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Bigger doesn't imply better. Bigger often is a sign of obesity, of lost control, of overcomplexity, of cancerous cells
|The idea that you can’t make
at least some judgments about what overall social-economic situations
are desirable or undesirable, is pretty silly.
about Posner views
November 19, 2009 | Crooked Timber
I just listened to an EconTalk podcast interview with Richard Posner about his new book, A Failure of Capitalism: The Crisis of ‘08 and the Descent into Depression [amazon]. The book has gotten a bit of buzz for the way in which Posner semi-recants certain libertarian or Chicago-style economics positions he is known for. But certain other positions he has not recanted, such as his narrow view of economic actors’ duties to consider negative externalities of their activities (discussed at CT before here and here). In the podcast, Posner basically asserts that those actors in the financial sector who almost crashed the world economy were right to do so, in the sense that it was rational for them, individually, to be massive ‘risk polluters’ (to coin a phrase someone else has probably coined already.) He would probably go further, although he isn’t actually asked to in the podcast: some of these actors were obliged to take the risk. In at least some cases it would have been their strong, positive fiduciary duty, under the circumstances, to do something which – taking a larger view – seriously threatened to run the whole world economy off a cliff. Because that was the apparent route of profit-maximization. It was their job not to take the larger view. Posner blames regulators, not these profit-maximizing actors, for the market failure; for not seeing that the damage to everyone downwind of all that toxic risk was so great that it should not have been permitted.
As a Rawlsian, more or less, I actually sort of like the overall picture here, minus the excessive and rather perverse dogmatic-legalistic strict tidiness of the segregations of duties. It makes sense to have a market in which private actors basically look to their own interests within a system in which regulatory steps have been taken to ensure that they do not, in the aggregate, make a giant, intolerable mess of the whole world. Flawed as any regulatory system is sure to be, it’s less reasonable to expect all the individual actors to be sufficiently attentive to, hence to take individual responsibility for, the whole. We don’t need to go so far as to treat them as weirdly obliged to be totally blinkered to the whole system. But we shouldn’t make each individual responsible for solving what is, in effect, a collective action problem, and a snarly knowledge problem to boot.
But I wonder what Posner would say about the following. Take two cases.
1) there’s a severe recession.
2) there’s serious income inequality.
We’ve got both; the causes of both are broadly similar. Namely, a lot of actors individually engaged in narrowly self-interested, more or less rational economic activities. The regulations in place, such as they are, have permitted these results. But we take it for granted that trying to do something about the former is presumptively permissible. Why should there even be an issue (beyond a practical issue) about whether it’s appropriate to take steps to do something about the latter?
Some people might argue that the second isn’t necessarily bad, but I don’t think we should take that seriously. What this lot are thinking is just that 2 is a possible outcome of a lot of individually permissible activity. Since we don’t want to say those activities were wrong, we shouldn’t say the result is wrong. But even if you accept this (for the sake of argument) you should still reply as follows: no one argues that severe recession cannot be a bad thing, so long as it can be shown to be the result of a lot of activity that was permissibly engaged in. Recessions can be bad without needing to be anyone’s fault. Likewise, we ought to be willing to say, at the very least, that serious income inequality – some people are rich, others don’t have enough to eat – is a bad thing. Because people going hungry is bad thing. Whether any individual actors are to blame for the bad thing is a separate question.
And some folks might persist in quibbling, even past this point, that it’s tendentious to characterize a hunger problem – an absolute poverty problem – as though it were a relative income problem. But I don’t think so. Why do we regard a recession as a problem? Recession, too, is a relative wealth comparison. We take ‘recession’ to be the relevant category in part because the fact that we were doing significantly better just a year or so back suggests this is something we should be able to get out of. Likewise, income inequality is provoking to people, not because they are inherently resentful of the rich (not necessarily) but because it suggests to them, prima facie, that poverty in this environment ought to be get-outable-of. At least we ought to try.
Now: I think there is a tendency among liberals – hence by extension, conservatives, when engaging liberal views – to treat the case of a severe recession morally differently from that of income inequality. The latter is, presumptively, a ‘social justice’ issue. The former an unfortunate event. It isn’t unjust for the economy to go into recession. That would sound odd, because everyone takes for granted that no one wanted this result, let alone engineered it expressly. But no one wants income inequality either. Not per se. Yet we may be inclined to say the latter result is not just bad but unjust.
It would make a certain amount of sense to recalibrate our notions so that both problems look morally equivalent. When bad things happen, overall, that it is no individual’s job to fix – like recessions, or severe income inequality – then it is the job of the government to do something about it, if possible.
I think Posner would not like this result, as he would think it puts us on a slippery slope to more aggressive interventions against the entity formerly known as ‘social injustice’ – now excitingly rebranded as: big bad things – than he would think wise. That is, regulators acquire a mindset in which we assume that it is their (the government’s) job to fix anything big and bad that it’s no one else’s job to fix. But really, that is the government’s job, on Posner’s view. It isn’t anyone else’s job, by hypothesis, and – if it’s bad enough – the bad does need fixing. The only proper restriction on the government’s efforts, in this regard, are legal/Constitutional, plus a due sense of humility about the technical possibility of fixing any given ‘big bad’ thing, without making too many other things worse.
No one thinks trying to get out of a recession is, per se, wrong, just because we should let ‘the market decide’. We don’t like recessions. But then the same goes for anything else we really don’t like: like people going hungry. The effect of thinking this way would be to bleed ‘let the market decide’ of any vestige of moral, as opposed to prudential, authority. And the prudential point reduces to: don’t rock the boat too much. Don’t make regulatory interventions in complex situations that might make things worse. (Of course, if you are arguing with someone who doesn’t see any value in any market mechanisms whatsoever, then ‘let the market decide’ can amount to a substantive suggestion that, in general, markets can work pretty well. But, since liberals and progressives are not Maoists, we can ignore this as presently irrelevant – not that Glenn Beck will ignore it, oh no.)
Posner’s extreme position seems to me most useful for helping to map out a range of possible positions. We’ll start with his.
- Individual economic actors are permitted to be (and may be obliged to be) borderline psychopathic in their solipsistic pursuit of narrow self-interest. In this case, you really need a government/regulatory system that is very actively concerned with the entity formerly known as social injustice – a.k.a. really big bad things.
- Matthew Yglesias gets what he wants: “What’s really wanted here is for the United States to be a different kind of country with a more public-spirited business class wherein the bank executives could be persuaded to “do the right thing” in light of all the crap that taxpayers were doing on their behalf. But we live in the United States of America. Fundamentally, though, as with a lot of this stuff I think what’s being implicated is much less America’s financial crisis emergency response policies than our background conditions of social justice.”
- We should ‘let the market decide’. That is, there is some reason to suppose the market gets things ‘morally right’, so if some people have less money, we should presume, prima facie, that this is the ‘right’ result. But then what is the justification for trying to moderate the business cycle? If we trust the market to decide what everyone deserves to have, then why not conclude that the reason why we all do less well in recessions, on average, is that we all become inherently less deserving people, on average. The business cycle has always been a bit of a mystery: maybe it’s fueled by an underlying moral cycle of inherent desert. Some years you get out of bed and you are just plain a worse person, economically, hence more likely to be unemployed for the next 18 months or so. And rightly so. (It’s a metaphysical thing. You wouldn’t understand.)
I could take 3 a bit more seriously, but I’m not really going to bother. The idea that you can’t make at least some judgments about what overall social-economic situations are desirable or undesirable, is pretty silly. Obviously there can be cases in which people really seriously do dispute whether a given arrangement is desirable or undesirable, in some global sense. But there are enough clear cases that we can stick with those, and grant upfront that the government has a lot less business – quite possibly none – intervening when it isn’t clear to everyone that we should want to get rid of state of affair x, if just waving a fairy wand were all it would take. (No one likes recessions or hungry poor people. We all agree that waving a fairy wand to eliminate those problems, if we could, would be an appropriate policy.) Once you grant this much, the rest is just arguing practical policy limits, pending the invention of functional fairy wands.
What I think is notable here is that liberals/progressives are more or less ok with 1 or 2, if they are spelled out in some satisfactory way. Whereas conservatives are really only happy with 3, philosophically. Very few of them will regard either 1 or 2 as philosophically tolerable, spell them out how you like. But this doesn’t seem to me like a good situation to be in.
I expect that one major line of resistance to all this would be: seriously, dude, you are underestimating the practical limits on government. You change one thing here and 12 things go wrong over there. Part of the problem with this is it assumes liberals and progressives are all Jacobin lunatics. Part of the problem is that it is actually an argument for 2 being a better option than 1. But mostly the problem is that it implicitly concedes that either 1 or 2 could still be philosophically correct.
I hammered all that out pretty quick. I’ll bet people won’t like it. I could write a post about fonts, if you want.
- Martin Bento 11.19.09 at 9:58 am
- Donald made a point I was going to. I would go a bit further though. It’s not clear to me that economic inequality is not desired for its own sake by the some of the elite. After all, studies suggest that once you get past the level of income needed for a reasonably comfortable life – about 40K for a single person in the US - the quest for money is mostly about status. Meeting your needs is not necessarily zero sum, but status is: my status can only be higher than yours to the extent that yours is lower than mine. The more inequality there is, the more status differentiation there is. Of course, there are other sources of status than money, but I’m talking specifically about people who value money for the status it confers. This is in addition to the “Donner Party Conservatism” calls to make sure the incentives to work are as strong as possible (to be fair, I think tolerating some inequality for the sake of incentives is worthwhile, but we seem to be well beyond that).
- Tolerating some wealth inequality for the sake of incentives is like tolerating some inflation for the sake of not having deflation: once you’ve got inflation at one or two percent, you’ve achieved that goal. One hundred or two hundred percent inflation is unnecessary and undesirable.
I’m not arguing with the previous commenter, but agreeing and then expanding on why I think the fact that some tiny amount of inequality might be tolerable, does not give libertarians and other inequalitarians carte blanche to argue in favor of unlimited inequality.
- bob mcmanus
- Adam Smith opposed “self-interest” to “selfishness” precisely in the spirit of giving the individual the benefit of the doubt and presuming a minimal amount of sociality. We should not presume, as the neo-classical economists do, that homo economicus is a sociopath. This is not only uncharitable, but is refuted by the facts as I know them. Just last night, I read a finance worker who probably makes mid-6 figures saying a) those damn CEO’s are making too much money, and b) if we have another crash, capitalism has failed and we should move to a command economy. He was very serious, his life-savings would be wiped out, and he would lose his personal “investment” in the free-market ideology. I encounter on the finance boards, at least as many nascent Maoists as Randians.
So if we accept the Smithian assumption that the vast majority are neither Randians or Benthamites, most of the questions become empirical, don’t they? How much inequality is tolerable, and what are the efficient ways to adjust incomes and wealth.
- bob mcmanus
- Empirical:as a Post-Keynesian, I believe that income/wealth inequality or maldistribution is the primary cause of financial instability. Not necessarily economic instability or recessions, we had recessions in the 50s or 60s, but the kind of credit collapse of 1929 and 2008 that is so catastrophic.
This also can be traced back to Smith, who distinguished between investors and speculators (not in those words) and accepted that the rich, without adequate counter-incentives, tended to gamble destructively. This was not a normative judgement, but a recognition that easy money tended to reduce safe investment opportunities and create “imaginary capital”. Smith fought with Bentham about usury laws (Smith was for limits on interest rates) because Smith thought high interest rates or excessive rates-of-return encouraged speculation.
To a large degree, the point and purpose of economics is to change normative or social justice questions into empirical questions, on the assumption that human beings are generally social and benevolent critters.
kid bitzer 11.19.09 at 1:47 pm
- interesting post.
“I expect that one major line of resistance to all this would be: seriously, dude, you are underestimating the practical limits on government.”
i take it that part of your larger point here is that this response is available only to conservatives who also think that govts and central banks ought to take no steps to intervene in recessions, either.
John Holbo 11.19.09 at 2:14 pm
Ben Hyde 11.19.09 at 2:50 pm
- “Some years you get out of bed and you are just plain a worse person, economically, hence more likely to be unemployed for the next 18 months or so.”
Some years you get out of bed with a greater talent as a risk polluter? Some years societies forget the good hygiene required to temper the risk polluters? Some years a new virulent species of risk polluters routes around society’s immune system?
Common cause in the face of inequality is harder to spin up, v.s. say the recession, since the problem’s costs and benefits are more perfectly aligned with the political fault lines. But both afflictions are pretty well aligned along that dialectic. In both cases the large economic actors are better able on average self insure against the risk, dodging the costs, and garner the benefits.
It is valuable to frame this issue around these as one of learning and forgetting. The recession is a powerful enough experience that even Posner can learn from it. Question: how cyclic is inequality, and what finally drives a society to learn to manage the fever? Where is Dicken’s when you need him!
Barry 11.19.09 at 3:51 pm
- Donald: “Likewise, one might argue that income inequality might be deliberately engineered (indeed, I think some part of it has been) for the purpose of achieving faster growth and a higher average standard of living in the future. Whether one thinks the outcome (higher average standard of living) is worth the cost (greater inequality) is another question. ”
Ath the risk of sidetracking things, I’d argue that those questions are actually third or fourth order questions, because the relationship between growth and inequality is weak, at best. [barring the extreme examples of almost perfect equality/extreme inequality, which I believe have been shown to be bad for growth]
Nicholas Weininger 11.19.09 at 4:41 pm
- I think you’re arguing against a strawman here. Broadly speaking, the right-wing-ish people who think government ought to intervene against recessions don’t think there should be no government action against poverty; they just want there to be less than you do. The people who really think there should be no welfare state at all are also in general likely to reject government anti-recessionary measures. So you’re inveighing against an inconsistency of principle actually held by very few.
There are of course both prudential and moral grounds for rejecting antirecessionary government intervention, even if you believe that on its face a recession is a bad thing. On the prudential side, you can believe, for example, that recessions are important truth-signals: they tell you that economic actors have engaged in massive malinvestment and need to seriously reassess their resource allocation. And antirecessionary interventions obstruct that truth-telling, leading to worse problems later. Not to mention that (on this view) government intervention in the economy is a prime cause of most severe recessions, since it so often encourages malinvestment and socializes downside risk.
On the moral side, just because a recession makes people worse off on average doesn’t mean it makes everyone worse off. Suppose (purely hypothetically!) that a recession causes a large decline in housing prices. Then people who have patiently saved up and rented, waiting to buy a house they can easily afford, will be better off, whereas those who foolishly took out a subprime mortgage and are now underwater will be worse off. Antirecessionary interventions will tend to help the latter group at the expense of the former, which (again, on a libertarian moral view) is unjust. So it’s simply not true that those who think antipoverty intervention is unjust don’t also think antirecessionary intervention is unjust.
- Donald A. Coffin 11.19.09 at 4:47 pm
- Barry (#12)—Let me be clear. I do not agree with the “inequality is essential for growth” argument, just that it is not an argument that can be dismissed out-of-hand. If the question, as implied by your comment is really “What degree of inequality is optimal, given our other economic objectives, such as growth?”, then the answer does, in fact, become an empirical issue, not a theoretical issue. Once we’ve conceded that some inequality might be instrumentally acceptable, then we are asking if the cost of greater inequality is worth the benefit of faster growth/higher average standard of living.
- mpowell 11.19.09 at 6:52 pm
- Why beat around the bush here? We know what the problem is. It’s as plain as day for anyone with a clear head to see. It’s not just that economic inequality is morally bad, it’s also politically disastrous. We have a situation where a small band of elites, sometimes even constrained by their so-called fiduciary duty, are running the show. It’s not the market in action. It’s powerful economic players undermining the very rules the game is played by by buying out legislators and regulators. It would be one thing for Posner to argue that these folks have a fiduciary duty to advance the interests of their shareholders in a narrow market sense, but how can you coherently maintain that better regulation is the answer if you are also willing to provide these folks the tools to undermine that regulatory process as part of that same fiduciary duty. It’s a view that just completely misunderstands how the modern political/economic game is played.
In another world without market power we could have interesting debates with conservatives about whether economic inequality is ‘fair’ or not. But in this world, the only task worthwhile is to persuade people that the shape of your regulatory regime can and is being driven by the very actors it is meant to regulate.
- Martin Bento 11.19.09 at 7:59 pm
- Re: mpowell’s point about regulatory capture. It is worth nothing that Posner has explicitly endorsed the notion that if the wealthy have more influence than others, this is not undemocratic. The proper definition of democracy is purely formal. Here is the quote:
- “Finally, I disagree with the suggestion, common though it is, that unlimited campaign spending impairs democracy by giving political power to the wealthy, or more precisely to any individuals or groups able and willing to spend disproportionately to support particular candidates or policies. The suggestion confuses democracy with equality. Democracy is the political system in which the principal officials are forced to stand for election at short intervals. The identity and policies of the officials may well be influenced by the underlying distribution of income and wealth in society, but that does not make the society less democratic.”
And here is the URL:
Posner wrote, apropos of Christy Romer's analysis of the stimulus:
Richard A. Posner: This makes the $40 billion in tax relief all the more important to Romer's argument. And if that figure consisted of actual rebate checks, or reductions in current withholding, then of course it should be included.... Almost all the tax relief provided for in the stimulus bill consists of reductions in taxes by individuals and businesses.... If... the reduction is reflected in reduced withholding, or a reduced payment of estimated tax by people who filed estimated returns on April 15, it should be counted as stimulus spending; it puts money in people's pockets. If it merely reduces their future tax liability, it does not. All that is certain is that not all that $40 billion in tax relief is stimulus money; not all, and, at a guess, not most, put money in people's pockets before the second quarter ended...
Richard Posner does not appear to have called anyone at the U.S. Treasury to check.
I did. I called Mark Mazur.
The U.S. Treasury staff report that they do not do accrual accounting. They do cash flow accounting. If they told Christy Romer that $40 billion went out the door in stimulus-related tax cuts as of June 24, 2009; then $40 billion in cash went out of the Treasury.
Richard Posner's "not all, and, at a guess, not most" is simply a lie.
Where do they get these people?
Richard Posner writes dishonestly about the Obama stimulus package. I count at least seven major ethical lapses in his piece.
They start with:
Richard A. Posner: [Council of Economic Advisers Chair Christina] Romer argues in her talk that by the end of the second quarter of this year, $100 billion of stimulus money had been spent. That is a suspiciously round number, and it is unclear how it was arrived at...
But consider Mark Zandi: Mark Zandi was one of John McCain's most senior economic advisors last fall. Mark Zandi's estimates of stimulus spend-out are that it amounted to $89 billion as of the end of June--$2 billion in February, $7 billion in March, $13 billion in April, $32 billion in May, and $35 billion in June; with (so far) about 60% of the spend-out coming in the form of tax cuts and about 40% in the form of aid to states (with a trivial amount in direct federal government spending):
Source: Mark Zandi, http:/www.economy.com
The number is "suspiciously round" because Christina Romer is rounding it: this is a talk, whereby the audience is supposed to take in information through its ears, and rounding things to one significant figure is something you do to make your talks informative.
Posner's snide and sneering implication that Christina Romer is bulls---ing her audience is false--unless, of course he wants readers to also believe that long-time Republican Mark Zandi and many others as well are corrupt and in the pay of the Obama administration.
If I were Richard Posner, I would under no circumstances publish this piece in Great Britain. Just saying.
It gets worse. Posner goes on, demonstrating nothing either his lack of facility with arithmetic or his willingness to play intellectual three-card-monte:
[Christina Romer] then argues that this small expenditure [of $100 billion]--about two-thirds of one percent of the Gross Domestic Product--is responsible for the fact that the decline in GDP fell (on an annualized basis) from 6.2 percent in the first quarter of the year to 1 percent in the second quarter (though the latter figure is likely to be readjusted upwards)...
Posner is trying to get his readers to compare the number 5 (the percentage-point swing in the growth rate between the first and the second quarter of 2009) to the number 2/3 (the percentage share of second-quarter stimulus expenditures to annual GDP). He hopes that they will conclude that Christina Romer's claims are wrong because the effect is disproportionate to the cause: $1 of stimulus could not reasonably be expected to produce $7.5 of boost within the same quarter. But the stimulus money spent in the second quarter was spent in one quarter, so the right yardstick to use to evaluate it is not annual but rather quarterly GDP--stimulus spending in the second quarter was not 2/3 of one percent but 2.6% percent. And the level of production in the economy in the first quarter was not 6% but rather 1.5% below its level in the fourth quarter--the 6% number is not the decline from one quarter to the next but rather the rate of decline, how much the decline would be after a year were it to go on for four quarters. So the right comparison is 1.5% to 2.6%.
Posner is off by a factor of 16. That is hard to do if all you are doing is the arithmetic: subtraction and division. But it is easy to do if making an apples-to-oranges comparison is not a bug but a feature you are striving for.
I would say that it gets worse, but it doesn't. It merely passes from the libelous and the wrong into the incoherent:
No one has the faintest idea what effect the stimulus has had. My guess is that it has had some positive effect... some of the $100 billiion--though no one seems to know how much--has been spent rather than saved. But it is impossible to determine the net impact of the stimulus on GDP or employment because so much else has been happening.... Some people have had to dissave.... Some people have had to replace durables.... And the government has been doing a lot to stimulate recovery besides the stimulus.... Disentangling the various factors that are responsible for the reduction in the rate of decline of output in the second quarter is probably impossible, but in any event has not, to my knowledge, been attempted...
If it is "impossible" to attempt--Posner does say "probably impossible"--then why has Republican economic advisor and macroeconomic forecaster Mark Zandi attempted it?
Source: Mark Zandi, http:/www.economy.com
As Mark writes:
It is not feasible to identify and count each job that results from the stimulus; economic impacts are estimated... [from] a statistical representation of the U.S. economy based on historical relationships... the Moody's Economy.com model, which is used regularly for forecasting, scenario building and policy analysis. The Obama administration has derived its estimates of the stimulus' impact using a similar approach. To date, most of the benefits from the stimulus plan have gone to state and local governments to pay for Medicaid and educational programs and expanded unemployment insurance benefits. This stimulus is defensive--it helps forestall draconian cuts in government services or tax increases that would have otherwise occurred. In the nomenclature of the debate surrounding the merits of the stimulus, this preserves jobs...
We do know that the stimulus money has been credited to the states, and we do know that the states have by and large used this money not to cut taxes (which would also be a stimulus, albeit a less effective one) but rather to fend off some of the spending cuts that their own internal budget procedures were forcing them to make.
And why does Posner say that "disentanging the various factors" "has not, to my knowledge, been attempted"? Does he not have Google on his computer?
And is he not reading Christina Romer (2009), "Is It Working?: An Assessment of the American Reinvestment and Recovery Act at the Five-Month Mark"? Two pieces of disentangling evidence in her talk stood out at me: the fact that those states that--by historical accidents of state-level social-insurance system design--are receiving a relatively small share of the stimulus money are doing relatively poorly:
and the fact that around the globe countries that have over the past six months responded to the crisis with large stimulus packages appear on average to be doing better than it was expected they would six months ago:
And worst of all is Posner's claim that:
As an academic, Christina Romer was a respected student of the business cycle, and actually expressed skepticism, no longer in evidence, about the efficacy of stimulus programs in arresting economic downturns...
As an academic, Christina Romer:
- strongly expressed a preference for using expansionary monetary rather fiscal policy to arrest economic downturns in normal times when expansionary monetary policy can push short-term interest rates down and so stimulate the economy; these aren't normal times--short term interest rates are now zero and cannot be pushed any lower--and so it is appropriate to resort to tools that in normal times are second and third best.
- argued that during the 1930s New Deal government spending was too small and too often offset by tax increases to play a material role in recovery from the depths of the Great Depression.
I don't think Posner has read Christina Romer's academic work on fiscal and monetary policy, or he would not make such a claim.
In his conclusion, Posner:
raises the question of the ethical responsibility of academic economists, such as Romer (and Krugman, and Lawrence Summers, and many others), who write for the media or join the government, either to adhere to academic standards in their nonacademic work or to make clear to the public that they are on holiday from those standards and that what they say in their public-intellectual or governmental careers should not be thought identical to their academic views...
I don't see daylight between Christina Romer (2009), "Is It Working?: An Assessment of the American Reinvestment and Recovery Act at the Five-Month Mark" and Christina Romer and Jared Bernstein (2009), "The Job Impact of the Americn Recovery and Reinvestment Plan" writing for the Obama administration and Christina Romer lecturing here at Berkeley.
I do see a much more serious ethical question here: Richard Posner:
- has not read (or has not understood) Romer (2009) or Romer and Bernstein (2009);
- has not listened to Christina Romer lecture;
- has not read (or has not understood) her academic work;
- has not used Google to ascertain that a number of attempts have now been made to ascertain the effectivenss of the stimulus package;
- has not used Google to determine the use that state governments have made of their second-quarter stimulus money;
- has not taken the courses in or studied the subject of econometrics in the amount necessary to acquire a view of how one can tease conclusions out of imperfect and confused economic data--or he would not dismiss as "impossible" things that economic forecasters do prospectively and retropectively every day;
- has not checked his arithmetic to correct howling errors of a factor of 16.
In my view, anyone holding themself out as a public intellectual has one duty: to be smart. Being smart involves (a) checking your arithmetic, (b) building up your intellectual tools, (c) using Google, (d) reading works until you understand them, and (e) not writing things where you have absolutely no clue about what you are talking about.
Does Richard Posner think that he is behaving ethically here? In my view, he has failed to satisfactorily perform any item of that checklist.
Does the Atlantic Monthly think that it is behaving ethically here in publishing Posner? At the very least whoever in the Atlantic offices is looking at Posner should have caught the factor-of-16 arithmetic error, not to mention a bunch of the other howlers should have raised red flags and caused the piece to be bounced back for quality control.
Inquiring minds would really like to know...
 A very reasonable number for a within-quarter multiplier: second-quarter spending will have effects on production and demand now and next quarter and into the future as well, as people who had jobs in the second quarter because of the stimulus spend some of their incomes in the third quarter, and so forth.
Last modified: March 12, 2019