Must-Read: Paul Krugman: Puzzled By Peter Gourevitch
Must-Read: Over the past twenty years, Paul Krugman has a very good track record as an economic and a political-economic analyst. His track record is so good, in fact, that any even half-rational or half reality-based organization that ever publishes a headline saying “Paul Krugman is wrong” would find itself also publishing at least five times as many headlines saying “Paul Krugman is right”. And when any organization finds itself publishing “Paul Krugman is wrong” headlines that are not vastly outnumbered by its “Paul Krugman is right” headlines, it is doing something very wrong.
Thus note this “Paul Krugman is wrong” headline from the Washington Post’s Monkey Cage:
In the article, the well-respected Peter Gourevitch puzzled and continues to puzzle Paul Krugman:
: Puzzled By Peter Gourevitch: “Peter Gourevitch has a followup… that leaves me, if anything…
…more puzzled…. He notes that….
The Federal Reserve is not a seminar… not only about being ‘serious’ or ‘smart’ or ‘finding the right theory’ or getting the data right. It is… a political… multiple forces of pressure: the… Committee; Congress and the president… political parties… interest groups… media… markets… foreign governments and countries.
But how does that differ from what I’ve been saying?…
[My original] column… was all about trying to understand the political economy of a debate in which the straight economics seems to give a clear answer, but the Fed doesn’t want to accept that…. I asked who has an interest… my answer is that bankers have the motive and the means….
I talk all the time about interests and political pressures; the ‘device of the Very Serious People’ isn’t about stupidity, it’s about how political and social pressures induce conformity within the elite on certain economic views, even in the face of contrary evidence. Am I facing another version of the caricature of the dumb economist who knows nothing beyond his models? Or is all this basically a complaint that I haven’t cited enough political science literature? I remain quite puzzled.
I agree.
It puzzles me too.
So let’s look at the arguments: In what respects does Peter Gourevitch think that Paul Krugman is wrong about the Federal Reserve?
(1) Here we have, for one thing, a complaint that Paul Krugman should not believe that there is even a “correct” monetary policy that the Fed should follow. This criticism seems to me to take an “opinions of the shape of the earth differ” form. I reject this completely and utterly.
(2) Here we have, for another thing, Peter Gourevitch saying–at least I read him as saying–that: “Paul Krugman is wrong! Political science has better answers! Political science better explains the Federal Reserve’s actions than Paul Krugman does!”
Yet Gourevitch does not actually do any political science.
He does not produce any better alternative explanations than Krugman offers.
In lieu of offering any such better alternative explanations, at the end of his follow-up post he provides a true laundry list of references for further reading:
- William Roberts Clark, Vincent Arel-Bundock. 2013. “Independent but not Indifferent: Partisan Bias in Monetary Policy at the Fed.” Economics & Politics 25, 1 (March):1-26.
- Lawrence Broz, The Federal Reserve’s Coalition in Congress. Broz looks at roll calls in Congress to explore left and right influences on the Fed.
- Chris Adolph, Bankers, Bureaucrats and Central Bank Policy: the myth of neutrality, Cambridge University Press 2013
- John T. Woolley. Monetary Politics. The Federal Reserve and the Politics of Monetary Policy. 1986. * Thomas Havrilesky. The Pressures on American Monetary Policy. Kluwer 1993.
- Cornelia Woll, The Power of Inaction.
- Kelly H. Chang. Appointing Central Bankers: The Politics of Monetary Policy in the United States. Cambridge UP 2003.
- Jeff Frieden, Currency Politics: The Political Economy of Exchange Rate Policy
- Roger Lowenstein, America’s Bank: The Epic Struggle to Create the Federal Reserve (suggested by Jeff Frieden).
- Bob Kuttner’s Debtors’ Prison
- Mark Blyth, Austerity.
- Paul Pierson and Jacob Hacker, American Amnesia: Rediscovering the Forgotten Roots of Prosperity.
- Greta R. Krippner, Capitalizing on Crisis: The Political Origins of the Rise of Finance
- Marion Fourcade, Economists and Societies: Discipline and Profession in the United States, Britain, and France, 1890s to 1990s; 2015
- Marion Fourcade, “The Superiority of Economists” (with Etienne Ollion and Yann Algan), Journal of Economic Perspectives; 2013
- Marion Fourcade, “Moral Categories in the Financial Crisis.”
- Marion Fourcade, “Introduction” (with Cornelia Woll)
- Marion Fourcade, “The Economy as Morality Play” Socio-Economic Review 11: 601-627.
18 references. Some of them are quite long. Figure roughly 3000 pages. Or roughly 1,000,000 words. Offered without guidance.
As one of my Doktorgrossväter, Alexander Gerschenkron, used to say: “to tell someone to read everything is to tell him to read nothing.”
So let me provide some guidance: If you are going to read one thing from Peter Gourevitch’s list, read Mark Blyth’s excellent Austerity. I do think it is the place to start.
And if you do read it, you will find a very strong book-length argument–an argument which carries the implications that Paul Krugman’s screeds against and anathemas of VSPs are not, as analytical explanations, wrong, but rather profoundly right.