Scott Sumner today made a post defending himself from Noah Smith that contains this quote from the same:
Scott Sumner expresses incredible confidence that NGDP targeting is best . . . . I think normal people realize that that certitude is basically never warranted.
Mr. Smith must not read Sumner very often as I’ve almost never read a post of his laden with arrogance, and I’ve been reading Sumner’s material regularly since 2009. And I’m a bit surprised such criticism would come from someone from the left, like Mr. Smith, after reading a quote like this one from Sumner (emphasis is mine):
Suppose Congress had instructed the Fed to target inflation at 2%, but, “while you are at it, try to be as cruel to the jobless as possible. Create as much jobs market instability as possible, consistent with 2% inflation over time.”
Under that mandate (let’s call it the “cruel mandate”) the Fed would do a tight money policy when unemployment is above target. Yes, they’d miss their inflation target on the low side, but that loss would be offset by the “benefit” that they’d receive from screwing the workers. Under that sadistic policy they’d run a procyclical inflation rate, just the opposite of what they are currently supposed to do.
Now of course this is exactly what the Fed did in 2009, they ran inflation well below target during a period of 10% unemployment. Defenders of the Fed will claim that this was unintentional. I agree. But it was also due to a flawed inflation targeting IT regime, which biases you toward procyclical inflation, especially at the zero bound. And my fear is that that regime still is in place.
The above quote is not an isolated incident and I wonder what Sumner might have to gain by stating it as plainly as he sees it? He did not need to make a career out of being a “yes man” unlike some of the more politically oriented economists I’ve read. It’s a great place to be in fact. Because once one makes a career out of it, one is sort of stuck doing it even once all the evidence to that point becomes public knowledge.
Now, what is Smith defending, again? Could it be the “cruel mandate” for all of the advantage it provides for a chosen political cause or something else? It’s interesting to live in a world where things are not nearly as straight forward as they seem, a world full of all sorts of people with all sorts of quirks, contradictions, and aspirations nobody understands, maybe not even themselves.
I’d just like to point out the part of the Sumner quote that I underlined. I wonder what Mr. Smith would think about it, supposing that it just might be correct that the policy of the “cruel mandate” is still in place. Really, the thought of it scares the hell out of me. I was part of that 2009 crop of the 10% and the horror of that kind of ordeal on an individual level is not something I would wish on an enemy, let alone multitudes of strangers. But somehow, either some are quite insulated from those nasty facts of policy effects, or they don’t really bother to think about the kinds of personal tragedies that played out as a result of this policy, hitting the people on the margins much harder than others. And it amazes me even more to hear people on the left, the people who were supposed to be the populists, dismissing the idea out of hat so that kind of policy can just go on and on creating more victims and perpetuating hopelessness.
Sumner didn’t deserve Smith’s remark and shouldn’t have to defend himself against someone who appears to be, at least on the surface, philosophically confused.