Strawman vs. Krugman

We really don't need another post stating that Megan McArdle set up a strawman and knocked it down again because she couldn't stand to see praise of Paul Krugman. (A study of pundit predictions demonstrated that almost all of Krugman's predictions during a one year time period were correct.) While I admire single-minded persecution of a target, she's just embarrassing herself.

But there was a very interesting passage in the paper McArdle purported to refute.

While initially investigating whether higher levels of education and experience correspond to higher predictive accuracy, [Philip] Tetlock ultimately concluded that cognitive style was the most important influence on prediction accuracy. Using the framework derived from Isaiah Berlin’s essay The Hedgehog and the Fox that “hedgehogs know one big thing; foxes know many things, (Berlin, 3)” Tetlock separated experts into two groups with competing cognitive approaches to prediction and found “the hedgehog-fox dimension did what none of the other traits did: distinguish more accurate forecasters from less accurate ones in both economics and politics” (Begley, 45).

According to Tetlock, there are clear differences between hedgehogs and foxes. Hedgehogs “know one big thing” and “apply that one thing everywhere,” express “supreme confidence in their forecasts, dismiss opposing views and are drawn to top-down arguments deduced from that Big Idea”; they “seek certainty and closure, dismiss information that undercuts their preconceptions and embrace evidence that reinforces them” (Begley, 45). Foxes “consider competing views, make bottom-up inductive arguments from an array of facts, doubt the power of Big Ideas” and “are cognitively flexible, modest and open to self-criticism” (Begley, 45). Ultimately, “what experts think matters far less than how they think: their cognitive style” (Begley, 45). Tetlock found that foxes outperform hedgehogs in prediction accuracy in virtually all fields, across all time periods, and across the various levels of expertise.

Expert Political Judgment also considers two types of general skepticism found in theoretical literature about prognostication. Tetlock mentions both radical skepticism, which is the belief that nobody knows anything, and ontological skepticism, the idea that the nature of the world is unpredictable. Both are ideas well illustrated by Rick Perlstein, a contributor to The Nation. Perlstein’s disbelief in and distaste for prognosticators stems from a blend of radical and ontological skepticism. Perlstein’s article “Pundits Who Predict the Future are Always Wrong” goes so far as to “call punditry a sin” (Perlstein, 12). Perlstein dismisses forecasting because of ontological skepticism, alleging “history does not repeat itself, nor does it unfold in cycles” (Perlstein, 13). Not
only does Perlstein claim “there’s nothing you can really know about the future at all,” he warns that “to pretend therwise is an insult to democracy” (Perlstein). Appealing to radical skepticism and criticizing conventional wisdom, Perlstein concludes that political prognostication “blinds us to the only actual, ineluctable reality--that no one knows what the future holds” (Perlstein, 11).

As I outlined here, McArdle analyzes based on ideology, not facts, and therefore is often wrong since her ideology is often wrong. McArdle frequently states that everything is too hard and nobody can know anything ever, which is not a surprising attitude in someone who accepts facts that fit her preconceived notions and dismisses facts that do not. How can you insist you are always right when the lying facts show you are not? How can anyone trust anything?? If the facts are right than the ideology is wrong, and the ideology cannot be wrong. For most people, their ideology is based on their emotional needs and to deny their ideology is to deny them--their value and values, their feelings and thoughts.

McArdle's commenters smell blood in the water and are exceptionally rude to the young study author who responds with civility in the comments. Neither they nor McArdle care as much about accuracy as they care about destroying anything that mars their perfect ideology, their perfect fantasy world.

Give Me Her Medicare

Over the past few years Megan Jane McGalt has gone Full Metal Wingnut. It's not overt because FMW is lower class and Jane Galt wouldn't be caught dead with the lower classes unless she was given the opportunity to personally snatch their Medicare from their aged hands. Just as she wouldn't be caught dead praising Atlas Shrugged, which has been heavily criticized by the intelligentsia. But Miss McGalt drops small hints by tweeting what and whom she's been reading--far right wingnut activists who are too embarrassing to discuss elsewhere. For instance, here she is linking to Michelle Malkin in reference to Paul Krugman. McArdle often attacks Krugman and has been doing so for a decade; right now she is most incensed by his criticism of her Galtian hero, Paul Ryan, Ayn Rand devotee and Destroyer Of Medicare.

I found it very odd to see Paul Krugman complaining that "patients are not consumers" as if "consumer" were some sort of horrible, low-status role that should never taint the sacred realm of health care. In my economics classes, "consumer" was not a value judgement; it was a descriptor.

Jane McGalt starts off by twisting the truth (of course), calling Krugman's criticisms "complaints" and implying that he is making a value judgement on consumers. Miss McGalt also establishes that she is Fair-n-Balanced by setting herself up as impartial, sticking to definitions instead of emotional arguments like that emotional Mr. Krugman.

So I was a bit befuddled to see an economist arguing that "The idea that all this can be reduced to money -- that doctors are just "providers" selling services to health care "consumers" -- is, well, sickening."

Let's see what Mr. Krugman actually said.

Last week, The New York Times reported on congressional backlash against the Independent Payment Advisory Board, a key part of efforts to rein in health care costs.

But something struck me as I looked at Republican arguments against the board, which hinge on the notion that what we really need to do is to "make government health care programs more responsive to consumer choice."

How did it become normal to refer to medical patients as "consumers"? The relationship between patient and doctor used to be considered something special. Now politicians and supposed reformers talk about the act of receiving care as if it were no different from buying a car. What has gone wrong with us?

[snip]

"Consumer-based" medicine has been a bust everywhere it has been tried. Medicare Advantage was supposed to save money; it ended up costing substantially more than traditional Medicare. America has the most "consumer-driven" health care system in the advanced world. It also has by far the highest costs yet provides a quality of care no better than far cheaper systems in other countries.

But the fact that Republicans are demanding that we stake our health on a failed approach is only part of what's wrong. As I said earlier, there's something wrong with the whole notion of patients as "consumers" and health care as simply a financial transaction.

Medical care, after all, is an area in which crucial decisions must be made. Yet making such decisions intelligently requires a vast amount of specialized knowledge.

Furthermore, those decisions often must be made under conditions in which the patient is incapacitated, under severe stress or needs action immediately, with no time for discussion, let alone comparison shopping.

The idea that all this can be reduced to money — that doctors are just "providers" selling services to health care "consumers" — is, well, sickening. And the prevalence of this kind of language is a sign that something has gone very wrong not just with this discussion, but with our society's values.

Obtaining medical care is not like buying a car. There is often no time to do research and many people wouldn't understand the technical details or be able to determine the best course to take if they did have the time. The patient might not even been able to make any decisions at that point. Iit is immoral to ignore reality and pretend that medical care is like any other consumer transaction.

This semantic moralizing takes away from what I do think is the core argument between the partisans of the "Peoples' Budget" and the advocates of Ryan's Medicare voucher plan: whether consumers patients, or a central committee (IPAB) should be in charge of deciding what to do with limited health care resources.

The individual should decide what he can and can't pay for instead of the government because "choice" is a magic word that will automatically lead to less spending on health care, and if people fight their insurance companies one-by-one, they are much more likely to get better coverage than Medicare provides. Which is why everyone is dying to get rid of Medicare.

Paul Krugman, unsurprisingly, is against putting consumers in control: [snipped quote]

The statistics with which he opens are dubious: Medicare Advantage is more expensive because it provides more benefits, and the US isn't even close to being the leader in consumer-driven medicine, if by that you mean cost-sharing and purchasing decisions; in the rich world, that would almost certainly be Switzerland, where consumers patients not only pay heavily out of pocket, but purchase their own insurance, as both Kaiser and Cato will tell you.

Notice the bait and switch. We go from "should patients be treated as consumers" to "which country is more consumer based," an irrelevant question.

But though Krugman may be wrong about how consumer-driven our system is, he's not wrong that this is a core conflict. Nor do I think he's wrong that patients will frequently decide wrong. Where Krugman and I differ is that I don't think that centralized rule making is going to do such a super job either, for two reasons.

There it is again; another Jane Galt Socialist Dog-Whistle (TM).

The first is that providers and patients are going to fight cuts with every fiber of their being, and they will find it easier to fight on individual procedures than on increasing the size of the health care voucher; the former is not very expensive for any given procedure, while the latter is a large, obvious whack in the pocketbook for taxpayers. Think of how easy it has been for oxygen providers to keep their Medicare reimbursements--and how hard it was to pass a new health care entitlement.

People do not want to be thrown on the tender mercies of health insurance companies. The want to stick with Medicare and find a way to solve its problems instead of throwing it away.

But the second is that while consumers may be stupid, rules are often stupid too. Evidence-based medicine is certainly a good idea, but we are nowhere near being able to generate solid rules that a) cover all major possibilities and b) provide the highest chance of survival for the money. People are incredibly complicated. This makes outcomes hard to measure--and solid guidelines hard to develop.

"People are complicated." Tell that to a room of seniors who need Medicare. Everything is too hard, nobody can do anything ever, blah blah. McGalt sounds more like a socialist loser than a Galtian Overlord.

[yip yip yip]

But even if we had the kind of data we'd need to develop a comprehensive set of rules, the problem remains: rules are stupid. You need to leave room for individual discretion. And individual discretion on the part of doctors and hospitals is a loophole you could drive a truck through.

That's why we need more regulation, not why we need to get rid of Medicare.

Nor do I think the possibility of reducing costs through individual discretion is quite as impossible as Krugman makes things sound. Sure, a lot of decisions are life-or-death last minute things. But a lot of them aren't. They're questions like, "Do we send grandma to a nursing home, or try to keep her in the spare bedroom with the help of a home health-care aide?" Or "I've got stage four breast cancer with bone metastes [sic]; should I really mortgage the house to try another round of chemo?"

Does she ever listen to herself? Does she ever wonder what it would be like to have to worry about mortgaging your house to pay for your mother's chemotherapy?

It's all very well to say that people shouldn't have to make those decisions on the basis of money. But that's all the government is going to do.

Sure, there are some procedures that people just shouldn't have (like a lot of back surgery). But a lot of this is value judgements: hip replacements for elderly patients, expensive chemotherapy that may extend life by a few months, more convenient dosing schedules or better side-effect profiles for brand name drugs. Unless we simply rely on across-the-board reimbursement cuts--which would be moronic on every level--the government is mostly not going to be deciding which treatments are effective; it's going to be deciding which treatments are cost-effective. We haven't taken doctors out of the business of selling health care to patients; we've just added a middleman.

McGalt doesn't discuss how to solve our Medicare funding problems, she doesn't discuss cutting the military, she doesn't discuss raising taxes, she just tells us that we have to have vouchers or we'll die, when we all know damn well that taking the government out of healthcare for seniors will just be adding another middleman, the insurance companies.

Now, maybe you think that the government is smarter than the consumers it's speaking for. But how does the government know what you value most: an extra three months of life when you have cancer, or an extra five years of walking after age 89, or an extra $4,000 right now?

Health care as a game show. Nice.

I think that people who favor a central board probably put more faith in technocrats than I do, but also, that they are horrified by the specificity of the choices. They're comfortable making decisions about who lives or who dies when the people in those decisions are just decimal points in an aggregate statistic. But they find it horrifying that anyone--particularly the patient--should have to make that decision about a specific person.

But to me, they're not really that different. All those decimal points are people too. And it's just as heart-rending when they suffer or die.

Yeah, right, she has a bleeding heart.

It's in a wooden casket on her dresser.

Do Your Own Homework

Megan McArdle respectfully notes Paul Krugman's discussion of the paradox of thrift--the more people save because of the bad economy, the worse the economy gets because of lack of spending. Megan asks:

What does this mean for the stimulative effects of tax cuts, transfer payments, or any other kind of government spending? What does it mean for the savings rate--savings could conceivably go up as a fraction of income at the same time it goes down in absolute terms. I don't know--I'm not even sure how we could know. Has any other country ever had this level of personal debt before?

Gosh, Megan, I don't know. Why don't you look it up, do some thinking, and blog about it, instead of asking us? Isn't that your job?

We are being led by children. [Correction--We were being led by children. Now it's time to get rid of the rest of the Bush croud.]

All Ideology, All The Time

Let's begin at the beginning Megan McArdle on Paul Krugman's correction of her work:

Paul Krugman clarifies his point about temporary versus permanent spending [Cowen quote.]

Etc. I covered this here. It is yet another example of McArdle's manipulations, both subtle and sledge-hammer, to evade responsibility for her words.

I quake to take on a Nobel-Prize winning economist, so perhaps I should call these my misunderstandings of, rather than my problems with, the post.

Perhaps you should, since you can't claim Krugman misunderstood or misinterpreted you, as you often do with your critics. However in the past you certainly did not quake to criticize Krugman:

Krugman also thought we might be about to get into a recession several earlier times, when I was more skeptical; in that sense, I called it better than he did. My care about calling a recession earlier in the year was not because I thought the economy was in fine fettle. Rather, it was because Britain had, against all theory, dodged a recession despite a popping housing bubble even more impressive than ours. This even though they'd gone more than a decade without one. Having watched the British economy in my professional capacity for most of the current decade, I'd seen it declared on the verge of recession multiple times by various commenters, for what seemed like good and sound reasons; nonetheless, it never quite went there. This made me somewhat cautious about proclaiming that a recession was inevitable based on our fundamentals.

Paul Krugman is voting for doom. It's worth keeping in mind, however, that Paul Krugman has predicted eight of the last none recessions under the Bush administration.

Unlike other popularisers, such as Paul Krugman, whose best popular work (such as Pop Internationalism) focused on his own field, what Mr Friedman is known for within the academy is completely different from what has made him famous outside it, which is possibly why liberals tend to classify him with Mr Galbraith. Mr Friedman has done more than possibly any other economist to advance the cause of free markets. But that is not his only contribution; perhaps it is not even his largest. Anyone who would compare the Nobel prize-winner to JKG as an economist can only have a gaping hole in their economic education.

This is a good one, considering the circumstances. It's long but worth it.

I've made no secret of the fact that I'm not over-fond of Paul Krugman's NewYork Times column. I don't hate it on ideological grounds; I hate it for reasons
of economic efficiency. Surely we have better uses for our nation's tiny stock of really smart economists, than using one to write 1400 words a week proving that the Bush administration is at the root of every single bad thing that ever happens in the world?

I don't blame Mr Krugman entirely. For one thing, it is Mr Bush's fault for getting elected; if you read through Mr Krugman's 2000 columns, it is clear that this event unhinged him. The slow decline starts in the summer of 2000, and by Jan 1, Mr Krugman has been transformed from Dr Jekyll, the economist who wrote so elegantly and eloquently on issues like trade and productivity, into Mr Hyde, the economist who thinks that his PhD somehow elevates his poorly researched forays into politics and international affairs into something worth reading, and who hates the Bush administration so much that no crime is too ludicrous to accuse them of--including forcing the outgoing president of Indonesia into making anti-semitic remarks.

For another, the medium is a poor one for anything weightier than Maureen Dowd's fluff. (I don't particularly enjoy said fluff, myself, but it is sufficiently vacuous that the time and space constraints do it no damage.) Writing twice a week is too heavy a burden for a columnist, particularly one with a day job. 700 words is
far too short to say anything interesting or meaningful about economics. And Mr
Krugman has had his column for going on six years, which is too long. One gets
the sense that he keeps repeating "I hate George Bush" because he has long ago
exhausted his supply of insight.

I also think that the venue is reinforcing Mr Krugman's already noticeable tendencies towards paranoia and savage assaults on those who disagree with him. Now, all political administrations can use a few good savage assaults. But the ratio of savagery to sense is getting rather top-heavy. And the New York Times reinforces this
tendency, because its readership is so heavily weighted towards coastal liberals
who really, really hate George Bush. They encourage Mr Krugman in his spleen, which can't be good for his personal development. A little time off, in a nice ashram, would not be amiss.

But who could replace him? My candidate is Austan Goolsbee, one of my most favoritest professors from the University of Chicago. He's a die-hard Democrat (advised the Kerry campaign), super smart, and did I mention he's from the University of Chicago? Plus he's early in his pundit career so he's got lots of ideas, and he's of the funny, rather than savage, school of economic argument. Let's start a write-in campaign to get Mr Goolsbee the recognition he deserves, and give Mr Krugman a well-earned vacation.

Following those Chicago boys and Milton Freeman, and Randian Alan Greenspan, has brought us to this most unfortunate point. Not that McArdle would admit any such thing. And this must be a example of the wit for which McArdle is so famous--calling Prof. Krugman savage, full of spleen, paranoid, and poorly reasoning, especially about foreign policy. (This would also be a good place to mention how McArdle didn't even know the prisoners in Guantanamo weren't tried by the UCMJ while she was pontificating about them, and had to be corrected by Glenn Greenwald.)

And it's nice to know that McArdle would never take that piece of fluff job writing about economics for the New York Times. Never, never, never.

I took some flak on liberal blogs for pointing out that Paul Krugman has been the voice of doom on the economy for nigh on a decade. But there was good reason to think that there might be a recession, my critics cried.

Here's the problem. What's the one time that Paul Krugman didn't forecast a recession? That would be when we actually had a recession. It just wasn't a recession that could be blamed on George Bush.

Ygglz misunderstands me; I didn't say that Paul Krugman never writes about economics; only that he has squandered a comparative and absolute advantage in writing extraordinary economics columns, in order to write not particularly interesting political columns that get taken seriously largely because he's a Very Important Economist. Even when he writes about things like health care, it's far too light on the economics, and far too heavy on the "Why do Republicans want babies to die?" rhetoric I could read from any 23-year old lit major interning at a left-wing political magazine. And when he writes about things outside his field, he makes what are (I am told) elementary mistakes on things like foreign policy, while his writing rarely reveals anything new. I don't devote my time to hating him, or anything; it's just that I wish he would write more novel an interesting things.

I'm with Felix Salmon--Paul Krugman's unequivocal declaration that this is an insolvency problem seems borderline irresponsible. What insight does a Princeton trade economist have into bank balance sheets that almost all other observers lack? I'm not near Wall Street any more, so take this for what it's worth, but what I'm hearing is indignation that JP Morgan and the Fed got such a sweet deal out of Bear's shareholders, not worry that either one will take a bath.

But now McArdle is modestly lowering her eyelashes and chirping that she just quakes at the thought of critiquing the great Paul Krugman. What could have happened to change her mind?

I'm a little late to the party--my various ailments have taken longer than expected to recover from. But though the timing may have been political, the prize is well deserved, indeed overdue, as plenty of other commenters have noted. I would offer my congratulations if I thought that the good professor cared to get them.

One of the most interesting things that I've read in multiple commenters is that his most important insights seemed obvious. I think perhaps the deepest economics insights do--after someone has pointed them out. Everything from comparative advantage to the CoaseTheorem makes you slap your head with the inescapable logic of it, and wonder how it can have escaped the human race for so long. And still, it takes a genius to reveal these obvious truths to the rest of us poor slobs. Krugman's math is far too impenetrable for this English major, but the conclusions are as clear and lovely as a bell.

She admires him so very much, you see.

As a lowly MBA, I do not think of spending money to build the bridge as a net increase in the country's wealth. We exchanged money for a bridge worth
the money we spent (or so we light-heartedly hope). One could argue that
the bridge would generate more economic value than it cost in taxes and
deadweight loss; one could also argue that it will generate less (and Japan has
quite a few bridges of this description). But this is an argument for the
bridge, not for bridge-as-stimulus.

Of course, there's nothing wrong with being an MBA. There's everything wrong with making supposedly fact-and-knowledge-based decisions and giving advice based on ideology. If you don't, you end up making stupid statements like saying that owning a new bridge doesn't mean you are more wealthy than not owning a new bridge. There's lots more, but more able people than I have already corrected McArdle.

McArdle wraps up her yapping with this:

There are better ways to assist the unemployed than to build a bridge we don't
need. If a project won't "pay" for itself, then it should be justified on
its own terms, not packaged into a stimulus so that politicians don't have to
explain their choices to the American people.

Who says we would build a bridge we don't need, instead of one we do need or repair several that have been neglected? This is such an insultingly stupid thing to say, as if we can't figure out she's using a strawman again. Her condescension to her readers is incredible, and her dishonesty is complete.

ADDED: I don't say this often enough: It might be too late to clean up after the mess Bush and his friends made. No stimulus might be enough, or the right type, or at the right time. The reason so many people were so shrill about what Bush was doing was because the lives lost could never be regained, and the money lost will never be recovered. We will finally be force to pay for what we let happen, and no amount of blaming or excusing will get us out of it.