Honestly why would anyone positively cite Joan Robinson - she literally endorsed the economy of North KoreaIn the 1970’s, there were very few women graduate students seeking Ph.Ds in economics. One of my professors suggested we need more role models like Joan Robinson. I would say his office made me think of what libraries must have looked like in the 19th century except for the fact that it was dominated by papers by Dr. Robinson. She may have been very liberal but she was also a first rate economist. Her The Economics of Imperfect Competition for example should be required reading for all Econ 101ers. But let me get straight to the point by asking what Brad DeLong meant here:
These are principal causes of "hysteresis". I do not believe that the output gap is the zero that the Federal Reserve currently thinks it is. But it is very unlikely to be anywhere near the 12% of GDP needed to support 4%/year real growth through demand along over the next two presidential terms. We could bend the potential growth curve upward slowly and gradually through policies that boosted investment and boosted the rate of innovation. But it would be very difficult indeed to make up all the potential output-growth ground that we have failed to gain during the past decade of the years that the locust hath eatenThe comments from JW Mason to my post indicate a couple of things. He is mad at me and he is also interpreting these lines differently than I do. I will offer an analogy to what Brad was saying that goes back to the fall of 2001, which was very painful for residents of New York City. I bet a lot of my neighbors on the morning of September 12, 2001 wishes they had Brad’s “magic wand” so it would be September 10 with the Twin Towers still standing and those 3000 lost souls still alive. Maybe it was the home run from Mike Piazza but many New Yorkers quickly wanted the rebuilding of the World Trade Center to start very soon. Sure it would take time but then again we had a 1.8% output gap at the end of 2001 according to even perhaps a conservative CBO estimate. And many of us were angry that the politicians took so long to get this rebuilding started. But we did and the World Trade Center is rebuilt. And in the current economy, many of us are saying we need to rebuild the subway system, Penn Station, and even our airports. My complaint with Friedman as well as Mason is that they are claiming liberal economists argue we are at full employment and should not be doing fiscal stimulus. Here is one of JW’s examples:
LMGTFY: http://www.bradford-delong.com/2016/02/no-we-cant-wave-a-magic-demand-wand-now-and-get-the-recovery-we-threw-away-in-2009.html. I'm directly quoting his post. Really, are you incapable of imagining that genuine disagreement is possible on this issue?This is sad as I have noted that there is disagreement on the size of the output gap with Brad noting it may be bigger than others think. Brad also is arguing that aggregate demand stimulus alone could raise the employment to population ratio to 62.5%. So Brad cannot be one of those liberal economists who is arguing we should not do vigorous fiscal stimulus now. Nor can this charge be levied at Krugman, Stiglitz, or Summers. So who are they referring to? Noah notes:
On Twitter, Mason clarified that when he talks about "the people running the show," he meant the Republicans, not Krugman, the Romers, et al.OK! Are these folks those “establishment economists”? If JW is referring to Robert Lucas, the term “liberal” is odd. And if the Federal Reserve is listening to Lucas, I will concede this is a big mistake. In my post, my anger was from the blatant misrepresentation of what others have been saying. I was applauding the efforts to enhance the original Gerald Friedman attempt at analysis. I will just say this. If Bernie Sanders does become President, he is going to need a credible economic model even before we sit down at our next Thanksgiving feast. Waiting until a few graduate students present their findings next summer will not be soon enough. But let me get to what I think Noah’s point was:
Friedman and Mason seem to be arguing that our belief about the facts should be driven, at least in part, by our desire to avoid a feeling of powerlessness. They also seem to be saying that if the facts seem to support conservative policies, even a tiny bit, we should reinterpret the facts. I don't like this approach. It seems anti-rationalist to me, and I think that if wonks behave this way, they'll end up recommending lots of bad policies.This is really a damning comment on the level of that “schlock economics” charge levied at Romer by Lucas. Look – when I was in school, I was told politics is cool. I will admit Bernie Sanders is considered hip, which is fine. Noah is suggesting economists should be nerds, which is likely good advice. Call me a nerd.