I disagree with Simon here. He claims that "Alesina or Rogoff featured so much in... austerity... not because they were influential, but because they were useful to provide some intellectual credibility to the policy that politicians of the right wanted to pursue". It's not one or the other. They gave credibility. And because they gave credibility the media-political machine made them influential. And there influence was such that they neutralized the rest of us, who understood what was going on and were desperately trying to stop it: Simon Wren-Lewis: The biggest economic policy mistake of the last decade, and it had nothing to do with academic economists: "Reading the article brought back memories of my first year or two writing this blog, where I became part of a mainly US blog scene of mainstream academics opposed to austerity...
...lead by Paul Krugman and Brad DeLong. We were trying to take down the academic arguments for austerity, and we succeeded. As Cooper’s article suggests it was not a very difficult task. Sometimes very senior economists who should have known better made simple mistakes of the kind I discussed here. On other occasions, like the predictions of massive inflation from Quantitative Easing that Cooper discussed, events quickly proved the Keynesians correct. Only in the case of the studies from the two pairs of Alesina and Ardagna and Reinhart and Rogoff was additional research required to challenge their conclusions. As far as us Keynesians were concerned, the intellectual battles were won by the end of 2012 if not before.... Paul De Grauwe’s... pointing to the lack of a sovereign lender of last resort, put an end to the academic credibility of ‘we are going to become like Greece’ stories. When the ECB introduced OMT in September 2012 and the Eurozone debt crisis came to an end De Grauwe was proved right....
I want to add two important points that Cooper’s article does not cover. The first is that although by 2013 most academics had become convinced about the austerity mistake (it was always a minority view anyway), economic journalists in the non-partisan media could not recognise that because the politicians were continuing to implement the policy.... Voters were indeed being led astray by a malign or blinkered media, or at least a media that did not have the courage to call the result of the academic debate. The second point is that this academic debate had zero impact on politicians.... I wrote in 2012 that if all academics were united we might have an impact on public opinion, but that illusion did not last very long and Brexit showed it was indeed an illusion..... Economists can be influential, but only when politicians want to listen, or the media is prepared to confront them with academic knowledge....
The reason why economists like Alesina or Rogoff featured so much in the early discussion of austerity is not because they were influential, but because they were useful to provide some intellectual credibility to the policy that politicians of the right wanted to pursue. The influence of their work did not last long among academics, who now largely accept that there is no such thing as expansionary austerity or some danger point for debt. In contrast, the damage done by austerity does not seem to have done the politicians who promoted it much harm, in part because most of the media will keep insisting that maybe these politicians were right, but mainly because they are still in power....
#shouldread
