Editorial
Ideological Thinking Revisited
Following the December 15th Republican "debate," New York Times columnist Paul Krugman wrote once again about the evils of ideological thinking.
Krugman did begin his piece by criticizing Mitt Romney for his repeated vacillations about which public policies he supports, which he opposes, a problem Romney has been plagued by most of his political life. But Krugman didn't do what follows from this, namely, praise Romney for being a pragmatist, for his agility and flexibility. No, he decried the former Massachusetts governor's various views. And then he moved on to a more familiar target, one he has been shooting at every chance he gets. This is Representative Ron Paul's integrity and consistency. Calling it ideological thinking, Krugman considers this a far greater failing than anything he could find with Romney.
Krugman summarizes all this: "In a way, that makes sense. Romney isn't trusted because he's seen as someone who cynically takes whatever positions he thinks will advance his career – a charge that sticks because it's true. Paul, by contrast, has been highly consistent. I bet you won't find video clips from a few years back in which he says the opposite of what he's saying now. Unfortunately, Paul has maintained his consistency by ignoring reality, clinging to his ideology even as the facts have demonstrated that ideology's wrongness."
Ignore, please, for the moment that Krugman is every bit as ideological as would be anyone who tries to make sense of political economy, just one field of study that tries to learn generalities from the past so as to prepare for the future. The way this is done is by the identification of certain principles and then implementing them with the expectation that bad results will be avoided and good ones fostered. There really is no practical field, such as farming, medicine, engineering, child raising and so forth, that can carry forth without such an "ideological" or theoretical approach; no one who even dabbles in them can avoid it.
Ron Paul's theoretical guidance comes from a certain school of free-market economics, laid out by the likes of Ludwig von Mises and F. A. Hayek. (Other free-market schools are those of Milton Friedman – the Chicago School – and those of James Buchanan – the Virginia School.) Massive volumes lay out these positions, in more or less technical ways, as they do the positions of Paul Krugman and his idol, John Maynard Keynes. It is routine in the social sciences for emerging scholars and researchers to hitch their wagon to some earlier leader in their field. Just check out sociology or anthropology – they all follow this pattern. Krugman is no exception. He has hitched his wagon to Keynes and follows Keynes's pragmatic, erratic economic thought. It happens to accommodate his hostility to principles. It doesn't demand any integrity in one's thinking; only expediency counts.
Because we are talking here about how political economy should be approached – or macroeconomic theory – the impact of unprincipled thinking is quite remote. It is difficult to tell which results of such mishmash political-economic thinking come from which ideas – as I have argued before, it is like getting food poisoning or, alternatively, health benefits from a smorgasbord meal which contains many diverse ingredients.
But if you consider some areas of concern that are more immediately relevant to one's life, the unprincipled approach quickly shows its damage. For example, it is generally understood that people with certain medical maladies should stick steadily to a certain diet – think of diabetics. In engineering, medicine, nutrition, farming and the rest the practitioners learn their general principles and implement them in the course of their practice. Or consider morality; it is pretty much the case that lying and cheating ought to be avoided. Even more drastically, deploying coercion in sexual relations is not just immoral but outright criminal. Everyone must, therefore, practice consensual sex so that rape, for example, is never acceptable. That is the ideology of the thing, no exception.
Yet by Krugman's lights, to prohibit rape in all cases, as a matter of one's ideology, is a serious flaw in one's character, just as sticking to free-market economic analysis – such as refusing to print money without proper backing – is supposed to be in Ron Paul's thought. As Krugman chides, "Paul has maintained his consistency by ignoring reality, clinging to his ideology even as the facts have demonstrated that ideology's wrongness," but the only case he offers to illustrate the alleged wrongness is that Paul and his allies have warned about inflation for years and yet we are not seeing inflation break out all over. (Of course, there are those, rather more subtle economists, who see it break out in numerous hidden way – like postponing the destruction of the value of money for a while, "kicking the can down the road" so as to confront the mess later, e.g., by our grandchildren.) In other words, inflation can be hidden in various clever ways but not without eventual dire consequences. So here, too, Krugman is off.
What Paul insists on is consistency in one's economic theorizing, something that every bona fide science insists upon. Pseudo-sciences like astrology and tarot reading don't, with the result that they accomplish nothing useful at all. Most of Krugman's ad hoc economics is like that – fancy footwork without any useful wisdom in its wake.
The ideology that Krugman follows despite denying it – just as many pragmatists deny that they firmly stick to some ideas – is the economic philosophy of the state's regimenting economic agents at nearly every turn. At no time will coercion as such be frowned upon by Krugman – it would be ideological to do so, in his view.
But the issue isn't whether ideology is admissible but which ideology is sound, which bogus.
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Posted by Anthony Migchels on 12/21/11 11:14 AM
The three schools of monetary thought mentioned in this article have one thing in common: they ignore interest.
Or: the price for money.
The little they have to say about it, is that money needs a price too and interest is just that.
But clearly, in a monopoly currency environment, you will have monopoly pricing.
Which explains why you pay 300k interest on a 200k mortgage, while the bank provides the money through bookkeeping.
The fourth relevant monetary school, interest free currency, is ignored.
That's why I like the idea of a free market for currencies. In a free market, free money will not be ignored.
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Posted by LloydMiller on 12/21/11 12:59 AM
In my mind "ideology" is or should be a theory of cause and effect, not just an array of preferences.
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Posted by Ralph Tamm on 12/20/11 07:55 PM
Pragmatists
Pragmatists are ubiquitous in today's world. Almost everyone is one if he or she recognizes it or not. A pragmatist can be defined as: 'One who examines facts, analyses them, and comes to a logical conclusion - unprincipled.' Or, as found in a dictionary, 'One who employs a practical approach to problems.'
Generally the facts derived from observations are accurate and indisputable. We see what we see. But the inductive reasoning - a posteriori, effect to cause - is almost always faulty in our social world. And in the analyses, the premises when using logic must be, but seldom are, right. To witness a few isolated incidents is hardly the big picture thus making it easy to jump to wrong conclusions. To analyze facts in the real world require a good grasp of human nature, and knowledge of existing extraneous forces at work that could have a bearing on the cause. It is obvious to me that in our case past legislation is having an enormous effect on the observable condition of our social world.
For an individual to base a conclusion and take action from faulty reasoning is not generally of concern but, when millions are a victim of faulty reasoning, as with political legislation, the results can be catastrophic. This is exactly what I think is our problem today. We let politicians through bureaucracy make decisions and pass legislative bills based on a pragmatist approach to 'solving' problems. In most instances, a history of the chosen solution is available, but is seldom researched, which is another problem of vast portent.
I'm sure it's ignorance and not intent that legislators cause the chaos we're witnessing. They have not learned the principle that universal coercion, the pragmatists 'solution' to problems, is destructive and is not a problem solver.
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Posted by Friend_of_John_Galt on 12/19/11 04:13 PM
Don't forget that the position of the U.S. Dollar as the world's reserve currency also exports a great deal of our inflation. The U.S. doesn't seem to get inflated (much) -- but China or India, etc., get hammered, forcing them to deal with the inflation at their end.
The inflation-causing policies of the Fed have been offset by the failure of those newly created dollars from cycling through the U.S. economy both by the banks holding them to cover their capital reserve requirement and from the exporting inflation effect of the dollar reserve currency -- but the day will come when "the chickens come home to roost" and we'll have very significant inflation, even if the dollar doesn't fully collapse -- this time.
Back in the 1970s, the inflation was set off because the printing presses were going full tilt following Nixon's exit from Bretton Woods. While the U.S. Dollar was just beginning its role as a reserve currency (in lieu of gold), the export of inflation effect was not yet fully established, so most of the inflation stayed home.
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Posted by mickchev on 12/19/11 12:39 PM
There was something bugging me about Krugman's article. He gloatingly stated that Ron Paul's argument was that by pumping trillions of dollars into the economy, inflation should have sky rocketed. It certainly increased but it didn't skyrocket, even if you measure it without distorting the figures. But what Krugman conveniently ignored was that the money given to the banks never made it into the economy. Instead it went into the black hole the banks created to prop up their rotten debts and the only money that made it outside their books were the bonus checks they paid themselves for destroying capitalism. I'm not sure when or if that money will ever make it into the broad economy because the banks can suck up lots more just to appear solvent. Krugman will no doubt forget he wrote that article when the s--t hits the proverbial. Which will almost certainly be sooner rather than later.
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Posted by bewer on 12/19/11 11:47 AM
Unfortunately, Ron Paul's ideology is the soundest over a longer term than the human condition currently accepts. We want politicians and bureacrats to make decisions that result in better living conditions for us and everyone else in 2 years. HAh
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Posted by Mountainview on 12/19/11 11:39 AM
You can compare it to religion: Like a Jewish person will never recognize Jesus as the savior, a Keynesian (business cycle analyser) will never admit that the economy can be guided by a correct interpretation of the credit cycle (as Austrians do).
So letting Krugman discuss Paul (or with Paul) will never ever lead to a solution, nor even to a hint of a useful tip to the real economy!
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Posted by Abu Aardvark on 12/19/11 11:37 AM
"And please ignore the fact that Keynes also advocated budgetary surpluses when the business cycle is lifting up (the other side of built-in stabilizers), something politicians alas never quite understood."
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Hahaha. Didn't they, eh? How come? Hahaha ...
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Posted by christof on 12/19/11 11:16 AM
Please ignore the fact that Tibor - like Krugman - is equally ideologically biased. And please ignore the fact that Keynes also advocated budgetary surpluses when the business cycle is lifting up (the other side of built-in stabilizers), something politicians alas never quite understood. And please ignore the fact that Hayek - when Keynes died - wrote to his widow Linda "that Keynes was one of a kind and of the great minds in economic history". And rightfully so, they both respected each other for what they were worth. And now seriously : please ignore Fox and the Glen Beck's of this world, they truly will give you both sides of the story !!!
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Posted by Abu Aardvark on 12/19/11 11:15 AM
Dear Mr. Machan,
you might want to take a look at Bob Wenzels ongoing debunking of Paul "Alien Invader" Krugman - Pure, unadulterated joy:
"Am I Getting into Krugman's Head?"
Click to view link
"What the Sulzberger Kid Must Learn at Home... "
Click to view link
"More Krugman Konfusion"
Click to view link
"Economist Magazine Finally Figures Out What the ECB is Up To ( and Proves Krugman Even More Clueless)"
Click to view link
"Paul Krugman as the Evil Jokester"
Click to view link
"EXPOSED Why Krugman "Smoothed" Price Inflation Over Four Years"
Click to view link
"Keynesian Economics vs. Austrian Economics"
Click to view link
"Krugman's World Turns Upside Down"
Click to view link
"Ron Paul versus Paul Krugman"
Click to view link
"Krugman Attacks Back with an Absurd Chart"
Click to view link
"Krugman Attacks Wenzel and Ron Paul"
Click to view link
Reply from The Daily Bell
Great list, thanks.
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Posted by provolone on 12/19/11 07:06 AM
Go ahead and justify my cynicism with intelligent news analysis. It is not like this individual has a position solely because he is willing to play ball with editors and tow the party line. A major media outlet pushing deceptive information? I would have never expected it! I like it when the presenter is over the top to the point of absurdity with their spin. At least I get a few laughs or some amazement at their gall. Some of the responses to the petitions at Click to view link come to mind. Although Glenn Beck was up there when he had his 4 or 5 pm slot.
