Monday Smackdown/Hoisted: Antonio Fatas on the Global Economy: Ignorance as an Excuse
From three years ago: : On the Global Economy: Ignorance as an excuse: "Via Greg Mankiw I read a response [by Aparna Mathur, Sita Slavov, and Michael R. Strain] to the argument by Peter Diamond and Emmanuel Saez...
...that the top marginal tax rate in the US should be raised to about 73%.... I... want to... discuss the logic used by the criticism of Diamond and Saez work. The authors... contrast... the willingness of Peter Diamond to offer a concrete policy recommendation with the answers that... Tom Sargent and Chris Sims... gave.... Sims answered....
Answers to questions like that require careful thinking, a lot of data analysis, and that the answers are not likely to be simple. So that asking Tom [Sargent] and me for answers off the top of our heads to these questions--you shouldn’t expect much from us.
And when asked for a specific policy conclusion he added:
If I had a simple answer, I would have been spreading it around the world.
The authors praised Sims' answers as the 'model of how academic economists should behave when facing questions about specific policy.' I find this... odd and depressing.... As Sims points out... one can find answers to those questions after careful thinking and a lot of data analysis. That's what Diamond and Saez have done. One can disagree with their analysis but one cannot simply disregard it.... The authors of the response then... protect themselves from criticism by saying that they [themselves] do not have an answer... although 'they can be pretty sure that the answer is significantly lower than 73%'....
Diamond and Saez presents their arguments and data analysis in a way that is at least as competent as any other analysis on the same subject. They can be criticized on their assumptions or calculations, but not on their willingness to advance knowledge on an issue of great policy relevance.
