We all have those who we revere, our demi-gods, mortals whom we admire and who easily capture our attention with the power of their words, thoughts or worldview. Anything Harry Turtledove writes - I read. And the Gingrich-Forstchen combo could publish their weekly supermarket shopping list and Amazon, under standing instructions to flag anything of theirs, immediately would ship it my way.
Examining parallel histories, - the retelling of familiar events in worlds that are quite familiar not only captures our imaginations but allows us to examine the outer environs of the possible. And no one enlivens the journey into parallel worlds better than Turtledove.
Counterfactual history, which entails constructing contrasting takes on past events –enriches our appreciation for what actually transpired, forcing us to acknowledge – among other things - that there are many paths that can reach a known outcome (and many paths that don’t, despite common beginnings). But to engage in such an exercise, - as do Gingrich and Forstchen in Gettysburgh (NY: St. Martin’s Press, 2003), amidst the still tender sentiments of civil war history (among many quarters) grip not only our imagination but also our hearts, emotions and even latent hatreds.
Then there are those writers who are provocative, entertaining and downright fun. Malcolm Gladwell for example, Steven Pinker’s unseemly and, in my opinion, undeserved thrashing notwithstanding (here), has the power to engage and teach, all while being hugely entertaining. I don’t know why Pinker was so bilious; perhaps he had just finished refereeing a paper for the Journal of Theoretical Biology or something and had failed to adjust his scopes to reality. (We will return to this theme up on a later blog.) Gladwell is a superb expositor; I routinely use his columns and podcasts in my classes – I think, to great effect. (Gladwell’s response to Pinker here.)
Then there are those authors and commentators we are now obliged to read or listen to keep up professionally, – anointed superstars like Paul Krugman. Every so often one of these superstars rips into another one in our constellation. These swipes engender a most unpleasant intellectual dissonance, shocks that upset my quest for that increasingly (as of late) elusive reflective equilibrium.
Such was the case with Krugman’s post in the New York Times of September 2009. In this piece, Krugman unleashed a massive broadside at mainstream (primarily Chicago) economics, disparaging with special gusto the work of John Cochrane, Robert Lucas and Robert Barro – bona fide economic grandees. Cochrane, Lucas and Barro are financial macroeconomists – and I, frankly am not that familiar with their work – beyond the obligatory classics. Besides they can take care of themselves – see here for Cochrane’s response to Krugman.
But the NYT piece as hardly the first Krugman nastygram. He appears to have warmed up to the task a few months earlier. In his three-part Lionel Robbins Memorial Lecture at the London School of Economics last June 8,9, & 10 2009 (which you can find here; the podcasts are organized by event date) Professor Krugman held forth on what he called ‘depression economics,’ probing the causes and appraising the recovery prospects of the current economic crisis. In doing so he does not hesitate to lambaste those he holds responsible. Regardless of your opinion of Krugman - or his abrasiveness – the Robbins lectures are a must.
Krugman’s recounting of Great Depression economics history is naturally, a self-serving interpretation. In his lecture, he opens a particular line of argument by sarcastically observing how the interpretation of Great Depression history has lately become a tool of ideology-laden economic policy debates. This observation doesn’t prevent him from plunging into his particular take on depression economics. Again, nothing truly objectionable here – ‘tis the nature of policy debates.
But when the narrative set forth naturally leads to an implicit claim of exclusivity, that is to say that when he argues that his interpretation of the actual economic path traversed is THE only possible plausible explanation Krugman treads thin ice. Harry Turtledove and Newt Gingrich fans would immediately recognize the logical fallacy in this reasoning – even if they had no idea what the NRA (the National Recovery Administration) and the FTC (the Federal Trade Commission) do. Krugman’s explanation as to the roots and persistence of the Great Depression, – and all other explanations for that matter – have to necessarily remain subjective and, so some extent, speculative. To fully understand the underlying causes of the persistence of the great depression, one would have to appreciate any number of causes and confounders leading to any number of both similar and varying alternative paths/explanations. For example, we would need to understand what would have happened (to output and employment over so many years) had real wages not risen, had FDR not vilified Wall Street, had Smoot-Hawley been rescinded, and so forth, ad infinitum. The presence of a multitude of ‘but-for,’ plausible alternatives is what leads Gingrich and Forstchen to explore what would have transpired had Lee prevailed at Gettysburg.
And so does Malcolm Gladwell although he appears to forget sometimes. In Outliers (NY: Little, Brown & Co., 2008) – Gladwell explores the necessary link between success, talent and opportunity – unwrapping one strand of a possible multiple. Thus, one is led to understand how Bill Gates did not just spring out of the ether fully clothed in his magnificent brilliance. Rather, Gladwell carefully notes how Gates’ affluent origins enabled him to have access to one of the earliest computers in his hometown of Seattle, just down the road from his suburban home – where he honed his skills, imagination and inquisitiveness. Perhaps; but do we know whether Gates would have grown up to achieve the same success had he taken a different path that one fortuitous night – say attend the local boy scouts meeting instead? And on the other hand what about the many other affluent, smart kids who had access to countless gadgets all across America? What happened to them? Or for that matter those who lived on the other side of the tracks but did quite well - nonetheless. All plausible, all realized. But the point is we don’t know. And we can’t know and therefore Gladwell’s thesis remains but a (damn interesting) thesis.
On to Krugman. One would have to determine whether, during the Depression, the alternatives not chosen would have led us to the same levels of output and unemployment and the 10 years of depression we lived through. Only by forming an estimate of possible outcomes - the full array of possible paths leading to the observed (as well as those unobserved outcomes) - could we ascertain the validity of Krugman’s claim, or Arthur Schlesinger Jr.’s (The Crisis of the Old Order) or John Kenneth Galbraith’s (The Great Crash)– for that matter. Uncertainty, Professor Krugman, is a condition of our environment.
And it is the relevance of the all-encompassing pervasiveness of uncertainty the precise point of Amity Shlaes wonderful book – The Forgotten Man: a New History of the Great Depression (New York: Harper Collins, 2007).
The phrase – the forgotten man – has suffered a lot of abuse over the years. It originates with William Graham Sumner and alluded to the normal Joe – like all of us who run afoul of the resulting regulatory morass that seems to succeed economic crisis. Forgotten men are those of us who don’t have lobbyists representing our interests in Washington; those of us who have no connections at the Federal Reserve; those of us who know no one at Treasury. Yet it is us who get stuck with the bill when the piñata is over.
Franklin Delano Roosevelt brought the phrase back cast in an entirely different light. In FDR’s hand, the forgotten man became the one totally abandoned by his government, the unwitting victim of unfettered free markets, the pawns in banker’s greedy lust for wealth – at all costs.
In rescuing Sumner’s forgotten man, Ms. Shlaes deftly embraces as her organizing theme the fear and apprehension that permeated America during the depression years. In no small part this uncertainty was the result of the grip on our mental schemas of the unpredictable, erratic and often contradictory policies coming out of Washington during the 1930’s – the FDR years. The government’s involvement in the economic recovery process exacerbates the problems derived from uncertainty instead of alleviating them – the idea of ‘regime uncertainty’ originating with Professor Robert Higgs. Professor Higgs makes the case that an uncertain political climate spooked investors (and a great many other folks) and thus slowed the recovery in the late 1930’s. There was among the populace during the depression an inability to sensibly gauge the impact of the politics behind the government’s recovery effort. There existed a sense that the government was headed in a direction that promised to curtail or reduce the success of a man’s private investment plans. Thus, ordinary folks adjusted their plans accordingly – and the depression lived on.
Professor Krugman dismisses Ms. Shlaes book as “massively uninformed” (in the 2nd Robbins lecture). It is not clear why Professor Krugman is so uncharitably dismissive of Ms. Shlaes work. Perhaps it is because Ms. Shlaes is a darling of the Cato crowd – Professor Krugman’s unyielding intellectual adversaries. Perhaps Professor Krugman believes that accepting Ms. Shlaes thesis is unfathomable if applied to present events. Yet even his fellow Keynesian Judge Richard Posner worries about this. Here is Niall Ferguson in the New York Times Book Review (May 9, 2010) writing about the recently converted (to Keynesianism) Judge Posner’s new book, “By directing their fire at bankers, Posner suggest, legislators want us to forget that among ‘the major culprits in our present economic distress’ have been ‘government officials.’ Moreover, the new regulations being discussed in Congress are tending to increase uncertainty in financial markets, another drag on recovery. “
Perhaps Professor Krugman did not read Ms. Shlaes’ book. Had he done so he would have recognized Knightian uncertainty settled in the background of Ms. Shlaes book and before that, snuggling within Professor Higgs’writings. In his third and last Robbins lecture - Krugman yanks – uber-Keynsian Hyman Mynsky back from (relative) obscurity – and sets him front and center as the intellectual flavor of the month. The irony here is that if there ever was anyone obsessive about the impact of uncertainty on economic performance, ‘twas Minsky.
A.E. Rodriguez
May 10, 2010
(arodriguez@newhaven.edu)
