Must-Read: Paul Krugman: Why Am I A Keynesian?

Must-Read: I must say, it is becoming increasingly clear to me what it is that they are doing when a Robert Lucas says that Christina Romer is only in favor of expansionary fiscal policy because it is what her political master wants, and when a Russ Roberts says that Paul Krugman is in favor of expansionary fiscal policy because he is a big government socialist. What they are doing is looking into the mirror at themselves. What they are then doing is projecting. They are thinking that we have their morals and their thought processes, and so are as ideologically-blinded, as loyally-partisan, and as short-sighted as they are.

But we are not like them.

We are for effective government works, not a big government for its own sake: private where private belongs; government where it is needed; circumstances alter cases. We are for an informed public sphere, not one that thinks a bigger or more active government is always better: we want to see voters who understand the technocratic pluses and minuses support politicians who recognize them.

And we are for marking our beliefs to market: for a ruthless criticism of the existing order of things–including the order of ideas–that shrinks neither from its own intellectual discoveries nor from conflict with the political powers that be. We are therefore not in favor of our hoisting a dogmatic banner. Quite the reverse. We try to help the dogmatists to clarify their ideas–and mark them to market: Why do we (or you) believe that? Is it true? And what is to be done?

Paul Krugman: Why Am I a Keynesian?: “[I] make a regular practice of asking myself whether I’m letting that kind of bias slip in…

…In fact, I lean against studies that seem too much in tune with my political preferences. For example, I’ve been aggressively skeptical of studies that seem to show a negative relationship between inequality and growth…. So, am I a Keynesian because I want bigger government? If I were, shouldn’t I be advocating permanent expansion rather than temporary measures? Shouldn’t I be for stimulus all the time, not only when we’re at the zero lower bound?… I’ve always argued for temporary fiscal expansion, and only when monetary policy is constrained. Meanwhile, my advocacy of an expanded welfare state has always been made on its own grounds, not in terms of alleged business cycle benefits. In other words, I’ve been making policy arguments the way one would if one sincerely believed that fiscal policy helps fight unemployment under certain conditions, and not at all in the way one would if trying to use the slump as an excuse for permanently bigger government. But in that case, why am I a Keynesian? Maybe because of convincing evidence?

June 11, 2015

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