When I was in high school I was staunchly conservative. Even then I disliked the idea of party loyalty and tried to subject friendly ideas to criticism, but there was a kind of filter in place. When I found problems in conservative arguments I would react by trying to fix them, assuming that the core concept was sound and that the argument needed to be strengthened. But with anything coming from a liberal perspective I would assume it was wrong and look for problems as an excuse to dismiss it, to declare victory for the opposing view. I think it’s a pretty common trap for young people, particularly those who think of themselves as intellectual, which I certainly did.
But economics was a difficult place to apply this kind of attitude. Try as I might, I couldn’t get the core conservative ideas to work. I could improve the arguments, but it always felt like trying to prove that 1+1=0. Eventually I gave up, and decided that economics was simply an area I could not master, that it was a confusing subject that defied understanding and only people who had some mysterious talent could make sense of it.
That changed when I stopped thinking of myself as a conservative. When I started looking at economics from a less partisan perspective I realized that the problem wasn’t economics. In fact when I started reading Paul Krugman it all fell into place. It wasn’t just that he was arguing that 1+1=2, he went further and also showed that 1-1=0. All the pieces that had confused me now made sense. The entire discipline went from a frustrating obstacle to a meaningful, useful tool.
So I when I read Krugman saying this:
What Samuelson does is to throw up his hands and declare that we just don’t understand what’s going on in the macroeconomy. How does he know this? He talks to several people who declare themselves deeply puzzled by events — notably, Lorenzo Bini Smaghi and Allan Meltzer.
I see my own past mistake. Samuelson and Meltzer were the kind of people I used to assume understood economics. And it’s small wonder that I had a hard time understanding economics, when faced with something that contradicts their understanding they declare the subject a lost cause. The smoking gun they’ve been pointing to for years turns out to be based on an error. When they’re forced to face up to that they say that it’s just so complicated and unintelligible that understanding is impossible.
It’s not just that I was biased. The real problem is that the structures I used to evaluate economics all hid my bias. Politicians, business men, the news: every source I trusted to inform me pointed me towards the same figures as credible sources of economic understanding. Somehow those sources were immune to being discredited. It wasn’t until I started evaluating their credibility for myself that I saw how flawed they were, and realized that the credit they were given was political or personal, but didn’t come primarily from their economic skills. Once I stopped believing that economics was a nonsense world where good was bad and up was down, once I entertained the possibility that the liberals were the ones who got it, it ceased to be confusing and mysterious.
This idea that economics is a mysterious discipline, so full of contradictions and hidden variables and unknowns that no one can really understand it, comes up a lot. This idea is common not because it’s true, but because people want to believe it. No one can master every subject, and most people find economics complex and boring. So they look for sources they trust to tell them what they need to know. When those sources fail it’s much easier and more comfortable to believe that no one got it right than to consider that they were trusting the wrong sources.