Which Jerks Would You Rather Hang Out With? (Economics Edition)

-- Posted by Neil H. Buchanan

My new Verdict column mocks the armchair psychologizing that passes for analysis by some conservative commentators regarding Thomas Piketty's new book.  Drawing from recent postings from the two self-identified conservatives on the NYT op-ed page, I note that they are using the Piketty phenomenon as another excuse to claim that liberals in America are really nothing more than a bunch of educated professional hypocrites who are jealous of people with more money and power.

In a way, one has to feel sorry for people like Brooks and Douthat.  They are clearly unequipped to deal with Piketty's arguments, but they are very good at changing the subject to point fingers at people they dislike.  Just for fun, I thought that I would use the column to engage in a little bit of their bastardized psychoanalysis, showing that it can be turned around and used to explain what they themselves are doing.  And guess what?  It is possible (in fact, quite easy) to argue that they are saying what they are saying because of deep psychological wounds that they do not acknowledge!  I trace it back to their college days, when they began to nurture the deep sense of grievance that to this day infuses their attacks on their socioeconomic peers.

I go to pains to allow that there is nothing inherently wrong with investigating people's motivations.  Sometimes such an exercise turns up interesting insights, but usually not.  In the former category are some convincing analyses of how Bill Clinton's childhood traumas have driven his career, for good and ill.  Into the latter category fall bizarre arguments like George Will's claim that "the real reason for progressives’ passion for trains is their goal of diminishing Americans’ individualism in order to make them more amenable to collectivism."  Brooks and Douthat are generally not as crazed as Will, but they are deeply stuck on the idea that liberals are self-satisfied meanies who are really just as selfish as conservatives.

We could, of course, actually have a discussion about the subjects covered in Piketty's book, but pretending to do the hard work of social psychology while instead producing fluffy, snarky op-ed pieces is how those guys chose to proceed.

Anyway, having discovered the easy charms of armchair psychology, I will devote the rest of this post to an analysis of the deep motivations of mainstream liberal economists.  As I described in my two-part commentary here on Dorf on Law last week (here and here), there has been what might be called "left-on-left action" happening in the economics blogs lately.  Bob Hockett added a Dorf on Law post over the weekend, in which he argued that the labels "orthodox" and "heterodox" are incoherent.  Although I can see his substantive point, for current purposes what matters is that there are two self-identifying (and other-recognized) groups of people who are disagreeing about substantive matters of economics, in a way that highlights a fundamental disagreement about how to understand the theory and practice of being an economist today.

Tom Palley (here and here) and Jamie Galbraith (here) are exemplars of the hetereodox, while Paul Krugman (here) and Simon Wren-Lewis (here) proudly carry the orthodox (or mainstream) banner.  I briefly described the issues under discussion in my posts last week, and my post tomorrow will go into some depth on the most contentious matter of theory.  Here, however, I want to ask a seemingly simple question: Why do mainstream economists (in particular Krugman, but there are many others) conduct their careers in ways that have the effect of marginalizing the heterodox left, while professionally enabling the hard right?

As I say, this post can be viewed, if one wishes, as mere armchair psychology.  Be that as it may, I am asking a serious question.  Economics as an academic discipline is, per Krugman, almost exclusively composed of scholars who fall into one of two warring camps: "saltwater" and "freshwater."  (This does not track as well outside of the macro subfield of economics, but I leave that aside for now.)   The freshwater/saltwater distinction is based on the historical fact that the hard right "new classical" types were based at the Universities of Chicago and Minnesota (near the Great Lakes) while orthodox Keynesians have been located near oceans (Harvard, MIT, Berkeley).

Outside of the mainstream of modern economics are heterodox scholars, along with various other marginalized groups.  There is virtually no one on the faculty of a truly elite economics department (near any body of water) who would be counted as heterodox -- almost by definition of what it means to be "elite."

From Krugman et al.'s standpoint, both the saltwater guys and the heterodox guys can be real jerks.  Krugman has spent the last six-plus years in a huge battle with the freshwaters, fairly pulling out his hair at their gross dishonesty and academic malpractice.  (That some of his juiciest targets are at Harvard and Stanford does not make them any less freshwater-ish.  The labels lost their geographic accuracy some time ago.)  By Krugman's telling (as well as Wren-Lewis, Brad DeLong, and others), the freshwaters are responsible for the fact that economic policy in the U.S., U.K., and the euro zone has gratuitously inflicted misery upon millions of people.  The freshwaters ignore evidence, opportunistically apply theoretical claims in the wrong context, and other sins.

And, to be very clear, the freshwater guys often really are total jerks (or worse) as people, not just professionally dishonest.  One freshwater leader has proudly noted the great day (sometime in the 80's) when economics seminars would be overcome by "giggles and whispers" if a person tried to present a paper with a Keynesian (saltwater) approach.  Having sat through many of those seminars at that time, I can testify that it would be difficult to overstate just how nasty the atmosphere was.  At some point, of course, everyone was yelling at everyone.  But the responsibility for the ugly tone originated obviously with the freshwater guys.

Of course, we are talking about a group of self-selected people -- young men (mostly) with well-above-average math skills and tragically limited social skills -- who were unlikely to be pleasant in any case.  (Think of "The Big Bang Theory" without any of the charm or innocence.)  It would never occur to anyone to say, "Well, I really like this paper's approach, although I have a concern about your second point."  It would be: "I can't believe that you're trying to make this ridiculous paper fly."  Even people who are not originally jerks end up adapting in an environment like that, becoming what they despise.

Which brings me to the heterodox.  As I commented in one of my posts last week, many of the heterodox guys have also been total jerks to Krugman.  These guys, after having been trained in the styles of seminar combat that they saw in elite graduate schools, have been fully marginalized by their profession.  As a result, most of them can be insufferable.  Palley, as I have noted, is one of the few exceptions.  Galbraith has his moments of, shall we say, intensity, but he is overwhelmingly constructive in his comments.  Many others are not, and as much as I deplore it, I must say that I do understand it.

Krugman has often expressed exasperation at a group of heterodox guys who tirelessly advance a theory called "MMT," who get into flame wars on his blog and have left him understandably angry.  I, too, used to find myself in arguments with some of those guys, and the experience was jarring (and scarring).  And, despite his constructive tone, Palley's recent attack on mainstream Keynesians/saltwaters was provocatively titled "The flimflam defense of mainstream economics," which was an obvious reference to Krugman's insistent (and entirely accurate) labeling of Republican con man Paul Ryan as a "flim flam" man.  Turning that insult back on Krugman was more than a bit of a poke with a sharp stick.

So, Krugman could plausibly see himself as having jerks to the right of him, and jerks to the left.  (Of course, he and his compatriots can be jerks, too, given the self-selection and socialization issues that I described above.)  But, to return to the title of today's post, which group of jerks does he choose to hang out with?  And the winner is: the jerks to the right.  By which I mean that the entire saltwater caucus, if you will, at least tolerated the rise of the freshwater right, if not affirmatively enabled it.  Krugman has written "new Keynesian" papers, which (despite the label) are very much based on freshwater-style economics.  Krugman justifies this by referring to such papers as "exercises to check for logical consistency," or something like that, but he justifies it nonetheless.

Meanwhile, over the generation-plus that Krugman has been around, and the additional decades that his intellectual mentors were in charge at MIT and elsewhere, the heterodox were driven from the ranks of respectable economists.  No one on the saltwater left lifted a finger when, for example, the heterodox-dominated economics department at Notre Dame was essentially shut down.  As a matter of revealed preference, therefore, we know that orthodox Keynesians have either participated in (or have done nothing to block) the hiring of multiple generations of younger economists who are definitely not heterodox, and many of whom are very much freshwater in their thinking.  When I say that orthodox Keynesians have chosen to hang out with the freshwater guys, therefore, I mean that quite literally.  The freshwaters occupy about half of the slots in the top economics departments.  The heterodox have been banished to parts unknown.

Why would this be?  My take on it has always been that it is a matter of deep commitment to the basic methodology that dominates current economics.  It is not "too much mathematics," actually, because the heterodox guys have gone out of their way to prove their chops regarding the ability to do needlessly obscure math.  The deep commitment, I think, is to the idea that two methodological tools -- supply and demand, and maximization against constraints -- are all one really needs in order to do economics right.  Krugman dismisses Palley et al. on the merits, as I described last week, by saying that you can adapt Krugman's basic approach to anything, including the results that the heterodox left prefers.  But if that is true, what is wrong with hanging out with some people who reach those results via a different methodological route?  Is there not something to be learned from seeing issues from a different perspective?  That orthodox Keynesians so easily devalue their overwhelming policy agreement with the heterodox left economists, while populating their immediate ranks with the freshwater guys who build from the same supply/demand and optimization framework, speaks volumes about what really matters to the orthodox left.

In a comment on one of my posts last week, a former academic economist (who, like me, ultimately found happiness in other endeavors) reminded me that a lot of the orthodox push away from heterodoxy is based on a deep fear of being called "sociologists," which is as big an insult as one can hurl at an orthodox economist.  As long as they are doing their work from traditional economic foundations, then the orthodox economists can insulate themselves from the horrible fate of being deemed not a "real economist."

In some ways, I can certainly understand the desire to draw boundaries.  Intellectual conversations need some common ground, such that some potentially insightful comments are simply incomprehensible to people who occupy different intellectual space.  Look, for example, at the fourth comment on my post last Friday.  I have a pretty broad and inclusive view of what counts as economics, but I have to confess that I simply could not figure out how to process that comment.  For all I know, I am missing out on something truly profound, but I simply lack the background knowledge even to understand what I was reading.  And even with less opaque approaches, I can see drawing some lines that would limit what would go on inside economics departments.

But honestly, when we are looking at the work of people like Palley, Galbraith, and others, there is no question that they could (and do) provide work that can comfortably fit within a meaningfully limited definition of economics, work that is far better (in both theory and application) than the work of the freshwater economists.  If we are choosing among jerks, therefore, it is sad that the orthodox left is so intolerant of the heterodox left, even while effectively endorsing the work of the orthodox right.