I Am Not Your Mirror Image/October 12, 2011, 5:23 PM

I Am Not Your Mirror Image 僕はあんたの合わせ鏡じゃない

Russ Roberts tries to debunk my explanation of the reasons to believe in a broadly Keynesian view of the world ― and reveals more than he intended.

First, a few points. Roberts treats my statement that we have a lot of evidence on the effects of monetary policy, not so much on fiscal policy, as being somehow slippery. But if you are at all familiar with the reality of macroeconomic policy, you know that there’s an obvious reason: monetary policy, which is set by a small committee without the need to pass legislation, is routinely used as a tool for managing the economy; discretionary fiscal policy isn’t. The classic Romer and Romer study showing that monetary policy matters was based precisely on the frequent use of monetary policy as a deliberate tool:

The central part of the paper is a study of postwar U.S. monetary history. We identify six episodes in which the Federal Reserve in effect decided to attempt to create a recession to reduce inflation.

Six such episodes between 1945 and 1990; there is no comparable profusion of fiscal examples.

Roberts also says, well, I choose some studies of austerity, but others reach different conclusions. Yes ― but not all studies are created equal. In fact, the last two years of research on fiscal policy have clarified a lot.

Initially, a lot of credence was given to work like that of Alesina and Ardagna, which tried to identity changes in fiscal policy using mildly fancy time-series analysis ― and seemed to find evidence of expansionary contraction. But everyone who looked at that work closely quickly noticed that their supposed episodes of both stimulus and austerity didn’t seem to correspond at all to known changes in policy. When economists started doing studies using the Milton Friedman/ Romer and Romer mthod –that is, using historical information to identify actual changes in policy ― the results turned clearly Keynesian.

But the main thing wrong with Roberts’s piece is the assumption that people like me are just mirror images of people like him:

Krugman is a Keynesian because he wants bigger government. I’m an anti-Keynesian because I want smaller government. Both of us can find evidence for our worldviews.

This is wrong on multiple levels. First of all, while conservatives see smaller government as an end in itself, liberals don’t see bigger government the same way. Think about it: while you often see conservatives crow about, say, reducing discretionary spending as a good thing just because the number is down, do you ever see liberals crowing about a rise in spending, never mind what on? Liberals want government to do certain things, like provide essential health care; the size of government per se isn’t the objective.
これは複合的なレベルで間違っている。一つ目に、保守派は小さい政府それ自体を到達点と見ているが、リベラルは大きい政府を同じようには見ていない。こう考えてほしい:あなたは、例えば、保守派が最小的支出の引き下げをその数字が下がっているというだけで良いことと喜んでるのをよく見ることはあっても、リベラルが支出の拡大をそれが何に使われるかも気にしないで喜んでるのを見たことがある? リベラルは政府に不可欠な医療を提供するといった特定のことをするように望んでいる。政府のサイズそれ自体が目的ではない。

Second, Keynesianism is not and never has been about promoting bigger government. Outside the US, this is obvious: there have been Tory Keynesians in Britain, the Germans favor both a big welfare state with heavy regulation and balanced budgets. Even in the US, when the political heat isn’t so intense, you find conservative economists promoting quite Keynesian views of stabilization policy ― Greg Mankiw is the editor of two volumes on New Keynesian Economics, and the Bushies were quite happy to argue for tax cuts as a way to boost spending.

What is true is that some conservatives in America have always opposed Keynesian thought because they believe it legitimizes an active role for government ― but that’s not what Keynesianism is about, and not the reason I or others support it.

Which brings me to the final point. Russ Roberts may choose his economic views because they support his political prejudices. I try not to. Maybe I sometimes fall short ― but I try to analyze the economy as best I can, never mind what’s politically convenient, and indeed to bend over backward to avoid believing things that make me comfortable, to avoid turning everything into a morality play that confirms my political values.

Here’s an example: is economic inequality the source of our macroeconomic malaise? Many people think so ― and I’ve written a lot about the evils of soaring inequality. But I have not gone that route. I’m not ruling out a connection between inequality and the mess we’re in, but for now I don’t see a clear mechanism, and I often annoy liberal audiences by saying that it’s probably possible to have a full-employment economy largely producing luxury goods for the richest 1 percent. More equality would be good, but not, as far as I can tell, because it would restore full employment.
例を出そう:経済的な不平等がマクロ経済学的沈滞の根源なんだろうか? 多くの人々はそう考えている――そして、僕は不平等拡大の悪徳について今まで何度も書いている。だけど、僕はその路線は取らない。不平等と我々が今いる混乱とのつながりを除外しているんじゃない。だが、今のところ明白なメカニズムがあるとは見ていない。そして、僕は、完全雇用になってもおそらくトップ1%の金持ち用のぜいたく品ばかり作っている経済になってるだろうと言って、リベラルな聴衆をよく困らせてしまう。もっと平等になることは良いことだが、僕の知る限り、それが完全雇用を回復してくれるからじゃない。

So I’m trying to figure this thing out, as best I can. If you’re not, we’re not in the same business.