Life in the Echo Chamber

24 January 2012 at 12:06 pm 3 comments

| Peter Klein |

You’ve all heard the story of the Manhattan socialite who expressed shock at Nixon’s landslide 1972 victory because “nobody I know voted for him.” (Attributed variously to Pauline Kael, Katharine Graham, Susan Sontag, and others, and probably apocryphal, but who cares; it’s a great quote.) I was reminded of this by a line in Larry Summers’s confidential 2008 economic policy memo now making the rounds, courtesy of the New Yorker: “Greg Mankiw is the only economist we have consulted with [about the optimal stimulus package] who refused to name a number and was generally skeptical about stimulus.” How can a huge stimulus package be wrong — everybody I know favors it!

(For the record, the economists consulted — supposedly representing the full spectrum of legitimate opinion — were Robert Reich (recommended stimulus: $1.2 trillion over 2 years), Joe Siglitz ($1 trillion over two years), Paul Krugman ($600 billion in one year), Jamie Galbraith ($900 billion in one year), Dean Baker and colleagues ($900 billion), Marty Feldstein ($400 billion in one year), Larry Lindsey ($800 billion to $1 trillion), Ken Rogoff ($1 trillion over two years), Mark Zandi ($600 billion in one year), an unnamed group of Fed officials (over $600 billion), Adam Posen ($500-700 billion in one year), and an unnamed group at Goldman Sachs(!) ($600 billion). So, we’ve got left-wing Keynesians, right-wing Keynesians, moderate Keynesians, Robert Reich who wouldn’t know a Keynesian from a Kenyan, and Goldman Sachs. How’s that for diversity of opinion?)

Update: Mankiw agrees: “Of course, the fact that I was ‘the only economist’ expressing skepticism reflects the range of economists that Team Obama chose to consult.”

Entry filed under: - Klein -, Bailout / Financial Crisis. Tags: .

Perceptions of Opportunities – Part 1 Finance and the Nature of the Firm

3 Comments Add your own

  • 1. A Roundup for Australia Day at Catallaxy Files  |  25 January 2012 at 8:05 am

    [...] Klein on O&M posted a list of all the economists who were consulted. (For the record, the economists consulted [...]

  • 2. Rich K  |  25 January 2012 at 10:27 am

    This is an easy response: If it looks like a duck and acts like a duck, its a Keynesian.

  • 3. David Hoopes  |  26 January 2012 at 11:29 am

    The might have gotten a slightly different answer from Christine Romer. All in all, it’s a bit depressing. Good for Greg M. for having a different take.

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