Why Market Monetarists Must Attack Paul Krugman

Ideas are secondary to tribes.

Paul Krugman, in a post attacking hard money types who are howling for the Fed to cut back on its easing programs, writes that folks like Scott Sumner ought to wake up to who their real allies are:

Actually, before I get there, a word about self-styled conservative “market monetarists”: guys, have you noticed who your real policy enemies are? People like me, Brad DeLong, etc. are skeptical about the Fed’s ability to offset the effects of fiscal austerity, but we do want it to try. The furious academic opposition to quantitative easing is instead coming from moderate conservative macroeconomists, notably Taylor and Feldstein. So your problem isn’t just that the GOP’s effective leader on economic issues gets his macro from Francisco D’Anconia; it’s that even the not-so-silly wing of the party is dead set against what you consider reform.

He’s right that the opposition to further stimulus from the Fed is overwhelmingly from the hard money right, but behind this kind of thinking is an assumption that reasoned debate is effective—that the way people come to believe stuff is through argument and evidence.

I think this is wrong. Let me explain. (And yes, I see the irony.)

People don’t come to their beliefs through a disinterested weighing of all the available evidence. They form them through emotional processes and then reason backwards to form support. It sounds foolish described that way but it’s actually not a bad system—reasoning from first principles for every decision would be almost impossibly difficult. You need crude, workable heuristics to be able to function.

In addition, most people are invested in one of the great tribes—you choose a political side, and get a full suite of opinions to call your own. Paul Krugman is one of the most prominent members of Team Left in the world; he believes in universal health insurance, high taxes on the rich, raising welfare and unemployment benefits, and relief for underwater mortgages, among many other things. He’s your basic American liberal, and none too ashamed of it; indeed, he’s famous for his snarky aggressiveness.

Most of that is totally anathema to the right. To a first approximation, if Paul Krugman says it, conservatives will disagree.

So if Scott Sumner (the preeminent market monetarist) were to start agreeing with Krugman and spend most of his time attacking the goldbugs and hard money fanatics on the right, all the great weight of Krugman’s lefty baggage would start to bear on his reputation. He’d be “the guy that mostly agrees with Krugman” rather than “the conservative who argues for monetary stimulus.”

The true genius of Sumner is that he has provided a conservative-coded way to embrace monetary stimulus. He’s the guy who proved that you can favor monetary stimulus and still hate Paul Krugman. That’s huge. It’s carved out a big intellectual space—it’s not a coincidence that about the only “conservative reform” policy that has gotten any traction is Sumner’s NGDP target.

Don’t take my word for it, take a look at AEI scholar Jim Pethokoukis, who has done the rarest of things: changed his mind on a major issue. He moved from a traditional inflation paranoia to an advocate of monetary stimulus, and explicitly mentions Sumner as inspiration. Seen so, regular fights with Krugman are critical to maintaining Sumner’s territory and credibility.

Now, I don’t think Sumner is doing this strategically or duplicitously. He does it for the same reason as anyone, I suspect—because Krugman writes stuff that pisses him off and he wants to pick holes in the argument.

What I’m saying is that that the liberals who value their conservative allies against goldbuggery and Mellonite liquidationist thinking (as they ought to) should understand that the forces of tribalism will totally overwhelm any reason-based approach. Sumner is right to keep up his conservative street cred.

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