Many friends and colleagues have asked me what I think of Paul Krugman’s New York Times Magazine article, “How did Economists get it so wrong?”I too was perplexed until I began rereading "Conflict of Visions" by Thomas Sowell. A vision is our sense of causation before we apply systemic reasoning or build a theory to explain a phenomenon. Visions are important because they are the foundation of theories and why people are consistently liberal or conservative on most issues. Sowell describes two visions, the constrained and unconstrained, and how they view the nature of man, knowledge and social processes.
Most of all, it’s sad. Imagine this weren’t economics for a moment. Imagine this were a respected scientist turned popular writer, who says, most basically, that everything everyone has done in his field since the mid 1960s is a complete waste of time. Everything that fills its academic journals, is taught in its PhD programs, presented at its conferences, summarized in its graduate textbooks, and rewarded with the accolades a profession can bestow, including multiple Nobel prizes, is totally wrong. Instead, he calls for a return to the eternal verities of a rather convoluted book written in the 1930s, as taught to our author in his undergraduate introductory courses. If a scientist, he might be an AIDS-HIV disbeliever, a creationist, a stalwart that maybe continents don’t move after all.
It gets worse. Krugman hints at dark conspiracies, claiming “dissenters are marginalized.” Most of the article is just a calumnious personal attack on an ever-growing enemies list, which now includes “new Keynesians” such as Olivier Blanchard and Greg Mankiw. Rather than source professional writing, he plays gotcha with out-of-context second-hand quotes from media interviews. He makes stuff up, boldly putting words in people’s mouths that run contrary to their written opinions. Even this isn’t enough: he adds cartoons to try to make his “enemies” look silly, and puts them in false and embarrassing situations. He accuses us of adopting ideas for pay, selling out for “sabbaticals at the Hoover institution” and fat “Wall street paychecks.” It sounds a bit paranoid.
It’s annoying to the victims, but we’re big boys and girls. It’s a disservice to New York Times readers. They depend on Krugman to read real academic literature and digest it, and they get this attack instead. And it’s ineffective. Any astute reader knows that personal attacks and innuendo mean the author has run out of ideas.
Cutting to the chase, Krugman has an unconstrained vision of man and many of his critics, a constrained vision. Why is Krugman's writing so full of personal attacks? Sowell writes,
Sincerity is so central to the unconstrained vision that it is not readily conceded to adversaries, who are often depicted as apologists, if not venal. It is not uncommon in this tradition to find references to their adversaries’ “real” reasons, which must be “unmasked.” Even where sincerity is conceded to adversaries, it is often accompanied by references to those adversaries’ “blindness,” “prejudice,” or narrow inability to transcend the status quo.His constrained vision critics place emphasis on fidelity to roles, in this case as scientists, above sincerity making it easy to acknowledge opponent's sincerity. Why the exaggerations?
Both sincerity and fidelity can be seen as aspects of honest--but as very different aspects, weighed differently in the opposing visions. The constrained vision in particular distinguishes sincerity from fidelity to truth: “The first thing a man will do for his ideals is lie,” according to J. A. Schumpeter.Before proceeding, it might be important to demonstrate that Krugman is not opposed to exaggeration for his ideal, the public good. Krugman weighs-in in "Pop Internationalism.
Many people who know that "competitiveness" is a largely meaningless concept have been willing to indulge competitive rhetoric precisely because they believe they can harness it in the service of good policies. An overblown fear of the Soviet Union was used in the 1950s to justify the building of the interstate highway system and the expansion of math and science education. Cannot the unjustified fears about foreign competition similarly be turned to good, used to justify serious efforts to reduce the budget deficit, rebuild infrastructure, and so on?Economists who hold to the constrained vision believe that they are acting in the public interest by acting as scientists; good facts lead to good policy. Krugman (and many who support his policies) holds to the unconstrained vision, that he is acting in the public interest by persuading people to support his positions; good policy produces happier citizens. While not judging which vision is correct, I know I would rather read Krugman's critics when forming my opinions.
A few years ago this was a reasonable hope. At this point, however, the obsession with competitiveness has reached the point where it has already begun dangerously to distort economic policies.