It's time to spin the Big Wheel for April Fools' Day! Who will it be this year? Amity Shlaes? Doug Henwood? Donald Luskin? John Cochrane? David Graeber?... No! The Big Wheel stops on... Niall Ferguson.
There is truly a wealth of material here. Let's start with:
Matthew O'Brien: Truth in the Age of Niallism: "Ferguson. He seems to believe he can twist facts...
...to mean whatever he wants them to. Last year, you may recall, he jaw-droppingly doctored a CBO quote to change its meaning entirely. The year before that, he argued economists had it all wrong, and that "yes, folks, double-digit inflation is back"--with his "proof" coming from a well-known conspiracy website. It'd be as if I told Ferguson his history was wrong, because it ignored the collected works of Dan Brown...
And!:
Brad DeLong: Niall Ferguson "Quos Deus Vult Perdere, Prius Dementat" Weblogging...: Niall Ferguson... (1999) [writes]:
Though [John Maynard Keynes's] work at the Treasury gratified his sense of self-importance, the war itself made Keynes deeply unhappy. Even his sex life went into a decline, perhaps because the boys he liked to pick up in London all joined up...
Plus:
Josh Barro: Niall Ferguson Is Mad That I And Other 'Acolytes' Of Paul Krugman Are Mean To Him: "I first tried to remember what exactly I had written...
...that would have so upset Laurence A. Tisch Professor of History Niall Ferguson... not much. Back in 2011, Ferguson wrote a column for Newsweek in which he alleged that the consumer price index, the standard measure of inflation, is "a bogus index." He continued:
Yes, folks, double-digit inflation is back. Pretty soon you’ll be able to figure out the real inflation rate just by moving the decimal point in the core CPI one place to the right.
I wrote a response, in which I called Ferguson's argument "bizarre."... That was a far more charitable response than such an asinine column deserved...
And:
Joe Weisenthal: Niall Ferguson's Bad Track Record On Economics:
Harvard historian Niall Ferguson landed himself in hot water... at a conference when he equated the economic philosophy of John Maynard Keynes with the fact that Keynes was gay and childless. Basically, he was trying to cleverly equate Keynes' famous line "in the long run we're all dead" to a mentality which doesn't care about the future, due to lack of offspring. Of course, that Keynes line is taken out of context, and Keynes clearly thought about the long term, and beyond that it's just straight up offensive to say that being gay is incompatible with long-term thinking. If there were any connection, then the obvious next step would be to be against any gay leader, or policymaker, or philosopher, on the suspicion that they were incapable of long-term consideration...
In addition:
Josh Barro: Niall Ferguson Uses Twitter Science To Prove He Is Better Than Everyone
Henry Blodget: Harvard Professor Niall Ferguson Reportedly Just Blamed Keynes' Economic Philosophy On Him Being Homosexual And Childless:
Niall Ferguson: Niall Ferguson Does Not Understand That the Federal Government Hires a Huge Number of Temporary Workers to Conduct the Decennial Census: "Well, that’s not really a part of the argument I made in the piece. The point I made in the piece was that the stimulus had a very short-term effect, which is very clear if you look, for example, at the Federal employment numbers there’s a huge spike in early 2010 and then it falls back down..." Invictus says: "Niall, babe, I got one word for you: 'Census'.'"
Joshua Tucker: Here We Go Again...: "Niall Ferguson at The Daily Beast yesterday.... Now if only we had some actual research on any of those other topics that he could reference..."
Brad DeLong: Whiskey-Tango-Foxtrot Wall Street Journal Bang-Query-Bang-Query Niall Ferguson Smackdown: Is This Some Strange Berkeley Acid Trip I Am on? Weblogging: Niall Ferguson: The Shutdown Is a Sideshow. Debt Is the Threat: "Only a fantasist can seriously believe 'this is not a crisis.' The fiscal arithmetic of excessive federal borrowing is nasty even when relatively optimistic assumptions are made about growth and interest rates. Currently, net interest payments on the federal debt are around 8% of GDP... that share could rise to 20% by 2026, 30% by 2049, and 40% by 2072..." Um.... No. Not 8%. 1.3%. Only 1/6 of 8%."
James Fallows: As a Harvard Alum, I Apologize for Niall Ferguson
David Beckworth: Goodbye, Cruel World!: "Nial Ferguson's latest demonstrates the widespread failure to understand the natural interest rate. We have failed as economic educators..."
Noah Smith: Blaming Easy Money for Alien Invasions
Dylan Byers: Niall Ferguson's Ridiculous Defense
Niall Ferguson et al.: "So-called 'quantitative easing'... should be reconsidered and discontinued.... The planned asset purchases risk currency debasement and inflation..."
Matthew O'Brien: The Age of Niallism: Ferguson and the Post-Fact World
Simon van Zuylen-Wood: Gingrich Gets an "A" From Niall Ferguson: "I get that self-avowed ‘neo-imperialist’ historian Niall Ferguson relishes his gig as academia’s most celebrated colonial nostalgic/conservative reactionary. But this is too much: 'I just read the transcripts of some lectures [Newt Gingrich] gave in the 1990s on "Renewing American Civilization". They positively fizz with historical insights and brilliant brain waves. They make the case against big government as vividly as anything you’ll ever read...'"
Ezra Klein: The Nate Silver Backlash: "Every few weeks... some pundit or reporter declares... a staggering humiliation for... election quants. Niall Ferguson took his turn at bat in early September. ‘The economy is in the doldrums,' he wrote. 'Yet the incumbent is ahead in the polls. According to a huge body of research by political scientists, this is not supposed to happen...’"
Noah Smith: The Ferg-Beast Attacks: "I'm breaking my blogging hiatus to briefly respond to Niall Ferguson, not because I'm mad, but because it's fun.... I feel I ought to make a few points.... 1. The Egyptian plover does not, in fact, eat meat out of the mouths of Nile crocodiles. That is a myth.... 4. Of course, there is a fourth reason for criticizing a public intellectual: pure enjoyment. Ferguson seems too angry and bitter for his Krugman-bashing to be motivated by pure fun, but my own occasional Ferguson-bashing (see here and here) was motivated each time by the peculiar glee that comes from giving a really bad article the thorough point-by-point thrashing that it deserved..."
Brad DeLong: This Is Getting Damned Annoying: Will I Ever Be Allowed to Disagree with Paul Krugman Again About Anything? (Niall Ferguson Edition): I thought that Paul Krugman must be being too harsh.... Ferguson could not really... believe that when interest rates are zero deficit spending is inherently contractionary, could he?... Now that I have taken a look at the transcript, I have to once again agree that Paul Krugman's analysis is correct. This is annoying. This is damned annoying. In fact, this is beyond annoying...
Dylan Byers: "Dude, you EDITED THE CBO REPORT to CHANGE ITS MEANING."
Niall Ferguson: The Great Inflation of the 2010s: "The Fed may deny it, but Americans know that prices are rising. Inflation is back..."
Brad DeLong: On the Perpetual Decline of Things, and Niall Ferguson: Answering Ashok Rao's Request Weblogging
Justin Fox: Trying and Failing to Understand Niall Ferguson's Behavior: "Conference organizers... pay Ferguson $50,000 to $75,000 to entertain and edify a hotel ballroom full of business types about 'Chimerica' or 'the six killer apps of Western civilization.'... Things get combustible... when speaker's-bureau pundits get called out online for misdeeds, errors, or just inanities.... [I]t's fair to say that our thought leaders have as a group done a disastrously poor job of leading our thoughts over the past decade, so some kind of shake up is in order..."
Niall Ferguson (2009): Yes, Niall Ferguson, Econ 101 Is Worth a Great Deal: "The policy mistake has already been made--to adopt the fiscal policy of a world war to fight a recession. In the absence of credible commitments to end the chronic US structural deficit, there will be further upward pressure on interest rates, despite the glut of global savings. It was Keynes who noted that 'even the most practical man of affairs is usually in the thrall of the ideas of some long-dead economist'. Today the long-dead economist is Keynes, and it is professors of economics, not practical men, who are in thrall to his ideas..."
Ashok Rao: The Great Degeneration by Niall Ferguson: "Rarely is a book’s title... so well-suited for its own description..."
Justin Wolfers: No, ShadowStats Statistics Are Not Real Price Indices Thursday Idiocy Weblogging: Noted: "Niall Ferguson apologizes for pretending to be a homophobe just to please a crowd. What about apologizing for pretending to be an economist?..."
Brad DeLong: George Orwell to the White Courtesy Phone, Please!: But-That's-Not-What-Niall-Ferguson-Said! Absolutely the Ultimate Thursday Idiocy Weblogging
Matthew Yglesias: Niall Ferguson Debates Himself
There's MOAR:
Niall Ferguson Krugtron the Invincible: "For too long, Paul Krugman has exploited his authority...
...as an award-winning economist and his power as a New York Times columnist to heap opprobrium on anyone who ventures to disagree with him. Along the way, he has acquired a claque of like-minded bloggers.... I would like to name and shame in this context Dean Baker, Josh Barro, Brad DeLong, Matthew O'Brien, Noah Smith, Matthew Yglesias and Justin Wolfers."... What qualifies a figure like Matt O'Brien to call anyone a "disingenuous idiot"? What exactly are his credentials? 35,550 tweets? How does he essentially differ from the cranks who, before the Internet, had to vent their spleen by writing letters in green ink?...
What has Krugman said about Niall Ferguson? I sent some of the minions off to do a quick-and-dirty trawl through Google for what Krugman has said since the start of 2009. Here is what they came up with:
Matthew O'Brien: Truth in the Age of Niallism: "Here are three facts about how the 10-year budget outlook has changed in the past year...
...1) the fiscal cliff deal raised $600 billion in new revenue; 2) the sequester, if left in place, cut spending by $1.2 trillion; 3) the CBO revised its projection for federal healthcare spending down by $600 billion.
Harvard historian Niall Ferguson has a counterfactual take. Here's how he described how our debt trajectory changed the past year:
A very striking feature of the latest CBO report is how much worse it is than last year's. A year ago, the CBO's extended baseline series for the federal debt in public hands projected a figure of 52% of GDP by 2038. That figure has very nearly doubled to 100%. A year ago the debt was supposed to glide down to zero by the 2070s. This year's long-run projection for 2076 is above 200%. In this devastating reassessment, a crucial role is played here by the more realistic growth assumptions used this year.
This isn't a difference of opinion. It's incorrect. But it's incorrect for reasons that will escape casual readers….
Last year the CBO calculated two long-term budget outlooks to deal with uncertainty about taxes. The first scenario assumed that all the Bush tax cuts would expire. Pure fantasy. The second scenario assumed that none of the Bush tax cuts would expire. Less fantastical….Here's the thing: Everybody knew the fantasy baseline was a meaningless fantasy from the beginning. Even Niall Ferguson. At least he seemed to know that in 2009, 2010, 2011, and 2012. Back then, the alternative fiscal scenario was the only thing he talked about, because it was, in his words, "the more likely of the two." Here's but one example, from 2011:
According to the Congressional Budget Office’s alternative fiscal scenario—which it sees as politically more likely than its baseline scenario—the federal debt could hit 344 percent of GDP by 2050. Interest payments would absorb nearly all federal tax revenues.
Ferguson was right to talk about the alternative fiscal scenario the past few years, and he would have been right to continue to talk about it today as the point of comparison. But he doesn't. And that leaves him with a rather obvious problem: How can he explain our supposedly darkening debt outlook when we just raised taxes and cut spending? Hmm. How about saying the CBO says it's all about high debt causing low growth!
The only problem is that's not what the CBO says at all. Stay with me here.
In its all-the-Bush-tax-cuts-expire baseline last year, the CBO projected debt would be 52 percent of GDP by 2038; and in its fiscal cliff baseline this year, it projects debt will be 100 percent of GDP by then. But Ferguson can't admit the baseline games he's playing are the reason for this 50 percentage point of GDP difference. So instead he says that "more realistic growth assumptions" play a "crucial role" in this "devastating reassessment." They do not. In fact, they play no role. The CBO quite explicitly says that its fiscal cliff baseline with debt at 100 percent of GDP in 2038 does not include any negative growth effects from high debt. When it did include those effects, its fiscal cliff baseline rose to 108 percent of GDP in 2038. In other words, what Ferguson says played a "crucial role" in increasing debt by 50 percentage points of GDP really only increased debt by 8 percentage points of GDP….
This continues a rather disturbing trend for Ferguson. He seems to believe he can twist facts to mean whatever he wants them to. Last year, you may recall, he jaw-droppingly doctored a CBO quote to change its meaning entirely. The year before that, he argued economists had it all wrong, and that "yes, folks, double-digit inflation is back" -- with his "proof" coming from a well-known conspiracy website. It'd be as if I told Ferguson his history was wrong, because it ignored the collected works of Dan Brown.
And then there's Ferguson's bizarre jihad against Paul Krugman, along with his many "acolytes" (though we prefer to call ourselves Krugman's Killer Apps), for not being perfectly clairvoyant. I'm not sure why Ferguson thinks anybody should think less of Krugman for being bearish on the euro, which was entirely appropriate before Draghi's "whatever it takes" moment, and still might be. Least of all Ferguson, who himself has been… pretty bearish on the euro. Unless that's the point? That agreeing with Ferguson shows that Krugman makes mistakes? It's not clear.
Ferguson fancies himself a victim of liberal intolerance—a conservative crucified on a cross of tweets. And, worse, by his lessers. Who are these unwashed masses of university professors and writers who dare question him? He's written books, and I have not. Arguing from authority is always a bad sign, because it means you can't argue from the merits. Maybe Ferguson should try not making arguments that seem tendentious at best, and oblivious at worst. But now we're getting into counterfactuals.
The twisted quote? Here:
Joe Wiesenthal: Niall Ferguson's Embarrassing Response To Paul Krugman: "This is what Krugman wrote...
...There are multiple errors and misrepresentations in Niall Ferguson’s cover story in Newsweek — I guess they don’t do fact-checking — but this is the one that jumped out at me. Ferguson says: "The president pledged that health-care reform would not add a cent to the deficit. But the CBO and the Joint Committee on Taxation now estimate that the insurance-coverage provisions of the ACA will have a net cost of close to $1.2 trillion over the 2012–22 period." Readers are no doubt meant to interpret this as saying that CBO found that the Act will increase the deficit. But anyone who actually read, or even skimmed, the CBO report (pdf) knows that it found that the ACA would reduce, not increase, the deficit — because the insurance subsidies were fully paid for.
Ferguson is back with a snarky response ('You know you have hit the target when Paul Krugman takes time out from his hiking holiday'), which basically comes down to: I wasn't wrong, just misleading!... The spending/insurance portion of the Affordable Care Act did increase the deficit, and I was only referring to the spending side. I wasn't referring to the whole thing.... Again, Niall Ferguson's defense is that he was being very obtuse and misleading.
Josh Barro: Niall Ferguson Is Mad That I And Other 'Acolytes' Of Paul Krugman Are Mean To Him:
I first tried to remember what exactly I had written that would have so upset Laurence A. Tisch Professor of History Niall Ferguson… not much. Back in 2011, Ferguson wrote a column for Newsweek in which he alleged that the consumer price index, the standard measure of inflation, is "a bogus index." He continued:
Yes, folks, double-digit inflation is back. Pretty soon you’ll be able to figure out the real inflation rate just by moving the decimal point in the core CPI one place to the right.
I wrote a response, in which I called Ferguson's argument "bizarre."… That was a far more charitable response than such an asinine column deserved….
(In Thursday's Huffington Post piece, Ferguson insists that his Newsweek piece was "hardly a confident prediction of higher inflation." That's true. It was a statement that inflation was already high and the government was using fudged statistics to claim it wasn't. Derp.) Then, in May of this year, Ferguson suggested that John Maynard Keynes endorsed short-sighted economic policies because he was a gay man who never expected to have children. He reportedly also noted that Keynes was an "effete" man who liked to read poetry to his ballerina wife, which admittedly does sound pretty gay.
But there were several problems with Ferguson's analysis, including: "in the long run, we're all dead" doesn't actually mean we should ignore the long run; Keynes once impregnated his wife (she miscarried); and just because gay people often don't have children doesn't mean we're indifferent to the future of humanity. I never wrote a post about this incident, but I did write a series of snarky Tweets…. Since the quick Google survey of my past writing on Ferguson turned up only one mildly critical post and six Tweets, I have concluded that I do not spend enough time writing mean blog posts about Niall Ferguson, and I will make sure to change that in the future.
I'll try to follow the example of my editor, Joe Weisenthal, who somehow didn't make Ferguson's "acolyte" list. Joe wrote a solid post this spring called "Niall Ferguson's Horrible Track Record On Economics," which explained that Ferguson has a tendency to make ridiculous claims about inflation and interest rates while purporting to be some sort of expert on the economy. Joe even wrote that "Ferguson has self-immolated a number of times trying to fight an anti-Keynesian battle." But then Joe, like Matt O'Brien, has never written a book, so he probably has no idea what he's talking about…. [From] Ferguson's endless whine… the most delicious [part]:
You may ask: Why have I taken the trouble to do this? I have three motives. The first is to illuminate the way the world really works, as opposed to the way Krugman and his beloved New Keynesian macroeconomic models say it works. The second is to assert the importance of humility and civility in public as well as academic discourse. And the third, frankly, is to teach him the meaning of the old Scottish regimental motto: nemo me impune lacessit ("No one attacks me with impunity").
Niall Ferguson will teach us the importance of humility! Presumably in the same manner that Lindsay Lohan can teach us the importance of sobriety.
Brad DeLong: Niall Ferguson, in Krugtron the Invincible, writes:
Repeatedly, over the last five years, [Krugman] has heaped opprobrium on others. His latest performance is characteristic…. My purpose here is simply to challenge Krugman's right to behave in this way. Even if he were nearly always right, there would be no justification for his lack of civility. But he is not nearly always right. There is therefore no justification for his unshakeable certainty either.
And:
For too long, Paul Krugman has exploited his authority as an award-winning economist and his power as a New York Times columnist to heap opprobrium on anyone who ventures to disagree with him. Along the way, he has acquired a claque of like-minded bloggers who play a sinister game of tag with him, endorsing his attacks and adding vitriol of their own. I would like to name and shame in this context Dean Baker, Josh Barro, Brad DeLong, Matthew O'Brien, Noah Smith, Matthew Yglesias and Justin Wolfers. Krugman and his acolytes evidently relish the viciousness of their attacks, priding themselves on the crassness of their language. But I should like to know what qualifies a figure like Matt O'Brien to call anyone a "disingenuous idiot"? What exactly are his credentials? 35,550 tweets? How does he essentially differ from the cranks who, before the Internet, had to vent their spleen by writing letters in green ink?
What has Krugman said about Niall Ferguson? I sent some of the minions off to do a quick-and-dirty trawl through Google for what Krugman has said since the start of 2009. Here is what they came up with:
May 2, 2009: Liquidity preference, loanable funds, and Niall Ferguson:
Joe Nocera writes about Thursday’s New York Revie/PEN event on the economy, but fails to mention what I found the most depressing aspect… we’re living in a Dark Age of macroeconomics…. Niall Ferguson “explaining” that fiscal expansion will actually be contractionary, because it will drive up interest rates. At least that’s what I think he said…. But in any case, this is really sad: John Hicks knew far more about this in 1937 than people who think they’re sophisticates know now. In any case, I thought it might be useful to re-explain….
Here’s what I imagine Niall Ferguson was thinking: he was thinking of the interest rate as determined by the supply and demand for savings. This is the “loanable funds” model…. [But] supply and demand for funds doesn’t tell you what the interest rate is — not by itself. It tells you what the interest rate would be conditional on the level of GDP; or to put it another way, it defines a relationship between the interest rate and GDP… the IS curve, taught in Econ 101….
So what determines the level of GDP, and hence also ties down the interest rate? The answer is that you need to add “liquidity preference”…. Right now the interest rate that the Fed can choose is essentially zero, but that’s not enough to achieve full employment…. We have an incipient excess supply of savings even at a zero interest rate. And that’s our problem. So what does government borrowing do? It gives some of those excess savings a place to go…. It does NOT crowd out private spending, at least not until the excess supply of savings has been sopped up, which is the same thing as saying not until the economy has escaped from the liquidity trap.
Now, there are real problems with large-scale government borrowing — mainly, the effect on the government debt burden. I don’t want to minimize those problems; some countries, such as Ireland, are being forced into fiscal contraction even in the face of severe recession. But the fact remains that our current problem is, in effect, a problem of excess worldwide savings, looking for someplace to go.
August 12, 2009: Are there no editors?:
Wow. I was airborne when Niall Ferguson published this:
President Barack Obama reminds me of Felix the Cat. One of the best-loved cartoon characters of the 1920s, Felix was not only black. He was also very, very lucky. And that pretty much sums up the 44th president of the US…
I cannot fathom the state of mind that led Ferguson to think this was a good way to introduce a column; admittedly, it doesn’t really distract from his larger point, since as far as I can tell he doesn’t have one.
But what I really can’t fathom is how any editor could think this was a good thing to appear in the FT’s pages. I occasionally use an unfortunate turn of phrase; when I do, my copy editor politely suggests that I find another. And if it’s borderline, Andy Rosenthal will weigh in. I don’t think anything like this could show up in the Times — certainly not as the lede.
Meanwhile, James Fallows has the best line:
I look forward to Ferguson’s discussing this over a beer with his Harvard colleague Henry Louis Gates.
Update: And he’s a whiner, too.
August 17, 2009: Black cats:
I really had no intention of writing more about Niall Ferguson. Regular readers may recall that he wrote an article in the Financial Times that began,
President Barack Obama reminds me of Felix the Cat. One of the best-loved cartoon characters of the 1920s, Felix was not only black. He was also very, very lucky. And that pretty much sums up the 44th president of the US…
I asked, are there no editors?
But Professor Ferguson demands that I (and James Fallows) print his response:
As you both took exception to my comparison of the President with Felix the Cat, my favorite cartoon character, implying it was racist and recommending I consult Professor Henry Louis Gates Jr., I have now done so. He has taken the trouble to consult others in the field of African-American Studies, including our colleague Lawrence D. Bobo, the W. E. B. Du Bois Professor of the Social Sciences, and has written to me as follows:
“None of us thought of Felix as black, unlike some of the racially-questionable caricatures Disney used. Felix’s blackness, like Mickey’s and Minnie’s, was like a suit of clothes, not a skin color. … You are safe on this one.”
What can I say? While the Ferguson line was deeply offensive — everyone I know asked, “Did he really write that? Did the FT actually publish it?” — it never occurred to me that it had anything to do with the question of whether Felix the Cat was supposed to be African-American. The mind reels.
For the record, I don’t think that Professor Ferguson is a racist.
I think he’s a poseur.
I’m told that some of his straight historical work is very good. When it comes to economics, however, he hasn’t bothered to understand the basics, relying on snide comments and surface cleverness to convey the impression of wisdom. It’s all style, no comprehension of substance.
And this time he ended up choking on his own snark.
July 20, 2010: Depression Debt:
Brad DeLong does the necessary on Niall Ferguson; no need for me to pile on. But I think there’s more to be said about Depression-era debt…. If you were ignorant… you might think that it’s possible to summarize fiscal policy by looking at the federal debt-GDP ratio…. Clearly, then, Herbert Hoover was a wild deficit spender, while FDR was much more cautious. Right? OK, we know that’s wrong…. Hoover ran up very little debt — only about 6 percent of 1929 GDP. FDR, on the other hand, ran up a lot of debt, about 47 percent of 1933 GDP. But Hoover presided over a shrinking, deflationary economy, while FDR presided over a rapidly growing (from a low base) economy with rising prices.
I’ve been careful to use the term “presided over”: you don’t want to attribute all the differences in the two sub-eras to policy, let alone fiscal policy. Nonetheless, the fact that virtually all the deterioration in the US debt position from 1929 to 1939 took place under the tight-fisted Hoover rather than under FDR is an object lesson in the crucial importance of growth in dealing with debt. And the Hoover experience also provides a nice illustration of self-defeating austerity — not only didn’t austerity produce economic recovery, it didn’t even improve the fiscal position. It’s too bad that people who don’t understand any of that seem to have the upper hand in policy.
October 12, 2010: Seoul Feud:
In Korea, at the World Knowledge Forum. First up, a panel with Niall Ferguson. Fun and games.
December 27, 2010: Partying Like It's 1923: Or, The Weimar Temptation:
The remarkable thing is how many people are determined to Weimarize recent events, even though the actual experience of the past three years has been an object lesson in the fact that sometimes that framework just doesn’t fit. In late 2008 there was, maybe, an excuse for looking at the big rise in the monetary base and thinking that inflation was coming — although not if you had actually looked at Japanese experience. At this point, however, it’s just bizarre…. But it keeps happening anyway. A few months back, in a dialogue in Korea with Niall Ferguson, I suggested a macroeconomic version of Godwin’s Law: the first person to bring up the Weimar hyperinflation is considered to have lost the debate. He was, um, not happy. And despite all the evidence, a lot of people are obviously determined to keep on partying like it’s 1923.
July 14, 2011: Interest Rate Stories:
Something I’ve been meaning to write: there are two different stories about why deficits might drive up interest rates…. The first story is good old crowding out: the government is borrowing, that competes with private borrowers, and that drives rates up. That’s what Niall Ferguson was arguing back when…. The other story involves fears about a government’s solvency. The key point to understand here is that one year’s deficit, in practice, can’t matter very much in determining a government’s solvency, which depends on the present discounted value of revenues and obligations over many years. So the deficit matters in that case only to the extent that it represents a signal about government determination, or, possibly, to the extent that it pushes debt over some psychologically important threshold…. A number of deficit hawks switched stories in midstream, without admitting it — they were crowding-out types, but seized on solvency as crowding out failed to materialize while the Greek crisis did. But that was cheating.
August 8, 2011: Stop! You're Killing Me!:
I hear on the grapevine that some people are shocked, shocked I tell you, that I compared S&P to a murderer. Um, no. That’s the funniest thing I’ve heard since Niall Ferguson accused me, somewhere or other, of dismissing confidence as a “mere fairy”.
September 22, 2011: One Point Seven Seven:
That’s the current interest rate on 10-year US bonds. Remember, back in 2009 there was a big debate between people like me, who said that we were in a liquidity trap and that interest rates would stay low as long as the economy was depressed, and people like the WSJ editorial page and Niall Ferguson, who said that government borrowing would bring on the bond vigilantes and send rates soaring. How’s it going? And just to be clear: this isn’t just about I-told-you-so. We’re talking about different models, different visions of how the economy works. Their vision led to calls for austerity now now now; mine said that the overwhelming danger was that we wouldn’t provide enough stimulus, and that we would pull back too soon. Sure enough, we didn’t and we did. And now catastrophe looms.
December 18, 2011: Inflation Conspiracy Theories:
One response of inflation-fearers to the absence of the inflationary outburst they’ve been waiting for is to reject the numbers, and claim that the BLS is hiding a much higher rate of inflation than the official numbers say. You see that a fair bit in comments, and some credulous mainstream figures (i.e. Niall Ferguson) have also bought into this story. How do we know that it’s wrong? One answer is that people I know work with the BLS, and they really are doing the best they can. But that won’t convince the skeptics, since I am presumably also part of the conspiracy. Bwahahahaha…. We now have price measures calculated independently by people not in the government — in particular, the MIT Billion Prices Project. The BPP collects prices from the internet; this means that it’s not a perfect match for the consumer price index, which includes things such as services that are generally not sold online. But if inflation were much higher (or much lower) than reported, you’d expect to see a big divergence between the independent index and the official stats. But you don’t
December 19, 2011: Keynesophobia:
Dean Baker is once again justifiably mad at Robert Samuelson. It is indeed frustrating that after three years in which Keynesian predictions have been spectacularly correct, pundits insist on reading the evidence as a rejection of Keynes…. Go back to Niall Ferguson, or Brian Riedl, etc., and you’ll find confident assertions that all that government borrowing would send interest rates soaring. Go back to the likes of Allan Meltzer or the Austrians, and you’ll find confident predictions that all that money printing would cause an explosion of inflation. And just about everyone on the right bought into some version of the doctrine of expansionary austerity…. So what the anti-Keynesians are left with are the sovereign debt troubles in the euro area. But as many of us have tried to explain, these are really balance of payments crises exacerbated by the refusal of the ECB to act as lender of last resort. And bear this in mind: no country has driven itself into a debt crisis with stimulus — nor has any country with significant debt regained investor confidence through austerity.
Look, I know that many people can’t bring themselves to even consider the possibility that Keynes was right — or, for that matter, that I personally might have gotten anything right. But reality has been really clear here.
February 6, 2012: Anti-Keynesian Revisionism:
Hmm. A number of people who attacked Keynesian analysis vigorously seem to be in the process of backing off, which is good. But they also seem to be in the process of rewriting history, specifically the history of their own positions. So just a few notes about what actually happened. Niall Ferguson now says,
I think the issue here got a little confused, because Krugman wanted to portray me as a proponent of instant austerity, which I never was. My argument was that over ten years you have to have some credible plan to get back to fiscal balance because at some point you lose your credibility because on the present path, Congressional Budget Office figures make it clear, with every year the share of Federal tax revenues going to interest payments rises, there is a point after which it’s no longer credible. But I didn’t think that point was going to be this year or next year.
What he said then:
After all, $1.75 trillion is an awful lot of freshly minted treasuries to land on the bond market at a time of recession, and I still don’t quite know who is going to buy them. It’s certainly not going to be the Chinese. That worked fine in the good times, but what I call “Chimerica,” the marriage between China and America, is coming to an end. Maybe it’s going to end in a messy divorce. No, the problem is that only the Fed can buy these freshly minted treasuries, and there is going to be, I predict, in the weeks and months ahead, a very painful tug-of-war between our monetary policy and our fiscal policy as the markets realize just what a vast quantity of bonds are going to have to be absorbed by the financial system this year. That will tend to drive the price of the bonds down, and drive up interest rates, which will also have an effect on mortgage rates—the precise opposite of what Ben Bernanke is trying to achieve at the Fed.
Oh, and notice that his argument wasn’t about solvency at all.
John Cochrane now says,
This is all ridiculous, of course. No, I — and certainly Bob Lucas and Gene Fama — am not making the “Say’s law” fallacy. We all understand the difference between identities, budget constraints, and equilibrium conditions.
What he said then:
Every dollar of increased government spending must correspond to one less dollar of private spending. Jobs created by stimulus spending are offset by jobs lost from the decline in private spending. We can build roads instead of factories, but fiscal stimulus can’t help us to build more of both1 . This form of “crowding out” is just accounting, and doesn’t rest on any perceptions or behavioral assumptions.
And Tyler Cowen now says that he was making the case for New Keynesianism in a recent post that actually said:
The big winners, apart from the American public?: real business cycle theory.
Oh well. I guess we’ve always been at war with Eastasia.
June 26, 2012: Economics, Good and Bad:
Jonathan Portes… points out, the reality is that macroeconomics – at least as he and I practice it – has actually performed spectacularly in the crisis. Portes quotes a three-year-old piece from Niall Ferguson I mercifully missed, ridiculing me as the “man from Econ 101” who believed, foolishly, that huge government deficits could fail to raise interest rates in a depressed economy. Indeed, that is what Econ 101 said – and it has been completely right…. So Econ 101 has done just fine…. So why the sense that macroeconomics is a mess? I’d say that it’s essentially political. The type of macroeconomics Portes and I do offends conservative notions of how things are supposed to work in a capitalist society, so they reject the theory no matter how well it performs, and throw their support behind other views and other people no matter how badly they get it wrong.
August 19, 2012: Unethical Commentary, Newsweek Edition:
There are multiple errors and misrepresentations in Niall Ferguson’s cover story in Newsweek — I guess they don’t do fact-checking — but this is the one that jumped out at me. Ferguson says:
The president pledged that health-care reform would not add a cent to the deficit. But the CBO and the Joint Committee on Taxation now estimate that the insurance-coverage provisions of the ACA will have a net cost of close to $1.2 trillion over the 2012–22 period.
Readers are no doubt meant to interpret this as saying that CBO found that the Act will increase the deficit. But anyone who actually read, or even skimmed, the CBO report (pdf) knows that it found that the ACA would reduce, not increase, the deficit — because the insurance subsidies were fully paid for. Now, people on the right like to argue that the CBO was wrong. But that’s not the argument Ferguson is making — he is deliberately misleading readers, conveying the impression that the CBO had actually rejected Obama’s claim that health reform is deficit-neutral, when in fact the opposite is true…. We’re not talking about ideology or even economic analysis here — just a plain misrepresentation of the facts, with an august publication letting itself be used to misinform readers. The Times would require an abject correction if something like that slipped through. Will Newsweek?
August 21, 2012: Kinds Of Wrong:
Looking at the comments on my Niall Ferguson takedown (see Ezra Klein, Matthew O’Brien, James Fallows, and Noah Smith for more), I found my memory jogged about a point I’ve been meaning to make about the nature of error in economics…. [Readers] confuse three different notions of wrongness…. First, there’s the ordinary business of expressing a view about the economy that the reader disagrees with…. Second, and much less legitimate, is the kind of wrongness that involves making assertions that are logically or empirically indefensible. I’d put the Cochrane/Fama claims that government spending can’t increase demand as a matter of accounting in this category… economists who are wrong in this sense should pay a professional price. That said, I don’t think it’s realistic to expect the news media to be very effective at policing this kind of wrongness…. Matters are quite different when it comes to the third kind of wrongness: making or insinuating false claims about readily checkable facts. The case in point, of course, is Ferguson’s attempt to mislead readers into believing that the CBO had concluded that Obamacare increases the deficit. This was unethical on his part – but Newsweek is also at fault, because this is the sort of thing it could and should have refused to publish…. We know what Ferguson is going to do: he’s going to brazen it out, actually boasting about the deftness with which he misled his readers. But what is Newsweek going to do?
August 22, 2012: The Census Zombie Eats Another Brain:
Back in 2010 all the usual suspects were going on about how there had been a huge increase in federal employment under Obama. This was funny, for two reasons: it was all about temporary hiring for the Census, and the meme continued to be part of what everyone on the right knew, just knew, to be true long after the Census blip was over and federal employment was back below its level when Obama took office. Eventually, however, the thing vanished from the discussion, and I thought we’d hear no more about it. But guess who didn’t get the memo?For what it’s worth, in this case I don’t think we’re looking at a blatant attempt to mislead; I suspect that we’re just looking at raw ignorance.
September 4, 2012: Natural Born Recovery Killers:
Hmm. Brad DeLong finds Niall Ferguson touting a paper by William White (pdf) that I read as a desperate attempt to find some reason why we should be raising interest rates despite a deeply depressed economy and an absence of obvious inflationary pressure. Why the desperation? There’s a certain kind of central banker who just hates the idea of easy money; plus the desire to raise rates is closely identified with the political right. No surprise, then, that Ferguson likes the paper. But it doesn’t hang together — and Brad is right to get especially exercised over the attempted invocation of Knut Wicksell to support the call for higher rates. Wicksell was a pre-Keynesian macro theorist who offered a way to think about booms and slumps in terms of the difference between the market rate of interest and the “natural” rate, defined as the rate that would match desired saving and desired investment at full employment; there’s a boom when the market rate is below the natural rate, a slum when the reverse is true. This is actually a viewpoint quite consistent with IS-LM analysis...
February 14, 2013: More Marcoeconomics:
Matt O’Brien beats me to it: Marco Rubio’s SOTU response also included a shout-out to Say’s Law…. But some things have changed over these past four years. Back then, the Heritage guys, Niall Ferguson, etc. made a prediction: those government deficits supposedly competing for funds with business would send interest rates soaring. Instead they hit record lows. And we also have evidence on what happens when government try to slash deficits in a depressed economy. Here’s IMF data for all advanced countries, where austerity is measured by the change in the structural budget balance as a percentage of potential GDP: Contractionary policy has proved contractionary. So Rubio has embraced an economic doctrine that was fairly stupid to begin with, and has produced ludicrously wrong predictions these past four years; this on top of accepting a completely bogus story about how we got into this mess in the first place. The GOP’s savior!
February 19, 2013: Data, Stimulus, and Human Nature:
It would be lovely to live in a world in which the failure of interest rates to soar as predicted would lead Brian Riedl of Heritage and Niall Ferguson to concede that their anti-stimulus critiques of 2009 were based on a completely wrong model; in which the economic downturns that have followed austerity policies almost everywhere they have been applied would lead Alberto Alesina to concede that his work on expansionary austerity was probably flawed, and lead George Osborne to proclaim publicly that he led Britain down the wrong path. But such things very rarely happen, and the fact that they don’t happen has nothing to do with the limitations of data. Indeed, such things rarely happen even in fields of endeavor that are largely insulated from politics, and in which the ethos is supposed to reward objectivity over ego. Science, Max Planck declared, progresses funeral by funeral. If quantum mechanics needs to rely on mortality to prevail, how much more so must this be true of Keynesian macroeconomics?
That said, if you look at players in the macro debate who would not face huge personal and/or political penalties for admitting that they were wrong, you actually do see data having a considerable impact. Most notably, the IMF has responded to the actual experience of austerity by conceding that it was probably underestimating fiscal multipliers by a factor of about 3. So yes, it has been disappointing to see so many people sticking to their positions on fiscal policy despite overwhelming evidence that those positions are wrong. But the fault lies not in our data, but in ourselves.
February 19, 2013: A Qualified Apology to Niall Ferguson:
So, several people, including NF himself, have written in to say that Ferguson actually did concede that I was right about deficits and interest rates. Indeed he did; I missed it. Unfortunately, there’s a very disturbing aspect to this sort-of concession; even while admitting that he had been wrong, Ferguson completely misrepresented his own earlier position, in an attempt to make it sound more defensible. Here’s his 2012 version:
FERGUSON: I think the issue here got a little confused, because Krugman wanted to portray me as a proponent of instant austerity, which I never was. My argument was that over ten years you have to have some credible plan to get back to fiscal balance because at some point you lose your credibility because on the present path, Congressional Budget Office figures make it clear, with every year the share of Federal tax revenues going to interest payments rises, there is a point after which it’s no longer credible. But I didn’t think that point was going to be this year or next year.
But here’s what he actually said in our original 2009 debate:
You can’t be a monetarist and a Keynesian simultaneously—at least I can’t see how you can, because if the aim of the monetarist policy is to keep interest rates down, to keep liquidity high, the effect of the Keynesian policy must be to drive interest rates up. After all, $1.75 trillion is an awful lot of freshly minted treasuries to land on the bond market at a time of recession, and I still don’t quite know who is going to buy them. It’s certainly not going to be the Chinese. That worked fine in the good times, but what I call “Chimerica,” the marriage between China and America, is coming to an end. Maybe it’s going to end in a messy divorce. No, the problem is that only the Fed can buy these freshly minted treasuries, and there is going to be, I predict, in the weeks and months ahead, a very painful tug-of-war between our monetary policy and our fiscal policy as the markets realize just what a vast quantity of bonds are going to have to be absorbed by the financial system this year. That will tend to drive the price of the bonds down, and drive up interest rates, which will also have an effect on mortgage rates—the precise opposite of what Ben Bernanke is trying to achieve at the Fed.
Points, then, for intellectual flexibility — but major demerits for trying to flush one’s own past statements down the memory hole.
May 4, 2013: The Gods Themselves Contend In Vain:
Please tell me this report is false. Update: Credit where credit is due: Ferguson has made a full, unqualified apology.
May 8, 2013: There's Something About Maynard:
After his Keynesianism-is-gay remarks got him in trouble, Niall Ferguson did the right thing and offered a straightforward, no excuses apology. Unfortunately, it seems that he has reverted to type; sigh. But this does seem to call for an update on… the remarkable way in which the Great Recession… has unleashed a sort of reign of error among anti-Keynesian economists and pundits… [even] people with serious reputations either for research or for seemingly judicious commentary. Oh, and by “error” I don’t mean “views I disagree with”; I mean raw conceptual or empirical banana-peel episodes, the kind of thing that defenders of these men (who have a lot of defenders) try to justify not by claiming that they were right, but by claiming that they didn’t say what they did, in fact, say. Now, few have matched Ferguson’s awesome arc of inanity…. If I were Ferguson I guess I’d have to seek some kind of psychosexual explanation here. I would note that none of these guys has a beard. Masculinity issues?Anyway, it’s quite remarkable.
June 29, 2013: The Always-Wrong Club:
Aha. Floyd Norris reminds us of the 23-economist letter from 2010, warning of dire consequences — “currency debasement and inflation” — from quantitative easing. The signatories are kind of a who’s who of wrongness, ranging from Niall Ferguson to Amity Shlaes to John Taylor. And they were wrong again. But that won’t diminish their reputations on the right, even a bit…. Quite amazing.
July 3, 2013: Nobody Pays Any Attention To What I Say:
Or that’s what people keep telling me. Actually, one of the odd but revealing things about modern conservatives is the way they alternate between paranoia about the vast left-wing conspiracy and insistence that people who disagree with them are part of a tiny fringe with no real following…. Left-wing rag the Wall Street Journal has a new assessment… the top thinkers are: 1.Paul Krugman; 2. Joseph Stiglitz; 3. Bill Gates…. 12. Niall Ferguson….
Let me say, the fact that Joe Stiglitz is up there makes me more optimistic about the world…. The list isn’t just heavy on economists; it’s heavy on liberal economists… in an era of markets gone massively bad, conservative economists don’t have much to offer except excuses. Obviously it’s not completely one-sided; going down the list a bit further I see proof that PT Barnum was right. But still, interesting.
October 7, 2013: On Knowing What You Don't Know:
Brad DeLong catches Niall Ferguson making another whoopsie. And while chasing NF isn’t worth the effort for its own sake, I think there is a broader lesson… the importance of knowing what you don’t know…. Ferguson… tried to weigh in on monetary versus fiscal policy without understanding basic macroeconomics… critique official inflation numbers without knowing enough about that subject to tell the difference between the experts and the cranks… demonstrating, rather embarrassingly, that he doesn’t know how to read CBO reports. What I find amazing is the failure to learn the meta-lesson…. Knowing what you don’t know is very important.
Me? I look at all 5000 words of this, and my conclusion is straightforward:
The problem is that Krugman has been insufficiently frank about Niall Ferguson. He has pulled too many punches. He has been too civil in responding to someone whose comment on Krugman's pleas for a moderate Keynesianism, for the government to spend to pick up some of slack and reduce unemployment, was "Well, if you want to try the Soviet model!"
For example, on December 8, 2011, Krugman merely calls Ferguson "credulous".
A fairer and more accurate description of Niall Ferguson's Newsweek inflation column is Josh Barro's. Josh Barro characterized it in National Review as "bizarre". And even that was, as Josh Barro reflects, a "far more charitable response than such an asinine column deserved".
Here is Ferguson's column, in all of its asininity:
The Great Inflation of the 2010s:
“I can’t eat an iPad.” This could go down in history as the line that launched the great inflation of the 2010s.
Back in March, the president of the New York Federal Reserve, William Dudley, was trying to explain to the citizens of Queens, N.Y., why they had no cause to worry about inflation. Dudley, a former chief economist at Goldman Sachs, put it this way: “Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful. You have to look at the prices of all things.” Quick as a flash came a voice from the audience: “I can’t eat an iPad.”
Dudley’s boss, Ben Bernanke, was more tactful in his first-ever press conference on Wednesday of last week. But he didn’t succeed in narrowing the gap between the Fed’s view of inflation and the public’s.
I respect Bernanke. As an expert on the financial history of the 1930s, he was one of the very few people in power back in 2008 who grasped how close we were to another Great Depression. But if we’ve avoided rerunning the 1930s only to end up with a repeat of the 1970s, the public will judge him to have failed.