The MM “ideal”

This comment to a previous post is deserving of a post. Commenter Brendan writes:

Steve Sailer pointed out that the view that Economists and Social Scientists are worthless is biased by the non-overlap between questions people are currently interested in and questions social sciences can answer. Example: He defended Milton Friedman by pointing out that Friedman was the loudest critic of Nixon’s somewhat widely supported Price Controls. Friedman was right and people forget that the efficacy of Price Controls was once a contentious issue and therefore underappreciate Friedman in particular, economics in general. The issue of Price Controls was RETIRED from general discourse.

Your response to Andolfatto’s request for a ‘theoretical model’- “it’s the NGDP stupid”- reminded me of Sailer’s point. If you guys are right about Macro, you guys basically RETIRE the entire field of Macro!

Imagine how useless Econ will seem 40 years from now with NGDPLT adopted, effective, it’s wisdom “obvious” to all and it’s once-contentiousness forgotten!

3 thoughts on “The MM “ideal”

  1. Another we could add to the list is the effect of unemployment subsidies on the jobless rate, though this hasn’t quite seeped into the common knowledge as far as price controls. My guess is that …80% of academic labor economists would say that greater jobless benefits lead to a meaningful increase in the jobless rate. Mainstream academic econ is not that bad next to mainstream nutrition, epidemiology or climate research. I think it was Sumner who said that no one blames physicists for not forecasting earthquakes. Though if economists really want to be held to a scientific standard, they must start treating the word ‘data’ as plural in their grammar. These data are…!

  2. While I am considerably more confident in MM than any other theory to which I have been exposed, there is a certain danger in making such predictions. NGDPLT is a high level theory, and like everything else, the devil is always in the implementation details. It’s rather astonishing that Bernanke never followed through with his explicit inflation targeting, ‘first you say it, then you do it’ allowing inflation to drop like a stone and just nonchalantly shrug it off. Given the consequences of the erring and persistent denials, I don’t have the nerve to suppose it is disaster proof and we won’t need macro economists to set the Fed straight.

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