The Faith of Economists

There was an interesting exchange this past week between economists Paul Krugman and Russ Roberts. It's instructive on two levels. First, as many folks have noted, Krugman uses his Nobel Prize and more serious work as cover for vulgar Keynesianism and a steadfast refusal to acknowledge that his views do not reflect "settled" economic science in the Times.

Roberts deconstructs Krugman's recent effort to - I'm not making this up - defend his belief in Keynesian economics notwithstanding the lack of evidence that Keynesian economics works. (Apparently, some "correspondents" had written asking "Paul, why are you so sure of yourself when there is no evidence that your ideas have actually worked ?")

As Roberts points out, Krugman does this by noting that there is evidence for some of the assumptions underlying the Keynesian view and evidence that monetary policy will work which Krugman asserts must mean that fiscal policy will work - a proposition that is not self evident. Even I know that there are critiques of Keynesian fiscal stimulus that might not apply to monetary contractions and expansions, e.g., the idea that the public is aware that stimulus must ultimately be paid for. Roberts points out that Krugman cites studies that support his views and ignores those that don't (observing in a later response to Roberts that "everyone" agrees with his assessment of certain studies - a facially unlikely assertion.)

None of this is new. Krugman's writing in the Times is routinely savaged in the economic blogs - often by citing his own work against him. Roberts goes on, however, to make a second point. He says that, given that the evidence for Keynesian theory is mixed and inconclusive, most economists choose to support it or opposed based on pre-existing ideological views.

Krugman takes umbrage at this, saying "he's just trying to figure this out." He argues that, while conservatives believe in small government as an end in itself, liberals don't believe that big government is instrinsically good.

I think Krugman misses the point. Conservatives are generally motivated by epistemological modesty. We tend to distrust the ability of the government to solve problems from the top down. Liberals tend to want to make the world anew by applying the expertise of people like - well, like Paul Krugman; Ivy Leaguers with some kind of training in symbolic analysis. (Yeah, I know I fall into that category too which ought to give my liberal readers pause.)

Krugman, of course, is familiar with the history of the progressive movement and the Hayekian critique of it, but he can't let that get in the way of dismissing his opponents as misbegotten.

Roberts makes one more point. A priori ideological commitments are not simply biases. They are generally rooted in judgments about the way in which the world works. In the social sciences and law, there is really no such thing as a scholar who -as one of my Marquette colleagues once said - pronounces from the Olympian heights. It is inconceivable that anyone who spends any significant period of time thinking about what social scientists and lawyers think about will not form some judgments about the world.