On the Want of Bold, Persistent Experimentation
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Title : On the Want of Bold, Persistent Experimentation
link : On the Want of Bold, Persistent Experimentation
How should policymakers react to an economic crisis or ongoing economic malaise--an event that has taken them by surprise and/or left them searching for answers?
Brad DeLong's prescription is to follow the example set by FDR in the 1930s: How to Fix the Economy: "Try Everything". He favorably quotes the former president, who once proclaimed:
One of the problems associated with macroeconomic experimentation, apart from the fact that most experiments fail, is the aura of uncertainty it engenders. The appearance of senior leaders resorting to bold and persistent experiments is unbecoming and even a little scary. What will they think of next?! Should I invest now, or should I wait?! It does not take a rocket scientist to appreciate the effect that policy uncertainty might have on prolonging an economic slump. I'm not sure how important this force is quantitatively (because it is hard to measure) but I don't think one can easily dismiss the role it can play in an economic crisis and recovery. Certainly, there is no shortage of narratives out there that blame FDR's "bold and persistent experiments" for transforming a recession into depression (many also blame President Hoover for the same reason).
Truth be told, I doubt that DeLong actually endorses "bold, persistent experimentation" in the sense of "anything goes." The set of "bold, persistent experiments" after all is very, very large. As he suggests, we already possess a set of tools--we (think) we know the nature of promising interventions--if only those squabbling politicians would employ them! In addition, he provides a short list of potential interventions (some of which, like QE, were actually implemented).
It seems that DeLong was motivated to write this piece mainly to criticize Martin Feldstein's needlessly inflammatory language in promoting an otherwise sensible policy proposal. I do agree with DeLong on that sentiment. But if this was the intended purpose of his article, then why invoke Hoover-FDR fables?* And why speak favorably of the FDR-style "kitchen sink" approach to macro policy? After all, if we don't know what we're doing, then isn't the principle of primum non nocere at least as compelling?
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*Note: FDR actually criticized Hoover in 1932 for his "reckless and extravagant" fiscal policy. Consider the following data:
How should policymakers react to an economic crisis or ongoing economic malaise--an event that has taken them by surprise and/or left them searching for answers?
Brad DeLong's prescription is to follow the example set by FDR in the 1930s: How to Fix the Economy: "Try Everything". He favorably quotes the former president, who once proclaimed:
One of the problems associated with macroeconomic experimentation, apart from the fact that most experiments fail, is the aura of uncertainty it engenders. The appearance of senior leaders resorting to bold and persistent experiments is unbecoming and even a little scary. What will they think of next?! Should I invest now, or should I wait?! It does not take a rocket scientist to appreciate the effect that policy uncertainty might have on prolonging an economic slump. I'm not sure how important this force is quantitatively (because it is hard to measure) but I don't think one can easily dismiss the role it can play in an economic crisis and recovery. Certainly, there is no shortage of narratives out there that blame FDR's "bold and persistent experiments" for transforming a recession into depression (many also blame President Hoover for the same reason).
Truth be told, I doubt that DeLong actually endorses "bold, persistent experimentation" in the sense of "anything goes." The set of "bold, persistent experiments" after all is very, very large. As he suggests, we already possess a set of tools--we (think) we know the nature of promising interventions--if only those squabbling politicians would employ them! In addition, he provides a short list of potential interventions (some of which, like QE, were actually implemented).
It seems that DeLong was motivated to write this piece mainly to criticize Martin Feldstein's needlessly inflammatory language in promoting an otherwise sensible policy proposal. I do agree with DeLong on that sentiment. But if this was the intended purpose of his article, then why invoke Hoover-FDR fables?* And why speak favorably of the FDR-style "kitchen sink" approach to macro policy? After all, if we don't know what we're doing, then isn't the principle of primum non nocere at least as compelling?
----------------------------------------------------------------------------------------------------------------
*Note: FDR actually criticized Hoover in 1932 for his "reckless and extravagant" fiscal policy. Consider the following data:
Title : On the Want of Bold, Persistent Experimentation
link : On the Want of Bold, Persistent Experimentation
Brad DeLong's prescription is to follow the example set by FDR in the 1930s: How to Fix the Economy: "Try Everything". He favorably quotes the former president, who once proclaimed:
The country needs and ... demands bold, persistent experimentation,” he said in 1932. “Take a method and try it. If it fails, admit it frankly, and try another. But above all, try something."In some ways, this sounds admirable. But in other ways, it sounds...well, it sounds a bit crazy. Even DeLong acknowledges this when he writes:
To be sure, Roosevelt’s New Deal policies sometimes conflicted with one another, and quite a few of them were counterproductive. But, by trying everything, and then scaling up the most successful policies, Roosevelt was ultimately able to turn the economy around.Hmm. Ultimately turned the economy around? I guess so...even if it did take 8 years. One has to wonder how long it would have taken if FDR had done nothing at all? I also wonder which of the many (some declared unconstitutional) experiments ultimately turned the economy around. The bold experiment of declaring war in 1941?
One of the problems associated with macroeconomic experimentation, apart from the fact that most experiments fail, is the aura of uncertainty it engenders. The appearance of senior leaders resorting to bold and persistent experiments is unbecoming and even a little scary. What will they think of next?! Should I invest now, or should I wait?! It does not take a rocket scientist to appreciate the effect that policy uncertainty might have on prolonging an economic slump. I'm not sure how important this force is quantitatively (because it is hard to measure) but I don't think one can easily dismiss the role it can play in an economic crisis and recovery. Certainly, there is no shortage of narratives out there that blame FDR's "bold and persistent experiments" for transforming a recession into depression (many also blame President Hoover for the same reason).
Truth be told, I doubt that DeLong actually endorses "bold, persistent experimentation" in the sense of "anything goes." The set of "bold, persistent experiments" after all is very, very large. As he suggests, we already possess a set of tools--we (think) we know the nature of promising interventions--if only those squabbling politicians would employ them! In addition, he provides a short list of potential interventions (some of which, like QE, were actually implemented).
It seems that DeLong was motivated to write this piece mainly to criticize Martin Feldstein's needlessly inflammatory language in promoting an otherwise sensible policy proposal. I do agree with DeLong on that sentiment. But if this was the intended purpose of his article, then why invoke Hoover-FDR fables?* And why speak favorably of the FDR-style "kitchen sink" approach to macro policy? After all, if we don't know what we're doing, then isn't the principle of primum non nocere at least as compelling?
----------------------------------------------------------------------------------------------------------------
*Note: FDR actually criticized Hoover in 1932 for his "reckless and extravagant" fiscal policy. Consider the following data:
Brad DeLong's prescription is to follow the example set by FDR in the 1930s: How to Fix the Economy: "Try Everything". He favorably quotes the former president, who once proclaimed:
The country needs and ... demands bold, persistent experimentation,” he said in 1932. “Take a method and try it. If it fails, admit it frankly, and try another. But above all, try something."In some ways, this sounds admirable. But in other ways, it sounds...well, it sounds a bit crazy. Even DeLong acknowledges this when he writes:
To be sure, Roosevelt’s New Deal policies sometimes conflicted with one another, and quite a few of them were counterproductive. But, by trying everything, and then scaling up the most successful policies, Roosevelt was ultimately able to turn the economy around.Hmm. Ultimately turned the economy around? I guess so...even if it did take 8 years. One has to wonder how long it would have taken if FDR had done nothing at all? I also wonder which of the many (some declared unconstitutional) experiments ultimately turned the economy around. The bold experiment of declaring war in 1941?
One of the problems associated with macroeconomic experimentation, apart from the fact that most experiments fail, is the aura of uncertainty it engenders. The appearance of senior leaders resorting to bold and persistent experiments is unbecoming and even a little scary. What will they think of next?! Should I invest now, or should I wait?! It does not take a rocket scientist to appreciate the effect that policy uncertainty might have on prolonging an economic slump. I'm not sure how important this force is quantitatively (because it is hard to measure) but I don't think one can easily dismiss the role it can play in an economic crisis and recovery. Certainly, there is no shortage of narratives out there that blame FDR's "bold and persistent experiments" for transforming a recession into depression (many also blame President Hoover for the same reason).
Truth be told, I doubt that DeLong actually endorses "bold, persistent experimentation" in the sense of "anything goes." The set of "bold, persistent experiments" after all is very, very large. As he suggests, we already possess a set of tools--we (think) we know the nature of promising interventions--if only those squabbling politicians would employ them! In addition, he provides a short list of potential interventions (some of which, like QE, were actually implemented).
It seems that DeLong was motivated to write this piece mainly to criticize Martin Feldstein's needlessly inflammatory language in promoting an otherwise sensible policy proposal. I do agree with DeLong on that sentiment. But if this was the intended purpose of his article, then why invoke Hoover-FDR fables?* And why speak favorably of the FDR-style "kitchen sink" approach to macro policy? After all, if we don't know what we're doing, then isn't the principle of primum non nocere at least as compelling?
----------------------------------------------------------------------------------------------------------------
*Note: FDR actually criticized Hoover in 1932 for his "reckless and extravagant" fiscal policy. Consider the following data:
