Battle of the NYT opinion-page economists


Wow–economists are under a lot of pressure. Not only do they have to keep publishing after they get tenure; they have to be funny, too! It’s a lot easier in statistics and political science. Nobody expects us to be funny, so any little witticism always gets a big laugh.

P.S. I think no one will deny that Levitt has a sense of humor. For example, he ran this item with a straight face, relaying to NYT readers in October 2008 that “the current unemployment rate of 6.1 percent is not alarming.”

P.P.S. I think this will keep me safe for awhile.

9 thoughts on “Battle of the NYT opinion-page economists

  1. 6.1 is not that alarming. Full employment in an economy is not 0% unemployment (it's considered to be around 5%, I think). But Krugman beats Levitt any day of the week.

  2. I agree that 6.1% is not that alarming. The point was that, in October 2008, just about everybody (except, apparently, Casey Mulligan and Steven Levitt) thought that the unemployment rate was on the way up!

  3. I've noticed repeatedly that Levitt is quite thin-skinned. I wonder why that is – my sense is that in general economists aren't overly sensitive (though Krugman has this weird thing that he keeps getting upset with his blog commenters – he comes across more exasperated than genuinely peeved, but still it seems odd).

    I wonder if there is some secret fear of not being taken seriously? Or maybe he's frustrated because he doesn't get published well anymore?

  4. The article with the 6.1% quote is 100% correct. While things were getting worse, nothing justified the $700 billion giveaway to clumsy dinosaur banks. Mulligan said that their continued existence is not essential, as those justifying the deal insisted at the time.

    And he's right — the economy needs finanial intermediation. That does _not_ however, mean it needs the specific banks that exist today (or existed then). Yet the distinction was lost on everyone demanding the $700 billion.

    If there hadn't been a bailout, then yes, unemployment would have (still) gone up sharply — but by recognizing the shock head-on and absorbing the loss immediately (rather than propping up failing, wasteful companies), the economy would have recovered a lot faster, perahps by mid-'09.

    But noooo, we have to "save" the economy by ignoring harsh reality and extending the recession through 2010.

    Mulligan's remarks do not deserve a laugh. What deserves a laugh is everyone else's robotic mentality that holds that level of corporate/individual debt in ~2005 was some magic number we have to bring the economy to all the time.

  5. Good thing we passed TARP and saved the rest of the economy!

    Obviously things might have been worse without the TARP but the evidence for that is pretty weak and indirect. Mulligan was pretty clearly on the optimistic side of economists, but the Romer-Bernstein paper predicted a top unemployment of under 8% (since the ARRA was passed) and a faster recovery. And that was with several more months of data and less uncertainty surrounding the banks and monetary policy. Its not clear to me why Mulligan was so wrong as to be credibility destroying if the Keynsians weren't.

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