Seductiveness of Demands for Pain

Paul Krugman Conscience of a Liberal June 10, 2010

Mark Thoma is astonished at Raghuram Rajan’s obviously intense desire to find some argument, any argument, for raising interest rates even though unemployment is near 10 percent. As he points out, Rajan is reduced to arguing that the Fed should raise rates because unemployment is low in Brazil.

But I realized, as I read this, that I’d seen something like this before. Back in the summer of 2008, as the world was sliding into recession, Ken Rogoff demanded that the Fed and the ECB raise rates because of rising commodity prices and inflationary pressure in developing countries. Again, it was very hard to understand what model lay behind the demand.

And let me throw Jeff Sachs into the mix. Brad DeLong is astonished by the recent Sachs op-ed calling for fiscal austerity now now now, in which he claims that fiscal expansion has had all sorts of negative effects that are, in fact, completely absent from the data.

What’s going on here? I don’t think you can resort to class-warfare arguments. What I think is happening is that we’re seeing the deep seductiveness, for many economists (and others), of taking what sounds like a tough-minded position in favor of inflicting pain on the economy — and the people who make up that economy.

Keynes knew all about this. Writing about the peculiar appeal of classical economics even in a world in which it had manifestly failed, he argued

That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue.

Something like that, I believe, is going on here. Calling for austerity and tight money feels courageous, tough-minded, and virtuous; it allows the economist making such calls to take the pose of a Serious Person standing firm against the easy-money guys.

Yes, I know that’s insulting. But what’s so striking is that in all three cases I’ve cited you had highly trained economists — that is, people who have spent their whole lives arguing in terms of carefully laid out models — making arguments that aren’t backed by any model I can see.

And may I say, I think that by giving in to the seductiveness of calls for pain, some of my colleagues are doing a lot of damage; at a time when we really need clarity of thought, they’re adding to the intellectual murk instead.

Paul Krugman is an Op-Ed columnist for The New York Times.

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The US needs to be thinking about how to insulate itself from European masochism.

June 09

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On the pose of being tough-minded.

June 07 //

Madmen in Authority

Pain for its own sake.

June 06 //

Yes, We Did Get Caught In A Thunderstorm

How did you guess?

June 06 //

Lost Decade, Here We Come

Utter folly posing as wisdom.

From the Opinion Blogs Freakonomics Time Is Relative

What "time zone" do you inhabit?

Opinionator Where Did All the Angry Voters Go?

The big news from Tuesday's primaries is that an incumbent wishy-washy moderate can still prevail in this political climate.

On the pose of being tough-minded.

June 07

Madmen in Authority

Pain for its own sake.

June 06 //

Yes, We Did Get Caught In A Thunderstorm

How did you guess?

June 06 //

Lost Decade, Here We Come

Utter folly posing as wisdom.

From the Opinion Blogs Freakonomics Time Is Relative

What "time zone" do you inhabit?

Opinionator Where Did All the Angry Voters Go?

The big news from Tuesday's primaries is that an incumbent wishy-washy moderate can still prevail in this political climate.

Pain for its own sake.

June 06

Yes, We Did Get Caught In A Thunderstorm

How did you guess?

June 06 //

Lost Decade, Here We Come

Utter folly posing as wisdom.

From the Opinion Blogs Freakonomics Time Is Relative

What "time zone" do you inhabit?

Opinionator Where Did All the Angry Voters Go?

The big news from Tuesday's primaries is that an incumbent wishy-washy moderate can still prevail in this political climate.

How did you guess?

June 06

Lost Decade, Here We Come

Utter folly posing as wisdom.

From the Opinion Blogs Freakonomics Time Is Relative

What "time zone" do you inhabit?

Opinionator Where Did All the Angry Voters Go?

The big news from Tuesday's primaries is that an incumbent wishy-washy moderate can still prevail in this political climate.

Utter folly posing as wisdom.

What "time zone" do you inhabit?

The big news from Tuesday's primaries is that an incumbent wishy-washy moderate can still prevail in this political climate.

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Seductiveness of Demands for Pain

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