There was one post on Saturday, and one yesterday. Saturday’s post was “Remembrances of Depression Economics:”
A bit more musing inspired by Brad DeLong’s decision to repost his old, rather negative review of my 1999 “The Return of Depression Economics” — which I think he means to imply was a review that got it mostly wrong, while I got it much more right than he realized at the time.
Surprisingly, I also think I got it much more right than he realized.
What I concluded way back in 1998-1999, in the face of Japan’s slump and the Asian financial crisis, was that we had returned to a much more Keynesian world — a world of “depression economics” — than many economists, and especially economic policymakers, realized. Liquidity-trap conditions already prevailed in Japan, and were a real risk elsewhere; self-fulfilling crises driven by capital flight were also back in force.
And my policy conclusions were accordingly Keynesian — above all, to reject calls for austerity. Monetary expansion would *not* cause stagflation; fiscal expansion would *not* cause crowding out; claims that austerity would solve currency crises by restoring confidence were not to be believed. (There was, I argued then, a good case for temporary capital controls, a view that has nowadays become almost conventional.) I talked quite a lot about the confidence game, although I wouldn’t come up with the confidence fairy until more than a decade later.
First, all of that analysis looks pretty darn good now that we’ve seen the kinds of events that swept Asia in 1998-9 go global.
Second, whenever I see someone going on about how mainstream economic analysis has failed, how we were totally unprepared for the 2008 crisis and what followed, I always think, “What do you mean ‘we’, white man?” The post-2008 world was very much the world I was writing about in 1999.
Third, the things I was saying back then came from fairly standard economic reasoning. My original Japan paper was a stripped-down New Keynesian analysis; so, more or less, was my analysis of the currency crises. Then as now, a lot of what was considered policy wisdom involved ignoring economic models and going with gut feelings instead — and was wrong.
The point is that as I see it, the past 7 or 8 years have if anything been a vindication, not a refutation, of basic macroeconomics. If policy has been terrible — and it has — don’t blame the analysts. And especially don’t blame me.
Yesterday’s post was “Work, Life, and Everything:”
Ryan Avent has a lovely essay about the reasons modern professionals tend to put in such long hours. As he says, it’s not just drudgery: for many people work is satisfying, a source of a lot more than just money. It can, of course, also be a form of avoidance, a way to avoid the messiness of real life. But anyway, for those lucky enough to have the right kind of work, it’s much more than a paycheck.
I just thought I’d add a note from further down the pike, as someone who’s a quarter-century older than Avent: the nature of the reward from work does change as you get older, although it doesn’t necessarily go away. The phrase that runs through my mind is “the end of ambition.” At a certain point you realize that it’s not about winning another prize, literally or figuratively, getting a promotion, whatever. (And yes, it’s easier to reach that state of mind if you have been lucky enough to get all the prizes you wanted.) Instead, it becomes about the craft, the service, just doing well what you hope you do well.
When that happens, you do lose some of the white-hot intensity of your younger years, and (in my case, at least) start trying to make up at least a bit for other things you didn’t do. (Music!) But there’s still plenty of work to do, and plenty of reasons to do it, with — maybe — some new-found serenity.