The Year of Living Stupidly
Paul Krugman, NYT
I didn’t realize it, but just before my lament over the imperviousness of conventional wisdom to evidence, Simon Wren-Lewis made a similar point, but more broadly. Reading his post, I had some further thoughts.
To this day, one often hears pundits and establishment types in general talking as if we had a clear distinction between the elite, who know How Things Work, and the great unwashed who need to be led to elite wisdom. The reality, however, is nothing like this. It’s true that there are crank doctrines — goldbuggery, the Laffer curve, etc. — that play a substantial role in popular opinion but have no traction with the elite. But the elite itself has spent much of the past five years committed to economic doctrines — the prevalence of structural unemployment, the urgency of deficit reduction and entitlement reform, the destructive effects of “uncertainty” — that may not be quite as contrary to the evidence as fears of hyperinflation just around the corner, but are pretty bad. And the influence of these doctrines has remained almost unscathed even though this past year should have driven them completely out of respectable discussion.
It has, after all, been quite a year — not just the sea-change in professional opinion on structural unemployment, but the collapse of the expansionary austerity doctrine and its replacement by the view that multipliers are quite large, the collapse of the 90 percent debt threshold view, the plunging deficit and the vanishing of medium-term debt concerns, and more.
Yet policy hasn’t changed at all, and elite views have hardly shifted. How is this possible? Wren-Lewis hits the main points: politicians seek out economists who reinforce their prejudices; news media are either propaganda organs or desperately afraid of declaring, in any straightforward way, that politicians are wrong, no matter how much what they say is at odds with the truth.
(More here.)
I didn’t realize it, but just before my lament over the imperviousness of conventional wisdom to evidence, Simon Wren-Lewis made a similar point, but more broadly. Reading his post, I had some further thoughts.
To this day, one often hears pundits and establishment types in general talking as if we had a clear distinction between the elite, who know How Things Work, and the great unwashed who need to be led to elite wisdom. The reality, however, is nothing like this. It’s true that there are crank doctrines — goldbuggery, the Laffer curve, etc. — that play a substantial role in popular opinion but have no traction with the elite. But the elite itself has spent much of the past five years committed to economic doctrines — the prevalence of structural unemployment, the urgency of deficit reduction and entitlement reform, the destructive effects of “uncertainty” — that may not be quite as contrary to the evidence as fears of hyperinflation just around the corner, but are pretty bad. And the influence of these doctrines has remained almost unscathed even though this past year should have driven them completely out of respectable discussion.
It has, after all, been quite a year — not just the sea-change in professional opinion on structural unemployment, but the collapse of the expansionary austerity doctrine and its replacement by the view that multipliers are quite large, the collapse of the 90 percent debt threshold view, the plunging deficit and the vanishing of medium-term debt concerns, and more.
Yet policy hasn’t changed at all, and elite views have hardly shifted. How is this possible? Wren-Lewis hits the main points: politicians seek out economists who reinforce their prejudices; news media are either propaganda organs or desperately afraid of declaring, in any straightforward way, that politicians are wrong, no matter how much what they say is at odds with the truth.
(More here.)
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