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Tuesday, October 14, 2003

On the Importance of How you Conduct Arguments

A recent post by Arnold Kling has been causing a fair amount of controversy in blogland. Henry Crooked Timber and Brad Delong for example both have substantial posts on what Arnold ahs to say. The cause of all the controversy: Arnold is not happy with Paul Krugman. Why is he unhappy, because K uses too many 'type M' arguments (attributing motives) and would be better sticking to the 'type C' arguments (concerning consequences).

My take on this: I can't stand what Arnold calls type M arguments, or at least type M when used in a political context, to cause offence or to try to refute - obviously if I say that Brad (for example) is producing a bad argument becasue he is a very good person, I guess nobody is going to complain (in fact I do this all the time, or at least I say that despite being a very good person he produces from time to time a bad argument, as in this case), it's when K say's George Bush is producing bad arguments because he is a bad guy - or because he wants to wreck the social security system, or American democracy - that people start to get nervous, and I think rightly so. Let me say something completely outrageous, I have no idea at all whether George Bush is a good guy or a bad one (in fact I think such Manicheanism belongs to his world and not mine), I don't even care which of the two he is, I have enough with what he says and what he does, and if five minutes from now he denies what he just said, well I'm not following him down that road, I've got better things to do. What I'm saying is that this whole argument for me is old rope.

What really concerns me here is the waste of what was once a very good economic brain. I don't suppose any of this will cut any ice with those who are convinced of K's approach, but for what its worth I could explain that I actually had an exchange of mails some months ago with K on this whole topic: the danger of how you present your arguments. Basically I was playing around - yes playing in the ludic sense - with the idea that you could make a good type M argument that Bush and Co were following K’s own advice, and more specifically advice contained in a doctoral thesis he partly supervised by Gauti Eggerston, to the effect that the best way to avoid deflation is by the politicians over-riding the central bank, and in an enthusiastic bout of crazed irresponsibility provoking a serious inflation fire. Gauti’s paper is called ‘Committing to Being Irresponsible’ (and is now published as an IMF working paper, where you can also find Gauti working as one of the deflation ‘experts’).

This theory is every bit as good as the ‘provoked trainwreck’ one, in explaining the Bush administration economic policy, indeed it is even better, since it offers a central role to K's denunciation in helping make the policy work (everybody has a part to play). But my point is not to advocate it this interpretation. My point simply is that to the educated economic eye it's as good an explanation of why John Taylor, Ben Bernanke, Greg Mankiw are going along with things as the one K is offering, and we have no decision procedure to decide which, if either, of them is correct. So perhaps it's better to stop going round in circles and pitch the argument at another level.

Look, for me the important point is this one: in 2001 K felt he couldn’t speak out too much about Argentina, since he might cause a run on the banking reserves in Argentina. I think he was wrong in this, but that is beside the point, it is a question of judgement. Now K is telling the world that the US is going to have an Argentina style crisis, and it seems from the equity and currency markets that no-one outside the political arena is taking a blind bit of notice. Who is bothering with K now, Arnold Kling and Larry Lindsey? I think it’s a tragedy. If as an economist you are reduced to arguing with Larry Lindsay, I think the best I can suggest is not dropping your argument to his level, but getting out while you're still ahead and changing profession. My take is that there may have been 5 really good economists out there who could hack both the theory and the practice of economics. We lost one earlier this year in Rudi Dornbusch, now we’ve lost another in his own ‘unravelling’. I think this is a high price to pay for handling an argument from Larry Lindsey (whoever he is BTW).

K could have had an impact on Japan, that could have been important. Throwing away your mind like this in a street brawl with GWB and co, it’s so irresponsible. It’s worse it’s self-immolation.

What I'm saying is the loss here is to science. Krugman is doing no original work, the problems are there (and they are not all created by GWB: the US is going to have to make a more or less ‘painful adjustment’ to its present reality whoever is in the White House). You see here we have another problem produced by collapsing economics into politics, politics tends to think in terms of short term fixes, a bit more fiscal here, a shot of monetary policy there, when what we may need is some long term strategic thinking. I happen to think that this is what intellectuals are for, putting the memes into circulation which can change things ten, twenty years from now, that’s why its better for them to stay out of politics, or at least politics with a capital P. The trouble is too many people are confusing policy here with politics, and collapsing the one into the other. This could prove very costly in the long run.

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