Krugman’s blog, 5/22 and 5/23/15

There were two posts on 5/22 and three on 5/23.  Here’s the first from 5/22, “Blogging Begins:”

Brad DeLong has a little note on how and when he began blogging, which comes at a perfect moment for me — I’m scheduled to talk with some Oxford undergraduates about changing forms of communication in economics, and Brad’s note both tells his own story and jogs my memory about how things changed in the late 1990s.

In my own case, I began writing online in 1996, when Michael Kinsley signed me up to write a monthly column for Slate. This was still traditional column-writing — length constraints were less rigid, editing less intrusive, and gratification less delayed than in print, but still relatively old-fashioned. But it did get me accustomed to the online format.

Then came the Asian financial crisis. Everyone was scrambling to make sense of what was happening, and both events and new ideas were coming far too fast for traditional publications to keep up. So I began posting little essays, thoughts, and models on my MIT home page — which is still extant! No blogging software; I just uploaded stuff and put links on the page. But it was still effectively a form of blogging, and it turned out that a lot of people read it. That’s where I put my initial efforts to model the liquidity trap, my thoughts on macro, and more. Most of the links there seem to still work, by the way.

Other people were doing some similar things; and Nouriel Roubini took things to the next step by creating an Asian financial crisis page (which seems to be gone) that acted as a compendium and clearing house for most of the interesting stuff being written on the subject. So by the end of the 1990s a lot of the substantive discussion of international macroeconomics and finance was already taking place online, bypassing the traditional channels.

A proper blog came much later, when I realized that I wanted a place to put the backstory behind my Times columns; the Times added a Twitter feed (which I didn’t even know existed until Andy Rosenthal casually mentioned that I had 600,000 followers). And so here we are today.

The second post from 5/22 was “Hypocritical Sloth:”

Yesterday Politico posted a hit piece on Elizabeth Warren, alleging that she’s being hypocritical in her opposition to a key aspect of TPP, that’s interesting in several ways. First, it was clearly based on information supplied by someone close to or inside the Obama administration – another illustration of the poisonous effect the determination to sell TPP is having on the Obama team’s intellectual ethics. Second, the charge of hypocrisy was ludicrous nonsense – “You say you’re against allowing corporations to sue governments, yet you were a paid witness against a corporations suing the government!” Um, what?

And more generally, the whole affair is an illustration of the key role of sheer laziness in bad journalism.

Think about it: when is the charge of hypocrisy relevant? Basically, only when a public figure is preaching about individual behavior, and perhaps holding himself or herself up as a role model. So yes, it’s fair to go after someone who preaches morality but turns out to be a crook or a sexual predator. But articles alleging that someone’s personal choices are somehow hypocritical given their policy positions are almost always off point. Someone can declare that inequality is a problem while being personally rich; they’re calling for policy changes, not mass self-abnegation. Someone can declare our judicial system flawed while fighting cases as best they can within that system — until policy change happens, you have to live in the world as it is.

Oh, and it’s very definitely OK to advocate policies that would hurt one’s own financial interests — it’s just bizarre when the press suggests that there’s something insincere and suspect when high earners propose tax increases.

So why are charges of hypocrisy so popular? Mainly, I think, as a way to avoid taking on policy substance. Is Elizabeth Warren right or wrong about TPP? Never mind, let’s sneer at her for having been a prominent law professor.

The same motives drive the preoccupation with flip-flopping. You once said that deficits were bad, now you say that they’re OK. Hah! Never mind whether deficits are in fact OK right now, and whether either the situation has changed or you have learned something. (As someone pointed out, both Mitt Romney and Hillary Clinton have rejected policies they used to support — but Romney has rejected policies that worked, while Clinton has rejected policies that didn’t. A bit of a difference.)

So maybe this head-scratchingly weird hit on Warren will serve as a teachable moment, a reminder that journalism about policy should be, you know, journalism about policy.

You can’t expect that from Tiger Beat on the Potomac.  The first post from 5/23 was “Regimes and Regressions (Wonkish):”

Some people have asked me about the chart in this post on interest rates and their effect: why did I truncate the time period, so as not to include the past couple of decades? I actually did explain my reasoning right there in the post (although I should know by now that careful reading is, let’s say, not a universal skill), but let’s revisit that anyway — and while we’re at it, let me talk about the broader principle involved.

Here’s what I said in the post:

Here’s the inverse of the Fed funds rate versus housing starts during the period when major moves in monetary policy were mainly driven by concerns about inflation (as opposed to bursting bubbles) [emphasis added]

To see what I was talking about, compare the interest-rate housing correlation in the early 1980s with the correlation after 2006 (sorry, you may have to squint a bit):

In the left panel, you see the Fed funds rate seesawing as the Fed tried to grapple with inflation — and you see housing starts move strongly in the opposite direction, plunging when rates rose and soaring when they fell. In the right panel, however, you see housing starts and interest rates moving in the same direction — plunging together. So is there no relationship?

Bad answer. The situations are different in a fundamental way. In the 80s interest rates were being driven by fear of inflation; from the point of view of the housing market, they were more or less endogenous. In the post-2006 period they were being driven largely by the housing bust itself. So the 80s experience was a sort of natural experiment in the effects of rate changes, whereas more recent events are an illustration of reverse causation.

And I’ve been arguing for a long time that there was a regime shift in the late 1980s, that as inflation fears were replaced by the Great Moderation, we entered an era of postmodern recessions in which monetary policy was trying to clean up after bubbles rather than curb inflation.

The point, then, is that when you look for the effects of monetary policy, it’s often important to distinguish between eras when interest rates are a cause and eras when they’re an effect — and it’s not that hard to know which eras we’re talking about.

The same principle applies to fiscal policy. I do a lot of scatterplots over the period from 2009 onward, because that’s the era of panic-driven austerity, when big changes in spending and taxes were a response to fears and arguably exogenous to real GDP. A scatterplot that includes other eras — in particular, eras when the zero lower bound wasn’t binding and governments weren’t worried about bond vigilantes — is not going to give the same result.

Again, we’re looking for reasonable approximations to natural experiments here. Really clean natural experiments are hard to find, but some eras provide better experiments than others.

The second post on 5/23 was “Time Zones, Columns, and Comments (Trivial):”

A few West Coast readers have complained to me that columns are no longer posted as early as in the past — they go up in the small hours of the East Coast morning, not 11 PM or so. There has indeed been a change in policy. But it’s not about you. It is, as I understand it, about the Europeans.

You see, our columnists — and me in particular — do have a lot of European readers. And what we were finding was that hundreds of comments from those readers were piling up in the queue long before our East Coast readers had their first cup of coffee. The result was a lot of loyal NYT readers complaining that whatever they had to say was buried so deep in the stack that nobody saw it.

Is the current policy a good solution? I don’t know. But we’re trying.

Oh, and by the way: to commenters who allege that there’s some sinister ideological screening going on in the threads on this blog — you have to be kidding. The staff who do the moderating (I very rarely do it myself these days) don’t have the time or inclination to do anything of the sort.

The third post on 5/23 was “A Conversation About Inequality and Atkinson:”

Tony Atkinson, in many ways the father of modern inequality research, has a terrific new book — “Inequality: What Can be Done?” — that is, um, about inequality and what can be done. A few weeks ago Janet Gornick, director of the LIS data center, led Bob Solow and yours truly in a wide-ranging discussion of issues raised by Tony’s book. Here it is:




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