Wednesday, July 3, 2013

Gregory Mankiw, Keynesian?

Looking back at the person who wrote my textbook, Gregory Mankiw I found he linked to a blogger who read part of one of his papers and wrote a praising article. Let's start with the problem...

  1. The blogger who Mankiw links to (so I assume he likes) says that the best type of economist "wears his assumptions on his sleeve". What a strange and unconventional saying. Does this mean that he knows clearly what his assumptions are and tries to work around them (which I"m pretty sure is wrong given the next point)? Or does it mean that we should base our world-view on our assumptions which we should base our world on and let the evidence be damned? I think it is the second.
  2. He sources Mankiw in a paper where he says "Economists can turn to empirical methods to estimate key parameters, but no amount of applied econometrics can bridge this philosophical divide."  which is just sloppy. The way I read this is that statistics have no use in a debate and that people will believe what they want to believe. I was in debate for four years to know this is not true and if we aren't going to use proven statistics to find out the truth, than what use is the entire field of economics? This is a terrible claim and is fitting for Mankiw.
I also used Mankiw's Microeconomics text in college my first year (as a seventeen year old) and there was a statistical problem I found (which I forgot to record and have forgotten at this point) that made me thoroughly distrust him. I might find the book in the library and find the error again and blog about it so people can know not to trust him, but seventeen year olds should be not be able to find any problems with the writing of a PhD! If there is another reason that we should distrust Mankiw, he recently cited the people at Carmen M. Reinhart for defending their baseless claim that a large amount of debt correlates to low economic growth, which unfortunately for them contained a statistical error. That should be enough to not trust Mankiw.

If Mankiw is defending people who claim that high debt is correlated with low economic growth, how can he be Keynesian? The Keynesian solution to a recession is go into temporary debt to get the economy jump-started (like when you start any business) and then pay the debt off when the economy is moving again. When Mankiw was an adviser to President Bush we saw record deficits during a period of (personal debt-financed) economic growth. That is as far as we can possibly get from the Keynesian school of thought. We should stop pretending Mankiw is a Keynesian and be honest that when we look at his writings he is clearly a Monetarist between claiming that assumptions are important (at least it might mean that), econometrics don't matter (a central corner stone to defending austerity, a centerpiece of laissez-faire economics), he was part of one of the most laissez-faire administrations in American history, and defending people who make faulty economic studies that claim high debt is a large problem when it is based off not reviewing their paper before they publish (which is unprofessional, sloppy, and a cornerstone to laissez-faire economics.). In every way, Mankiw is part of the laissez-faire religion.

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