This is one of those very unfortunate situations where good people make bad decisions, probably in haste. It's an occupational hazard in blogging, often to be overlooked, but one should admit it when one has jumped the shark, as Krugman clearly did. He obviously trusted ordinarily competent Nick Rowe to have it right. But there is always a risk in not consulting the source, and Professor Krugman fell victim to this freshman error.
Read it at
Relentlessly Progressive Political Economy
Hubris leads to incompetence: the Rowe & Krugman edition
by Travis Fast
(h/t Travis for providing the link in the comments)
22 comments:
Listening to the BBC world service over here, apparently Detroit is about to go bankrupt and there's been yet another maniac gunman college massacre in California. What the f@ck you guys??
One liner of the day by Nathan Tankus in the comments at WCI:
N Rowe: "It gets a little frazzling when there are hundreds of comments and most people commenting are saying I'm wrong! And I'm not!!"
N Tankus: "@Nick Imagine how we feel when we open a textbook :)"
LOL!
JJ,
Detroit: MMT proposes revenue sharing with the states;
California: MMT proposes full healthcare (including mental health) for all by providing balances of USDs to all citizens at the beginning of the year to be used solely for health services...
Resp,
"Hubris leads to incompetence"
Covered 2,000 years ago in Romans 1: "21 because, knowing God, not as God do they glorify or thank Him, but vain were they made in their reasonings, and darkened is their unintelligent heart.
22 Alleging themselves to be wise, they are made stupid"
They are ALL being made stupid (ie morons) in this.
Resp,
We're doing okay in Detroit. Thanks for thinking about us.
"ordinarily competent Nick Rowe" -- I must have missed his good stuff...
Krugman hits back and dismisses his opponents as being part of a sect (update):
http://krugman.blogs.nytimes.com/2012/04/02/oh-my-steve-keen-edition/
Keen Responds:
http://www.debtdeflation.com/blogs/
This is VERY revealing from K:
"I’m all for listening to heretics when they offer insights I can use, but I’m not finding that at all in this conversation, just word games and continual insistence that the members of the sect have insights denied to us lesser mortals."
Wow.
Resp,
"members of the sect have insights denied to us lesser mortals."
The reason that they are denied insight is that their minds are clouded with preconceived ideas. Just about everyone who has come to see things through the PKE-MMT lens realizes that it is the reverse of the way the mainstream looks at things. It is like the well-known Gestalt figures such as the duck-rabbit that Ludwig Wittgenstein used to elucidate the difference between "seeing that" and "seeing as" in Philosophical Investigations. Because orthodoxy is model-based rather than operations-based, it often gets the causation backwards.
Tom,
No mention of the truth here by K... sad. He is really in a bad place I am afraid.... really bad. This is terrible for him...
Can you expand on this situation wrt Wittgenstein's work?
Resp,
Here is my big question that you guys need to answer for those of us who follow all these economics blogs..
How is it that this reserve constraint is a debatable question?
It seems to me that bankers either do take this into account or they don't. We are not talking about interpreting past data and trying to determine likely outcomes and all the different possibilities that may develop as a consequence and speaking theoretically. They do or they don't. What is the problem here?
Can I simply go down to my local Wells Fargo and ask them? or will the guys upstairs even take the time to answer my question?
And, why are there no bankers on these blogs simply clearing up the issue? or are there..
Krugman completly embarrassed himself yesterday when Scott showed the way to him. I think Krugman is not worth arguing with. Warren is right. If krugman wants to learn MMT, he has to come to MMT. Krugman is pretending that he doesn't understand. He aint that stupid.
Monopolist sets price and lets quantity float. How hard is that for a Nobel prize winner? Can monopolist do this at all, or is It impossible?
Didn't realize I could pick a name so easily.. My questions above were with regards to why this is an issue at all...
Anon,
Warren Mosler owns a bank...
Resp,
"Can you expand on this situation wrt Wittgenstein's work?"
There are many biases involved in such matters, but the bottom line is that monetarists are convinced by their way of looking that they are right, so others must be wrong. The duck=rabbit shows that the same "thing" can be seen differently. Models can be useful tools, but when one takes them as representations of reality, then one can go wrong. The MMT and PKE economists understand the ISLM approach, DSGE, etc., and can talk about them intelligently. They also have the operations approach. Others have only one approach and equate it with fact.
"How is it that this reserve constraint is a debatable question? seems to me that bankers either do take this into account or they don't. We are not talking about interpreting past data and trying to determine likely outcomes and all the different possibilities that may develop as a consequence and speaking theoretically. They do or they don't. What is the problem here?"
PK says it doesn't matter at the macro level what bankers actually do. Macro is about modeling aggregates. The problem is that is one doesn't understand the underlying ops then one can draw conclusions from the model that do not actually hold, like the money multiplier. Operationally, it is an accounting residual not a cause like they think.
Matt,
Ok, so that should settle it then.
Does PK claim that the bankers are not telling the truth when they explain it to him then?
This is really a strange debate to observe from the outside... It's weird to watch people argue about if the grass is green or not.
Tom,
thanks, maybe I am reading what he is saying wrong then... I'll have to reread his columns with that in mind.
"bankers are not telling the truth"
Sorry to say but it looks like the truth is not even on his mind here....
Resp,
Once you enter the world of politics, truth is a secondary consideration. It is all about winning and that often involves concealing the truth, never admitting even an innocent mistake, except for the very brave. Sadly, here we have no bravery. Does anyone doubt the lies and concealment going on in the current budget crisis? Or in the debt crisis past year?
Krugman is known for being a dishonest 'intellectual' with too much of an ego.
Bankers, central bankers -comments from CB'ers, papers from organisations like BIS, etc.- (paradoxically, since they are basically admitting the only reason for their existence is to save the banking system from itself when they collapse, as it was the first and sole reason of their initial foundation anyway) and economist with half a brain and who dedicated some time to study this know how it works.
Ad hominems by intellectually dishonest people won't change that. Truth will find its way at some point, for everyone seeking truth, which unfortunately won't be that much people.
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