never unveil the reasons for this fascination.

Quite depressing, uh?

Well, yes …and no … because in fact, Patinkin’s unfruitful research produced two articles published in the AER (!) … and if we, the kids, could expect such a prestigious output every time we embark on a bibliographical research of that sort, I guess we would have already been considered for a tenure somewhere …

As some of you may know, Robert Leonard have been engaged for some time in a research on the links between economics and chess in the first half of the twentieth-century , which either as a chess fan or an historian of economics I find fascinating. While looking for chess news, I came accross this (click the link below) and it made me wonder whether the historians of post-WWII macroeconomics knew about this.  I did not.

http://www.chessbase.com/newsdetail.asp?newsid=5089