Unicorns of the Intellectual Right

the real problem here is that media organizations are looking for unicorns: serious, honest, conservative intellectuals with real influence. Forty or fifty years ago, such people did exist. But now they don’t.

.. First, while there are many conservative economists with appointments at top universities, publications in top journals, and so on, they have no influence on conservative policymaking.

.. What the right wants are charlatans and cranks, in (conservative) Greg Mankiw’s famous phrase. If they use actual economists, they use them the way a drunkard uses a lamppost: for support, not illumination.

.. under Obama the director was always someone who was interested in real policy research, listened to what experts had to say, and was willing to change views in the face of evidence.

.. Obviously none of this is true in Kudlow’s case. He’s basically a TV personality, whose shtick is preaching the magic of tax cuts, and nothing – not the Kansas debacle, not the Clinton boom, not the strong job creation that followed Obama’s 2013 tax hike – will change his mind. And it’s not just that he’s incurious and inflexible: selling snake oil is his business model, and he can’t change without losing everything. And that’s the kind of guy Republicans want.

All this means that if you get a conservative economist who isn’t a charlatan and crank, you are more or less by definition getting someone with no influence on policymakers. But that’s not the only problem.

.. even aside from its complete lack of policy influence, it’s in an advanced state of both intellectual and moral decadence – something that has been obvious for a while, but became utterly clear after the 2008 crisis.

I’ve written a lot about the intellectual decadence. In macroeconomics, what began in the 60s and 70s as a usefully challenging critique of Keynesian views went all wrong in the 80s, because the anti-Keynesians refused to reconsider their views when their own models failed the reality test while Keynesian models, with some modification, performed pretty well. By the time the Great Recession struck, the right-leaning side of the profession had entered a Dark Age, having retrogressed to the point where famous economists trotted out 30s-era fallacies as deep insights.

.. What accounts for this moral decline? I suspect that it’s about a desperate attempt to retain some influence on a party that prefers the likes of Kudlow or Stephen Moore. People like John Taylor just keep hoping that if they toe the party line enough, they can still get on the inside.
.. we’re looking at asymmetric polarization... Am I saying that there are no conservative economists who have maintained their principles? Not at all. But they have no influence, zero, on GOP thinking.

.. News organizations don’t seem to have figured out how to deal with this reality, except by pretending that it doesn’t exist. And that’s why we keep having these Williamson-like debacles.

Trump’s top economist offers solution to unemployment: More government jobs

In the latest edition of the ‘POLITICO Money’ podcast, Council of Economic Advisers Chair Kevin Hassett discusses tax policy, drawing Americans back into the workforce and his ‘Dow 36,000’ prediction.

President Donald Trump’s top economist has an unusual idea for dealing with the problem of long-term unemployment: Just have the government hire people.

.. Kevin Hassett, the conservative chairman of the White House Council of Economic Advisers, believes some Americans are so disconnected from the workforce that the best idea to get them working again could be a federal jobs program that would ultimately lead to private-sector employment.

 .. To Hassett, long-term unemployment often leads to family breakdown and descent into addiction and other maladies. “People who have been unemployed for more than a year very often don’t ever reconnect to the labor force,” he said. “And very often they fall into sort of downward spirals of personal despair where they end up abusing substances and have a higher risk of divorce. Some of the literature in this area is just absolutely disturbing.”
.. Hassett remains convinced that the tax cut bill now emerging on Capitol Hill that would slice the top corporate rate from 35 percent to 20 percent will in fact add at least $4,000 in increased wages per household over the next several years
.. Hassett called the idea “iron-clad” based on studies of other countries cutting their corporate rate. And he said he believes the increase could be even greater.
.. He argues that a lower corporate rate and more immediate expensing of capital investments will lead to greater productivity among workers and thus higher wages without big inflationary pressure.
.. “If you have a supply-side stimulus precisely now, we can get capital deepening back to where it used to be, then you could add a percent to GDP growth,” he said. “And that will increase labor productivity and increase wages but not in a way that’s inflationary.”
.. Hassett, an affable economist with friends on both side of the partisan aisle, also spoke about his often-lampooned 1999 book with James Glassman, “Dow 36,000,” that predicted stocks would hit that mark by 2004. Instead, the dot-com bubble burst and stocks tanked.Hassett described the title of the book as a bit of a “youthful indiscretion” that was also somewhat unfairly maligned. “The point was that people who buy and hold stocks for the long run tend to do well, but that stocks go up and down a lot and it’s scary.”

Modern Economists: The Inept Firefighters’ Club

The problem is with the behavior and the incentive structure of the practitioners. There is overwhelming pressure to produce work that supports the status quo (i.e. redistributing to the rich), that doesn’t question authority, and that is needlessly complex. The result is a discipline in which much of the work is of little use, except to legitimate the existing power structure.

.. When I tried to raise these issues in years prior to the crash, my arguments were largely laughed off by a wide range of economists. I didn’t have the stature, and besides, the argument was far too simple.

.. I pointed out that his Administration’s assumed rates of return in the stock market were impossible given the current price-to-earnings (P/E) ratios in the market and the economic growth rates assumed by the Social Security trustees. This was an argument based on simple algebra.

..  it was necessary to have something more complex than simple algebra to be taken seriously at Brookings.

.. And how about a little accountability for economists when they mess up? There is a large literature on the importance of being able to dismiss workers who do not perform their jobs well. We all know and expect that a dishwasher who keeps breaking the dishes or a custodian who can’t clean the toilets loses his job.

.. I have suggested that economists who prescribe policies that turn out badly, or who can’t see multi-trillion dollar housing bubbles coming whose collapse sinks the economy, ought to pay a price in terms of their careers. Invariably people think I am joking. When they realize I am serious, they think I am crazy or vindictive.