Sunday, July 21, 2013
When have econ blogs changed your mind about something?
Author: Noah Smith
There are quite a lot of strong priors in the world, and there's also quite a lot of confirmation bias, which is even worse. I'd like to think I'm about as susceptible to these things as the average person. But there are also a lot of cases when reasonable argumentation has changed my mind about this issue or that. Thinking back, I can remember several instances in which reading econ blogs made me totally switch my position. To wit:
1. Tyler Cowen convinced me that the Great Stagnation is real.
At first I was very skeptical; citing slow productivity growth as evidence of stagnating technology seemed a bit like low-frequency RBC, and the ongoing boom in the productivity of durable-goods manufacturing seemed to belie the technological stagnation thesis. But Tyler brought two pieces of evidence that changed my mind. First, the point that the Stagnation is not just technological, but also resource-based - we have mostly run out of unexploited natural resources and easy educational gains - was a key one. Second, unlike in RBC models, the Great Stagnation can mostly be tied to an observable piece of technological stagnation: energy. Cheap oil began to end around the same time that the Great Stagnation began. That's too striking to ignore, though I still suspect that globalization may also be affecting the TFP figures.
2. Paul Krugman convinced me that American politics is largely about race and the South.
I was raised to believe that American politics was all about class; the GOP was the party of the rich and the Democrats were the party of the poor. My parents told me that, my teachers told me that. Although I still think class matters, on the margin, I now think that race and the legacy of the Confederate civilization matter a lot as well, especially on the margin. Paul Krugman basically convinced me of that all by himself back in the early 2000s, though nowadays it seems that everyone has picked up this thread. Krugman is still saying smart things about race and politics, however.
3. Alex Tabarrok and Matt Yglesias convinced me that the patent system is broken.
I was raised to love patents - Public goods! Reward the nerds for their hard work and smarts! But after reading a lot of blog posts by Tabarrok and Yglesias about the abuses of the system, I have come to believe that the modern American patent system is fundamentally broken and needs substantial reform, and that lots of patents - perhaps even the majority of patents - are doing more harm than good.
4. The whole blogosphere convinced me that the Reinhart-Rogoff 90% thing was total BS.
I am not ashamed to admit that I bought into the Reinhart-Rogoff talking point that a 90% debt-to-GDP ratio spelled trouble for growth; anecdotally, high debt and slow growth had coincided in Japan, and there were some theoretical reasons to believe in some sort of negative debt-growth relationship, and I assumed R&R had done their homework, and I also had been convinced by their point that financial crises prolong subsequent recessions. So I accepted their 90% number, though I maintained some reservations due to the general difficulty of drawing any kind of conclusions from that kind of data. But then...well, the rest is history. Miles Kimball's posts on the subject were possibly the most convincing of all. 90% is well and truly dead.
5. Ramez Naam convinced me that solar is real and huge.
I used to buy the conventional wisdom that solar costs would always be too high for solar to be a viable cost-effective alternative energy source without huge government subsidies. My hopes for alt-energy were always pinned on nuclear, and maybe advanced biofuels. Then Ramez Naam came along and demolished my entire worldview with a single post. Of course trends can stop, but this trend is too long and too strong to hand-wave away. Solar is real, and it's huge. If the cost trend holds just a little longer, the point where unsubsidized solar is cheaper than coal is coming very soon - maybe five years from now.
There were also some instances in which my perspective didn't reverse entirely, but became much more mixed and nuanced, after reading blogs. For example:
6. Steve Williamson convinced me that the macro field is structurally biased toward monetarism.
I can't find the post(s) now, but Williamson has pointed out that central bank macroeconomists have a strong incentive to choose and promote models in which independent, active central banks are the most important stewards of macroeconomic stability. Since a big percent of top macroeconomists work at central banks, this is a non-trivial observation. I was trained to be pretty monetarist (by Miles Kimball and somewhat by Bob Barsky), but Williamson's point was a good one, and has given me pause. Of course, it's a bit of a cynical Marxist type point, but a good one nonetheless.
7. Paul Krugman convinced me that Japan's 1990s stimulus had some positive effects.
Living in Japan in the mid 2000s, I picked up the conventional expat wisdom that Japan's "fiscal stimulus" was a total waste, driven by clientelist construction spending and LDP corruption, concreting over the riverbeds and building bridges to nowhere. And while I still believe there was a ton of waste, Krugman blogged some data showing how mild Japan's two recessions in the 90s were, despite the incredible severity of the country's financial crisis. That's a powerful argument. I now believe that though Japan's 1990s spending spree probably wasn't worth it on balance, it probably was not quite as unmitigated a waste as I had thought.
Those are most of the examples I can think of. Not a lot, but not nothing either! Derp is strong, but it is not all-powerful.
What are your examples? Other bloggers, feel free to give your lists as well. (Note: To make the list, a blog has to have actually changed your mind about something, not just convinced you of a position where you had none to begin with!)
Update: Cardiff Garcia gives his list.
Posted at 5:16 AM