Misinformation Transcends Borders

So Jonathan Chait’s recent takedown of denialism about Obamacare’s success is well done, but not all that distinctive (read his New York magazine article here: nym.ag/1BRjVSf). What Mr. Chait does put his finger on, however, is another aspect of the “debate” (it doesn’t really deserve to be dignified with that term): reliance not on substantive arguments about policy, but on public perceptions. In the case of health care reform, this amounts to the assertion that Obamacare has failed because many Americans continue to believe opponents’ lies.

This is a cheap, dishonest way to argue — but it’s also very widely used, and not just by the right in the United States. I’m doing some work on the austerity debate in Britain, and what’s striking to me is how crucial a role this kind of argument from perception plays in the economist Simon Wren-Lewis’s discussions of “mediamacro” (see his blog here).

Consider, as a prominent example, when The Financial Times published an editorial in 2013 declaring that austerity was vindicated. At no point did the editorial actually take on the economics. Instead, it declared that Chancellor of the Exchequer George Osborne “has won the political argument,” and dismissed actual economic analysis (a resumption of growth when fiscal consolidation pauses is exactly what you should expect) as too complicated for the voters, bless their pretty little heads.

Let’s be clear about the bad faith this involves. It’s perfectly O.K. to point out that elections seem to turn on the recent rate of growth rather than on a true assessment of economic performance. What’s not O.K. is blurring the distinction between that kind of political analysis and a real analysis of how a given policy works. And when people do that kind of blurring to make the case for a policy they prefer, it’s deeply sleazy, no matter who they are.

Economics of Love

Not love as in romance, but love as in the tennis score, meaning zero. The economists Stephen Cecchetti and Kermit Schoenholtz argue in their blog (here) that “zero matters” in macroeconomics; specifically, both the zero almost-lower bound on interest rates and downward wage rigidity make the case that deflation, or for that matter very low inflation, is a bad thing.

Just to note: This is exactly the point I’ve made a number of times. I’m not complaining here — many people have made this point, and we need them to keep making it.
The message instead is for those people who imagine that the macroeconomics I write about is somehow way out there on the left. In reality, I’m almost depressingly mainstream.
In fact, it’s the folks on the other side of these debates who are showing lots of creativity, coming up with novel and innovative arguments about why we should do stupid things.