Arnold Kling  

David Warsh on Tyler Cowen

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Warsh writes,


Sometimes Cowen, 48, seems to have nothing but outside interests, as his readers know from Marginal Revolution

Noting that Cowen directs the Mercatus Center, recently mentioned in the context of Jane Mayer's conspiratorial portrayal of the Koch brothers, Warsh writes,

If anything, Mercatus appears to have avoided some of the pitfalls that have made the Hoover Institution such a dependable source of irritation to Stanford University.

This suggests that there is a story about Hoover which I am not in on.

My view on the funding of left and right is that if you include government funding, the left enjoys a huge funding advantage. A single government contract for Jonathan Gruber to lend his technocratic hand in government regulation of health insurance or for Mark Zandi to bless the stimulus with precise estimates of multipliers exceeds what one can earn in a lifetime by writing essays on expert failure. Compared with the amount of money that the government spends on statist propaganda and on promoting research that argues for more state power, the funding of conservative think tanks is miniscule.

The issue is similar to campaign finance reform. The typical Congressman or Senator spends more on one earmark than his or her opponent spends on a campaign. Yet what we call "campaign finance reform" is focused on reducing the latter.

I do not know any economist on either side who I would accuse of altering his opinions to increase his earning power. But if you do want to prostitute yourself, then my advice is to join the left, not the right. The left is where you are more likely to get tenure and really large research contracts.

Daniel Klein has more on the life of left and right in academia.


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CATEGORIES: Economic Education



COMMENTS (21 to date)
RPLong writes:

To paraphrase a much-derided author, perhaps what we need is at minimum a separation of state and economics, or a full-on prohibition against diverting government funds to the development of ideas to which a subset of the population is morally opposed.

Vacslav writes:

The New Yorker piece mentions that Koch have quitely given $100M over 30 years. Roughly, $3M a year, enough to feed 10 scientists and 20 assistants, provide them with a roof and some travel expenses. Quelle horreur!

sean writes:

Arnold, you should do some digging and find out what the Hoover reference was all about. Or maybe David will respond.

More importantly, Vacslav FTW.

Daniel Kuehn writes:

Could you explain what you mean by "prostituting yourself" in this context?

Also - since you bid on government research contracts by presenting a methodology and conceptual framework only (not results), why do you think there is such an advantage? In my government contract work, we've found results they like and results they don't like. They don't hide or embargo results they don't like. And we competed with other research firms on the basis of cost and our methodology.

Where is this ideological component you speak of?

Are you suggesting that if a conservative researcher and a liberal researcher at two otherwise identical research groups or universities, submitted a contract with the exact same methodological approach and the exact same cost, then the liberal researcher would win the bid?

That seems absurd to me, given my experience competing for government research contracts.

Do you have any evidence at all to back this up?

This all just seems to be complaining that:

1. Government doesn't fund speculative, philosophical essays (I'm sure liberal speculative, philosophical essays aren't generally funded too), or

2. That there is some "liberal methodology" that government prefers, or

3. That the contracting process is just plain rigged, or

4. You have no idea how the government contracting process works, or

5. Perhaps I have no idea how the government contracting process works.

It's all pretty vague - and I get wary when talk of "prostitution" and "propaganda" comes in. What exactly are you suggesting, Arnold?

FC writes:

Hoover's offense is to be anti-Communist and anti-multicultural, and then to stand on its right to autonomy against protests from the university outside.

Jacob Oost writes:

Number five, Kuehn.

Hyena writes:

I guess all that money spent by the Department of Defense doesn't count a bit as "conservative" spending?

What about all the money spent arguing for more "law and order" policies?

Daniel Kuehn writes:

Jacob -
When you just throw that out there unelaborated I feel like I probably should have added a #6 for you. I'm assuming if you had anything substantive to add you would have actually shared it.

Daniel Kuehn writes:

Jacob -
That was unfair of me. I'll give you the benefit of the doubt.

Could you explain where in the process of bidding for these contracts there is any scope at all for preferential treatment of the left? If I'm not understanding something or missing something or if my experience hasn't been typical I'd be interested in knowing where I went wrong. Clearly you had something in mind or you wouldn't have commented.

Silas Barta writes:

Daniel_Kuehn is actually making some pretty solid, well-supported points. The government uses a rigorous, neutral, corruption-resistant (if imperfectly) process for determining which intellectuals to grant money to. As proof, look at how frequently the government sponsors principles scholars who produce well-documented models that turn out to support a policy of reducing the size of government, or end up recognizing government programs as failures.

Daniel Kuehn writes:

"As proof, look at how frequently the government sponsors principles scholars who produce well-documented models that turn out to support a policy of reducing the size of government, or end up recognizing government programs as failures."

You're sticking to the same vagueness that Arnold has so it's hard for me to understand exactly why you think what you think.

I mostly do program evaluation. We tell the government the impact of certain programs - mostly employment and job training programs, although I've been involved in some others. There are only so many ways to run an evaluation like that and none of them have a shred of ideology to them. We've given the government good news and bad news. What they do with that information is up to Congress.

That's what the lion's share of government economic research is - impact estimates and evaluations. If you think there is some bias in the way we do these evaluations, for God's sake spell it out and don't beat around the bush. I'll make it easy for you. I've done random assignment, and in cases with less clean data I've worked with difference-in-differences, propensity score matching, and regression discontinuity evaluations. I've had things come up positive, and negative, and no effect depending on what it is we're looking at. What is the ideological skew you're expecting???

Now - Arnold mentions multiplier estimates. Again, the functional form of a fiscal multiplier is ideology-free. Everyone agrees on the estimation concern here: endogeneity. Since you do fiscal stimulus when the economy is especially bad, and not randomly, you're going to bias estimates downward. So if anything the methodology in this particulary case favors libertarians and the right, NOT the left. Regardless, Zandi and Barro (to take two examples) don't disagree with each other on the methodological issues at hand.

So please stop attributing these things to ideology unless you're willing to make a case why ideology has a thing to do with it.

Daniel Kuehn writes:

Oh ya - one more thing - Barro received federal funding for the study that produced his multiplier estimates, and as far as I can tell Mark Zandi did not.

Perhaps Zandi did have federal funding, but I kind of doubt it. I'd be interested in knowing if anyone can find anything - I couldn't.

Which raises a question for the host - why mention Zandi rather than Barro? Seems a little odd if your concern is federal funding.

Silas Barta writes:

It must be great to have a job where there's no chance of reality proving you wrong, no matter how bad your work, just of colleagues disagreeing with your or proposing alternate metrics.

And yes, Daniel_Kuehn, there is ideology in multiplier estimates: the ideology assumption that the second-order production encouraged by government stimulus is worthwhile and sustainable in the first place. (i.e. If it funds a new road, which, by the multiplier effect, leads someone to set up a restaurant nearby to sell food to construction workers that has to shut down when the program's finished, is that pure economic growth, or an unsustainable temporary adjustment that contributes nothing to stable full employment?)

Also, there's the ideological assumption that more spending is necessarily good, no matter what the judgments of the individuals about their needs. If everyone went deep into debt to get NGDP numbers back up, that is automatically assumed to be great, no matter how destructive it is.

Daniel Kuehn writes:

"It must be great to have a job where there's no chance of reality proving you wrong, no matter how bad your work, just of colleagues disagreeing with your or proposing alternate metrics."

The whole point of empirical science is that you let reality tell you what is right and what is wrong. I'm not sure what you mean by "no chance of reality proving you wrong". You may think that a particular program might, say, raise wages. The whole point is seeing if reality proves that or not. That's the whole point of empirical science.

You act like people just write down what they feel like and then argue with each other about which conclusions they like most.

J. Murray writes:

"Again, the functional form of a fiscal multiplier is ideology-free. Everyone agrees on the estimation concern here: endogeneity. Since you do fiscal stimulus when the economy is especially bad, and not randomly, you're going to bias estimates downward."

I have no clue where you get this "everyone agrees" nonsense. The process from the start is biased. It selects researchers that have already accepted that the "stimulus" is a good idea and are actively seeking how good it will be. This isn't some universally accepted truth. To the contrary, it's actively argued against in the very field that it's supposedly held as an ideologically-free concept.

The government is tricky that way. I've spent some time in the DoD acquisitions program before seeing the error of my ways. The government is tricky. They'll throw out bones to the little guy and trumpet how unbiased government contracts are. But when the big bucks are concerned, ideology trumps all. Tossing scraps to you, Mr. Kuehn, doesn't prove anything. Take the construction of a Liberty ship for instance. Do you really think the best facility and best crew won that contract? Not on your life. The KEY determinations of who won it was the national identity of who ran the organization and whether the company was unionized or not. Ideology was the main concern, not the final product. Other contracts actively dictate that the ONLY producer will be a small business, despite it rarely being the best choice for quality and cost. Major campaign donors to powerful Congressmen frequently win contracts despite being a poor bidder. This is just DoD contracts.

This happens in EVERY Department. When was the last time you saw the Department of Energy recommend nuclear deregulation in the face of overwhelming external studies that their regulation not only quadruples the costs of nuclear plant production, but also makes them less safe? What you will find is that they'll hire someone to perform a "Verification Study" of their policies which always, magically, comes out in favor of the DoE actions, even going so far to recommend FURTHER regulation of the industry.

When was the last time you saw the Department of Education argue against its own existence in the face of mounting evidence that the entire organization has done nothing but make the American education system worse? No, all they do is produce study after study of how they're the saviors of education and that all they need is more money to do even better.

Tell me the last time ANY government agency produced a major, heavily publicized, study that recommended it be shut down. I'll even make it easy for you, to reduce staffing, reduce budget, and do less. Then I'll buy into your fantasy that government contracting is somehow unbiased and neutral. I'll send you my car if you can pull off that stunt. And I don't gamble unless my chance of winning is 100%.

Silas Barta writes:

The whole point of empirical science is that you let reality tell you what is right and what is wrong. I'm not sure what you mean by "no chance of reality proving you wrong". You may think that a particular program might, say, raise wages. The whole point is seeing if reality proves that or not. That's the whole point of empirical science.

Yeah, that's my point -- economics as it is practiced deviates from being an empirical science. There is so much room for "interpretation" that you can explain away any failure of your theory (e.g. what Krugman is doing now with rationalizing the failure of the stimulus). Worse, it helps if you're a more politically-connected academic.

Did wage rates not do what you expected? Uh, some confounding effect happened, that's it! Does your measure actually characterize wage rates in a way we care about (i.e. not just ignoring whether the wages are for performing an individually-rational but inefficient activity)? Who cares? The government money keeps flowing in either way!

Daniel Kuehn writes:

J. Murray -
"It selects researchers that have already accepted that the "stimulus" is a good idea and are actively seeking how good it will be. This isn't some universally accepted truth."

Ummm... tell that to Taylor or Barro or Alesina or any number of people who are fine with the estimation exercise but don't buy the idea of a fiscal stimulus.

The idea of a multiplier isn't contested. When people don't like stimulus they don't say the multiplier doesn't make sense as a concept - they say that it is low. As a concept "multiplier" just means "the effect of spending on output". It's just shorthand for that. There's no ideological content to that.

You also are trying to compare the defense acquisition contract to research contracts. I think it's pretty safe to say that defense acquisitions is a lot more f&%^*ed up.

I can't speak for DOE either. I know HHS and DOL get positive and negative reviews, they have reacted to research, and when they don't react to research we tell people that they don't.

- HUD changed RESPA regulations in response to research we did.
- JTPA was repealed and replaced with WIA because of findings indicating JTPA had no impact. WIA incorporated insights on why JTPA failed.
- Bush's HGJTI initiative was put into place in response to research suggesting that sectoral training had a higher payoff than other types. I've been involved in the evaluation of HGJTI and we have some mixed reviews - hopefully it will be tweaked in response to our research, but time will tell.

Some of these are changes - at least one is a repeal - JTPA. That was a widely publicized finding. I'll be waiting for your car.

I'm not sure DOD or DOE respond in this way.


Silas -
You seem wedded to this understanding. I'm clearly not going to make a dent.

Silas Barta writes:

@Daniel_Kuehn: If I'm "wedded" to the understanding that a taco stand that exists solely because of a government program *might* not be the growth we're looking for, then I don't want a divorce!

Congrats on all that political capital you're building up, though. Now I see why you're so wedded to the idea of keeping an expanding state around.

Daniel Kuehn writes:

Who said anything about an expanding state? Barring some macroeconomic policymaking which oughta be temporary, I think the state oughta shrink.

You're so caught up in your own ideology you didn't even realize that.

Daniel Kuehn writes:

Well let me put it this way - there are some places where it needs to shrink dramatically and there are places where it needs to make inroads. How it nets out is sort of a question mark of course - but I've never really thought of myself as wanting to expand the state.

Why you think that is beyond me... I suppose because I take standard macro and empirical science seriously?!?!? I'm not sure why.

Jacob Oost writes:

What I meant Kuehn was that your rosy view of the government laying out an objective process and then following it was merely the microcosm you have personal experience with. It is a far from complete picture of how the government operates, especially when it comes to propaganda. I'd give an example of what I'm talking about from my own microcosm but I can't share it right now. You need to watch more "Yes, Minister."

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