Living in a World of Idiots

You should never take psychological tests as a parlor game.  I was with some friends and when they got to the analysis of my answers the scoring guide said- “How does it feel to live in a world full of idiots?”

Smuggish Thoughts (Self-indulgent)

Paul Krugman, The New York Times

October 12, 2012, 1:40 pm

It is a truth not universally acknowledged that it’s possible to be a highly successful academic and still have a somewhat fragile sense of self-worth. You get your papers published, you get tenure, maybe you win some prizes; all this says that your colleagues believe that your stuff is right, that you really do know something about your subject. But do you really? Or are you just good at self-marketing?

Some, maybe many, academics don’t care; they’ve carved out a nice career and life, so it’s all good. But if you are truly serious about your work as opposed to your career, the question of whether your knowledge is real is always with you.

…

‘ve had a wonderful career, getting all the major gongs, yet as late as 2008 it was still possible for that small self-doubting voice in my head to whisper that being a facile modeler and a pretty good writer might not mean that I really knew how the world works.

…

Well, events provided an acid test. If you believed in the little models I and others were using, you made some very striking predictions about how the world would work post-crisis – predictions that were very much at odds with what other people were saying. You predicted that trillion-dollar deficits would not drive up interest rates; that tripling the monetary base would not be inflationary; that cuts in government spending, rather than helping the economy by increasing confidence, would hurt by depressing demand, with bigger effects than in normal, non-liquidity trap times.

And the people on the other side of these issues weren’t just academics, they were major-league policy makers and famous investors.

And guess what: the models seem to work. It appears that I wasn’t just a successful self-marketer, that I really did and do know something.

So that’s great – except that it turns out that one form of anxiety has just been replaced with another. It’s great to have confirmation that you weren’t just playing career games; it is, however, not just frustrating but terrifying to watch decision-makers ignore all the hard-won evidence and knowledge, and repeat the mistakes of the 1930s. The good news is that I’m not Sammy Glick; the bad news is that I’m Cassandra.

Triumph of the Wrong?

By PAUL KRUGMAN, The New York Times

Published: October 11, 2012

The latest devastating demonstration of that wrongness comes from the International Monetary Fund, which has just released its World Economic Outlook, a report combining short-term prediction with insightful economic analysis. This report is a grim and disturbing document, telling us that the world economy is doing significantly worse than expected, with rising risks of global recession. But the report isn’t just downbeat; it contains a careful analysis of the reasons things are going so badly. And what this analysis concludes is that a disproportionate share of the bad news is coming from countries pursuing the kind of austerity policies Republicans want to impose on America.

O.K., it doesn’t say that in so many words. What the report actually says is: “Activity over the past few years has disappointed more in economies with more aggressive fiscal consolidation plans.” But that amounts to the same thing.

For leading Republicans have very much tied themselves to the view that slashing spending in a depressed economy – “fiscal consolidation,” in I.M.F.-speak – is good, not bad, for job creation. Soon after the midterm elections, the new Republican majority in the House of Representatives issued a manifesto on economic policy – titled, “Spend less, owe less, grow the economy” – that called for deep spending cuts right away and pooh-poohed the whole notion that fiscal consolidation (yes, it used the same term) might deepen the economy’s slump. “Non-Keynesian effects,” the manifesto declared, would make everything all right.

Well, that turns out not to be remotely true. What the monetary fund shows is that the countries pursing the biggest spending cuts are also the countries that have experienced the deepest economic slumps. Indeed, the evidence suggests that in brushing aside the standard view that spending cuts hurt the economy in the short run, the G.O.P. got it exactly wrong. Recent spending cuts appear to have done even more harm than most analysts – including those at the I.M.F. itself – expected.

Which brings us to the question of what form economic policies will take after the election.

…

Republicans, however, are committed to an economic doctrine that has proved false, indeed disastrous, in other countries. Nor are they likely to change their views in the light of experience. After all, facts haven’t gotten in the way of Republican orthodoxy on any other aspect of economic policy. The party remains opposed to effective financial regulation despite the catastrophe of 2008; it remains obsessed with the dangers of inflation despite years of false alarms. So it’s not likely to give up its politically convenient views about job creation.

And here is where Herr Doktor Professor makes what lambert strether calls a “category error”.  Everything he says about Republicans is equally true of Barack Obama and the Democrats.