Don’t let those switches distract you. My point is simple: it is very hard to find examples of successful fiscal stimulus driving an economic recovery. Ever. This should be a sobering fact.
But wasn’t the statement he made just kind of ridiculous?
Not only ridiculous — in context it was vicious.
I am a murderous Luddite populist, so of course I fail to understand why people like Cowen are tolerated just because they are competent professionals and fairly pleasant people.
There are lots of Godwinian examples of charming, pleasant people who were fundamentally horrible and vicious. Enough said.
As for competence, who cares? Scientific economists, who have been jerking everyone else around for god knows how long, have just now calmly decided that they don’t know what the fuck is going on. No skin off their asses, they’ll still have their jobs and their lives. An interesting problem indeed. Possibly the most interesting problem since the Great Depression. In the end it may be a good thing for the biz — economists will be more necessary than ever.
There’s an enormous body of physics consisting of definite, reliable answers to definite, consequential questions. On these questions there aren’t schools of thought or nuances of interpretation. That’s why physics sets the standard for successful sciences.
Economics just isn’t like that, and for that reason it would not be reasonable to hope that anyone, once certified, could ever be driven out of the profession because of incompetence, malpractice, malfeasance, misfeasance, nonfeasance, conflict of interest, fraud, misprision, malice aforethought, or any other goddamn thing. This is because to do so would be entirely arbitrary and unfair, because when the chips are down, economists can’t be sure they know anything. They’re nothing but ideologues and mercenary advocates, but with more math and more data.
American life is a powerful solvent. It seems to neutralize every intellectual element, however tough and alien it may be, and to fuse it in the native good will, complacency, thoughtlessness, and optimism.
Most scientists believe that only objective factors are real and try to eliminate all subjectivity from their explanations — subjectivity is seen primarily as a source of error. Economists are the most objective social scientists, and they customarily sneer at dumber so-called scientists who fail to reduce human behavior to hard facts.
When things are going well, that is. During times of prosperity, economics is a hard science like physics. It’s only when things go badly that they kick the can over to psychology and reach for mental factors like “irrational exuberance” and “mental depression” so that they can blame other, stupider sciences for their failures. (Quantum physicists also reach desperately for The Mind at times, since after sixty or seventy years their data are still impossible to interpret.)
So here’s my explanation of the present Collapse of Western Civilization: amphetamines. The world of finance is a rather small one, populated entirely by supersmart, extremely aggressive and competitive men (mostly) who have to go at top speed twelve or more hours a day, day after day. How do they do it? Performance-enhancing drugs, that’s how: legally-prescribed amphetamines. (Cocaine is uncool and very Eighties.)
And since finance controls the world, when the tweakers crash, the whole world crashes with them. Like a football team collapsing in the fourth quarter, the world has run out of beans. We’ve had our jag, and now we’re crashing. Not much fun.
In my small experience, amphetamines are very nice. The world becomes a happy place. You get smarter and have lots of energy, and you can keep on going indefinitely. Complex ideas seem simple and all of your ideas look good. The crash isn’t even that bad if you use in moderation. But amphetamines are not conducive to moderation.
A friend working in a major science research institute has told me in confidence that a psychologist had told him (also in confidence) that the majority of the researchers there were using amphetamines or something of that kind. Paul Erdős, one of the greatest mathematicians of our time and probably the most prolific, was famous for his reliance on amphetamines. Science magazine has recently suggested that we seriously look into the possibility that the use of amphetamines for performance enhancement should be medically authorized, allowing scientists to do openly what they’re already doing under the table.
Erdős always worked with collaborators, and maybe this is the reason for that. While it’s working, amphetamine only shows you the bright side of things. It doesn’t enhance your judgment, your capacity for self-criticism, or your awareness of problems. Maybe Erdős needed a ground man — someone to point at his work and say “You know, Paul, I think that you skipped about seventeen steps right there.”
The mathematics community is self-policing, but finance absolutely isn’t. A rising tide raises all boats, and when things are going well a glib but clueless investor can keep winning for years. Furthermore, someone’s who’s already persuasive will be even more persuasive while in the grip of amphetamine-induced enthusiasm. Optimists who believe what they’re saying are the best con men, and speed gives them the sincere optimism they need. (Have Glassman and Hassett ever been pee tested?)
Negative thinking is necessary and good. The disseminated optimism of crowds is not to be trusted. If we’d had fewer people lighting candles and more people cursing the darkness, we wouldn’t be in this fix.
The crash phase of amphetamine psychosis is now before us.
A funny math joke just destroyed half of everything