I've been busy in the last week with end-of-quarter classes and two speeches, the latter of which I'll report on today or tomorrow. Which is why I hadn't replied to Jeff Sommer's criticism of me in the New York Times. But now I have time.
So it comes as a surprise, not least to Mr. Sims and Mr. Sargent, that these two now find themselves thrust into an uncomfortable spotlight. Conservative voices, like the editorial page of The Wall Street Journal, have claimed them as their own. The men's work on economic cause and effect and the theory of rational expectations -- which maintains that people use all the information available in making economic decisions -- proves that Keynes had it wrong, these commentators say.
Of course, the editorial page of the Wall Street Journalis conservative. But click on the link and it leads you, not to the Journal's unsigned editorials, but to my piece on the Nobel prize winners back in October. I'm not a conservative, as even a cursory look at the easy-to-get evidence on the web (Google "David R. Henderson") or even a quick phone call or e-mail to me would have confirmed.
This is a mistake that many New York Times reporters make. Many of them seem to have a congenital inability, or, at least, unwillingness, to distinguish between libertarians and conservatives. The differences are not small. Think: Iraq war, sanctions on Iran, the drug war, the USA PATRIOT Act, protectionism against China, and our views on the rights of Julian Assange, to name six off the top of my head. (Even here, it's true, that some people who call themselves libertarians have advocated the Iraq war and the USA PATRIOT Act.)
Now look at Sommer's whole sentence:
Conservative voices, like the editorial page of The Wall Street Journal, have claimed them as their own.
Put aside the fact that I'm not a "conservative voice.'' What if I were? Or what if, even, Jeff Sommer had got it right and claimed me as a "libertarian voice?" Can you find anywhere in my article that he cites my claiming Sargent and Sims as ideologically "my own?" Nope. My article was entirely about their views on economic analysis, not about their advocacy of any specific policy. Here, for example, is a key paragraph in my article:
This conclusion [of Sargent's] was at odds with the Keynesian model, which dominated economic thinking from the late 1930s to the early 1970s. The Keynesian model posited a stable trade-off between inflation and unemployment. In 1970, major U.S. econometric models, built on Keynesian assumptions, predicted that the government could get the unemployment rate down to 4% if it accepted an increase in inflation to 4%. In a 1977 article titled "Is Keynesian Economics a Dead End?" Mr. Sargent wrote, "[I]nstead of 4-4, in the mid-1970s we got 9-9, a very improbable occurrence if econometric models of 1969 had been correct."
Notice that my analysis is entirely about Sargent's analysis of the economy and how it undercut the dominant Keynesian model of the time. The other parts of my article are similarly analytic about economics, not about ideology.
This is not the first time Jeff Sommer has made these two mistakes in characterizing my work. Here's what he wrote in October, just after the prize was announced:
Journalism abhors a vacuum, however. Others assigned ideological views to the Nobel laureates.
An op-ed piece in The Wall Street Journal on Tuesday carried the headline, "A Nobel for Non-Keynesians," placing the professors in the camp that opposes the interventionist philosophy of the influential British economist John Maynard Keynes.
Again, I assigned no ideological views to Sargent or Sims.
Postscript: What I'm about to criticize is not Jeff Sommer's fault, assuming he quoted Tom Sargent correctly. Again, assuming the quote is correct, this is a criticism of Tom Sargent. Here's the quote:
Mr. Sargent says his most important work is spoken "in the beautiful language of math." He knows it's not widely understood.
"The kind of work we do, that real economists do, will never catch on with the public," he says.
Real economists, Tom? Give me a break. Oh, we poor put-upon economists who can't figure out how to say things in words that non-mathematicians can understand. Oh, the humanity.
Jeff Hummel and I attended a talk that Sargent gave at Hoover a few years ago on his book about small change. Sargent wrote out an equation and I wrote it down and started thinking through it. He quickly drew a conclusion from it and I looked around the room and saw that a whole lot of other people, including some young hot-shot Ph.D. students from Stanford's grad program were looking puzzled like me. Jeff Hummel, seeing my puzzlement, whispered a completely verbal explanation that didn't rely at all on the equation. I understood it instantly and Jeff turned out to be right.
Later in the seminar, Sargent laid out a model with one good and money. I didn't have to be a mathematician (although when I graduated with a Bachelor of Science and a major in math, I won the University of Winnipeg's gold medal in math) to understand the problem with that. I stuck up my hand.
"Yes?" said Sargent.
"If there's only one good, why would anyone bother to hold money?" I asked.
Sargent dismissed my question as being just clever but not insightful.