Atlas Shrugged: The Mocking

Monday, August 29, 2011

Mysteries Of The Universe


People always have a reason for their actions; it might be trivial or deeply buried but it always exists. Perhaps their choice flatters the ego, hides a fault or mistakes, advances an agenda, eases anxiety, or merely gives a moment of pleasure. Whatever the motivation, people make choices and decisions based on needs, wants and fears. Illogical and self-harming actions are only inexplicable to those who do not know the individual's motivation.

Megan McArdle announces Alan Krueger appointment to the president's Council of Economic Advisers and gives him her tentative approval. In the past, McArdle has spoken out against almost everything Krueger has supported and it's a little difficult to understand why McArdle is making one of her rare diversions from the economic elite's dogma.

It's also no bad thing that we have a labor economist at the CEA right now, when our failure to create jobs for the standing army of the unemployed is by far our biggest problem. It's not that I think there's some magical program for re-employing everyone that has been hitherto overlooked because the CEA didn't have Alan Krueger on hand (I'm sure Austan Goolsbee could--and did--get him on the phone any time he wanted.) But on the margin, it matters that someone who has spent much of his career studying labor market outcomes will be dedicating the next few years to helping the president devise economic policy. When issues come up, his mind will naturally see the repercussion for jobs. And that's exactly the focus we should have right now.
Krueger is a labor economist, which automatically would put him on the wrong side of the indivisible line between labor (boo!) and capital (yay!) that McArdle has erected in her brain. She disliked the cash for clunkers program, which Kruegar worked on, and has spoken dismissively of supporters of increasing the minimum wage, saying they are confined to "movement think tanks" and "marginal academics." Kruger co-wrote a well-known study that showed increasing minimum wage did not increase unemployment.

We only have one or two small clues that might help us solve the riddle of the inner workings of McArdle's brain.

On other fronts, I think Krueger is an excellent choice. I've heard him speak in a number of off-the-record sessions, and I don't think that anyone is going to be mad at me for revealing that he was extremely impressive, with a grasp of labor market economics that seems to this non-economist both encyclopedic, and very nuanced. He's also very good at explaining those distinctions in a way that makes sense.
Perhaps McArdle merely parroted the thumbs-up that Tyler Cowen gave Krueger. Or maybe it's just that McArdle is a sucker for power, and if she has basked in the glow of an important person she is theirs forever. Austan Goolesbee is far too liberal for McArdle's acceptance under ordinary circumstances but she was a student of his and knowing that she has been that close to power is utterly intoxicating to her. One cocktail party convinced her that David Koch was a rilly great man who never could have done something so underhanded as to bankroll and organize the supposed grass-root tea parties.

We will probably find out the reason in due time, as McArdle's commenters take to the inadvertent bait like sharks to chum, irate that she would support an Obama hire when everyone knows that the best government is no government (at least in between hurricane recovery and relief efforts).

13 comments:

Ken Houghton said...

"a grasp of labor market economics that seems to this non-economist both encyclopedic, and very nuanced. He's also very good at explaining those distinctions in a way that makes sense."

She admits it.

All right, which regular here (or at FMM, may it rest in peace) broke into McMegan's Atlantic account and posted this piece?

ifthethunderdontgetya™³²®© said...

I used my mind control waves, Ken.

But now I feel incapacitated...
~

Mr.Wonderful said...

He's also very good at explaining those distinctions in a way that makes sense.

How nice. Whereas Megs herself so often can't be bothered to explain anything, but rather occupies herself with announcing her opinions as she sprays the audience with jargon.

Batocchio said...

It's not that I think there's some magical program for re-employing everyone that has been hitherto overlooked...

It's called the fucking New Deal (contemporary version thereof). Maybe McMegan has heard of the original, classic version?

Okay, there's more to McArdle's sentence, but the biggest problem facing America is the vortex of stupid-evil-crazy consuming all policy debates and the entire Republican Party (plus some Dems). The problem isn't that folks don't have good ideas and effective policies. The problem is that Megan and her brood fight against those with every fiber of their Galtian beings.

Myles said...

It's called the fucking New Deal (contemporary version thereof).

The New Deal was an economic failure. Look at US GDP numbers from 1930 to 1940.

In any case, one of the shittier things about the New Deal is the conflation in people's minds between fiscal stimuli (which are effective) and make-work programs. Ideally, fiscal stimuli should operate invisibly and automatically, and the public should not have any sense of its separate existence. Automatic stabilizers, for example. Payroll tax moratoriums, for another.

The more the public are actually aware of fiscal stimuli the less effective it is.

CLBetley said...

To avoid any mistaken assumptions about Myles' veracity: http://www.census.gov/statab/hist/HS-32.pdf shows US GDP grew annually from 1934 to 1940 between 5 and 13% in real terms, but for 1938, when it fell 3.5% following an ill-advised and well-debated turn to austerity.

It's your cite, Myles.

Ben Wolf said...

Despite his press, Krueger has done little work in mass unemployment and is not really "pro labor". He has advocated cutting the social safety net in the past and will continue to do so as a member of team Obama. His sole purpose is as a sop to liberals which, given his track record, will be purely cosmetic.

Myles said...

It's your cite, Myles.

What's the GDP level in 1940 (or 1939, given purchase by Britain of American armaments) as compared to 1930?

Anonymous said...

"Megan McArdle announces Alan Krueger appointment to the president's Council of Economic Advisers and gives him her tentative approval."

Well, I guess that settles it. If the business and economics editor of the Atlantic says it's okay, then I'm sure Boehner, McConnell and all the other fucksticks in the GOP will just wave their withered old white man hands and let the guy through!

-AWS

Myles said...

Well, I guess that settles it. If the business and economics editor of the Atlantic says it's okay, then I'm sure Boehner, McConnell and all the other fucksticks in the GOP will just wave their withered old white man hands and let the guy through!

Personally, I think Brad DeLong should be appointed to the Fed.

The basic problem for sane econ people in relation to politics is how to separate countercyclical fiscal stimulus and unconventional monetary policy from left-wing politics (given the problematic bundling effect with things like WPA, and given the pretty understandable unwillingness of conservatives to support unconventional fiscal and monetary policy otherwise). DeLong is someone who goes for serious unconventional policy without having the left-wing politics baggage.

You don't want it to be the case where the most vocal spokespeople for unconventional policy are loons and cranks like Jamie Galbraith or Hudson or Ha-Joong Chang or whoever is the crank-of-the-day. That both decreases the credibility of unconventional policy and increases the credibility of the loons' other (more idiotic) ideas.

Substance McGravitas said...

if she has basked in the glow of an important person she is theirs forever

There you go. It's a proximity thing.

Batocchio said...

Okay, I'll play along, at least this once. I won't use live links to try to avoid running afoul of Blogger twitchiness.

CLBetley has already linked the GDP data, which as CL notes, doesn't support Myles' claims. Moreover, while GDP is certainly important, it's hardly the only important economic factor. Jobs are kinda crucial, especially to those who are struggling. (Meanwhile, in our current era, most economic gains are funneled to a tiny few, and income and wealth inequity shouldn't be ignored.) Let's recall: McMegan was specifically claiming that there wasn't "some magical program for re-employing everyone that has been hitherto overlooked." Yet again – sure there was/is, the New Deal (or contemporary version thereof). The historical one absolutely lowered unemployment. McMegan is wrong or disingenuous as usual; it's not that such policies don't exist or don't work, it's just that she and her ilk don't support them. (Not coincidentally, New Deal jobs and projects helped spur some economic growth.) The Wikipedia entry on the Great Depression is decent but not great, but does provide some charts on unemployment and GDP:

http://en.wikipedia.org/wiki/Great_depression

If you want to argue the New Deal wasn't great for some other reasons, fine, although it's not a convincing sell, but stay on point: acknowledge that it significantly reduced unemployment. Some conservative hacks (Amity Schlaes) have tried to argue otherwise (more on that below) but it's a preposterous claim.

Moving on to broader context, and another CL point, there are many articles on the mistake of 1937 – cutting back on the New Deal – but this one by David Woolner is pretty good:

http://www.salon.com/news/politics/war_room/2011/08/04/obama_keynes_fdr

Demand, baby. FDR took office in March 1933, and his policies proved much more effective than Hoover's. Roughly speaking, the New Deal was extremely helpful but insufficient (FDR resisted going further); full recovery wasn't achieved until higher WWII spending kicked in. Paul Krugman has explained these dynamics countless times, and that non-military spending can do the same trick. Christina Romer and Krugman recently explained this:

http://www.nytimes.com/2011/08/14/business/economy/from-world-war-ii-economic-lessons-for-today.html?_r=2&pagewanted=print&pagewanted=all

http://krugman.blogs.nytimes.com/2011/08/15/oh-what-a-lovely-war/

(Cont.)

Batocchio said...

(Cont.)

Okay, final stretch. (BTW, it appears the links can be copied and pasted even if they don't fully display on the screen.) Eric Rauschway's written quite a bit on the Great Depression and the New Deal. These posts are bit older, but he gives a good overview here, and critiques conservative New Deal foes Grover Norquist and Amity Shlaes:

http://www.slate.com/id/2169744/pagenum/all

Rauschway has done further debunking along these lines, and in this series, McMegan makes an appearance – and you'll be shocked to learn she attacked the New Deal and was wrong yet again:

http://edgeofthewest.wordpress.com/2008/10/10/very-short-reading-list-unemployment-in-the-1930s/

http://edgeofthewest.wordpress.com/2008/11/06/stop-lying-about-roosevelts-record/

http://edgeofthewest.wordpress.com/2008/11/07/when-is-it-lying/

Finally, Lance Mannion makes some good, related points in "The Invisibles":

http://lancemannion.typepad.com/lance_mannion/2009/02/the-invisibles.html

I imagine the non-Myles readers know most of this stuff already, and perhaps Myles does, too, and just chooses to ignore it. Night, all. Cheers.