Mankiw vs. Frank

[butler blue]

This mini-debate between Greg Mankiw and Bob Frank caught my attention. You can get through the links back to Frank's original NYT article, Mankiw's response, and then Frank's rebuttal. Frank criticizes supply-side macro stimulus by way of some revision of homo economicus (at least the rich version of him). http://gregmankiw.blogspot.com/

 

Discuss. :)

[chauchau]

Mankiw is a joke, not an academic. As supposedly "liberal" as Harvard is, it never ceases to amaze me the way they sanction rightwinger' "research".

 

i.e., Mankiw's purported "research" "found" that a one dollar dividend tax cut increases economic growth by two dollars... that's some magical accounting... I doubt even George W. Bush would say that, fearing for his own credibility... The guy's like a caricature of a conservative, tax-cuts-are-the-one-and-only-path-to-salvation economist.

[commodore]

Mankiw was a full professor at Harvard by age 29, and he's written some of the most influential undergraduate textbooks. Sorry, but you don't get to where he is by being "a joke". You may disagree with him (I sometimes do), but he's no joke.

[macrodude84]

The guy's like a caricature of a conservative, tax-cuts-are-the-one-and-only-path-to-salvation economist.

 

That must be why Mankiw advocates raising Pigouvian taxes.

[chauchau]

No, Mankiw advocates raising Pigouvian taxes b/c he hates Cambridge traffic, and he wants riff-raff confined to the 't'. He does get credit for sticking his neck out, but it's the only issue I've seen where he does that. Even that's a joke though -- he once claimed it makes him "liberal".

[chauchau]

Mankiw was a full professor at Harvard by age 29, and he's written some of the most influential undergraduate textbooks. Sorry, but you don't get to where he is by being "a joke". You may disagree with him (I sometimes do), but he's no joke.

 

Sorry, but the guy's a joke. I don't think someone's a genius and his ideas must be brilliant just b/c he's a Harvard professor. I care about his ideas. You're insinuating that b/c he's a Haaavahd professor that I should just roll over. The fact that someone who is a tenured professor at Harvard could assert in published academic research that a one dollar cut in dividend taxes could increase economic growth by two dollars makes Mankiw far more dangerous than if he were merely the outspoken head of your local chapter of the Young Republicans.

[Skipper]

The fact that someone who is a tenured professor at Harvard could assert in published academic research that a one dollar cut in dividend taxes could increase economic growth by two dollars makes Mankiw far more dangerous than if he were merely the outspoken head of your local chapter of the Young Republicans.

I'm not familiar with the paper you're referring to, but I think it would be more helpful if you would criticize Mankiw's methodology rather than asserting that he's a "joke" because he found results that you find implausible.

[chauchau]

Re: The textbook

 

Look, if you are the Chairman of the President's Council of Economic Advisors & a tenured Harvard Professor, and conservative, it's not going to be difficult to sell a lot of textbooks. If you're from, say, Iowa, and you write a principles book, even if it's a great book, you'll have trouble selling it.

 

Second point, Mankiw's undergrad textbook is horrible. Aside from botching the Market for Loanable funds, the book is a work of conservative propaganda. Virtually everything in the book is chosen to conform to conservative myths. One example: If Mankiw wants to give samples to his students of the differences in living standards around the globe, he'll give only gdp, and compare the US with, say, Mexico & ghana (to make our economic system look flawless). He regularly pretends northern Europe didn't exist, and of course wouldn't compare, say, drug-use, obesity, crime rates, life expectancy, teen pregnancy, and health-care coverage -- areas where the US doesn't do so well.

 

Point is: if you don't have the same (narrow) worldview as Mankiw, you won't like his book.

[Skipper]

Chauchau, I'm beginning to suspect that you're not a big Mankiw fan.

[chauchau]

I'm not familiar with the paper you're referring to, but I think it would be more helpful if you would criticize Mankiw's methodology rather than asserting that he's a "joke" because he found results that you find implausible.

 

It's the paper on his blog. If it's the same as his earlier draft, one key fallacious assumption (among many) is that contemporaneous lump-sum taxes help balance the budget when you cut the cap gains rate.

[chauchau]

Yep, he assumes that lump-sum transfers adjust immediately to revenue changes... He buries it in there, but there it is.

[chauchau]

The WSJ wrote: "Reduced to its essence, Mr. Mankiw concluded that a $1 tax cut on dividends would reduce government revenue collections by about 50 cents, after taking into account taxes on $2 of additional economic growth induced by the tax cut."

It seems the WSJ plumb forgot to mention about the contemporaneously adjusting lump-sum taxes.

[commodore]

I was not saying that because he's a Harvard professor we have to listen to him. I was suggesting that Harvard doesn't just hand out tenured professorships to 29 year olds, and they probably think he's a pretty bright guy.

[chauchau]

I was not saying that because he's a Harvard professor we have to listen to him. I was suggesting that Harvard doesn't just hand out tenured professorships to 29 year olds, and they probably think he's a pretty bright guy.

 

 

I'm starting to wonder. I think Schleifer got his PhD & tenure pretty young, and he is definitely pretty far out there. Sacchs, if memory serves, was tenured at 27, and while he might be a pretty smart guy in some ways, he's a bit of a loon. I wouldn't be surprised to find out that Summers & Feldstein were also tenured in their 20s, and they both do crap. Based on the record, tenured young in the Econ dept. at harvard ain't all it's cracked up to be. (It'll propel your career forward, that's for sure, all i'm saying is that their Econ department doesn't seem to be the best judge of intellect.)

[chauchau]

also, I don't want the above critique of Mankiw's paper to come across like it is the sole problem with the paper: It's not. The way he spun the results to the WSJ, one would think he had the US economy in mind when he did the study. Instead, of course, he had a perfectly competitive closed economy with no human capital, one type of physical capital, and one type of capital tax, and the sensitivity of capital to capital taxes was pretty much built right into the model in a way which doesn't even remotely match the data. Making, and working, with a wooden, textbook model like that is perfectly fine. To take the (highly implausible) results about that model and spinning them to the WSJ as though it's applicable to the US case is irresponsible. Mankiw's paper and the WSJ's snow job reporting it are exactly what's wrong with modern economics.

[chauchau]

so, i imagine you'll be writing papers like that in a coupla years, eh commodore?

[ekonomiks]

I don't care much about the Mankiw debate. I just have a question that is peripheral to this discussion: How can one get tenure at such a young age? Write an incredibly influential paper? Receive unanimously positive recommendations from Nobel-caliber colleagues?

 

That sounds like a pretty awesome deal though. You're done struggling for tenure by the time you're 30, after which you can start vacationing, blogging, consulting, doing public policy stuff, or whatever... without ever worrying about losing your job. How sweet thy job is, Prof. Mankiw!

[nasshi]

what makes you qualified to label people like you are, chauchau?

[chauchau]

I'm tenured.

[chauchau]

Yeah, admittedly I was pretty harsh on the whole Harvard crew, when I haven't read all of their research and so I can't really be sure that there wasn't some brilliant paper by Summers or Feldstein from 20 years ago... For the sake of our profession, I really hope there is. What I do know is what I've read and seen, and I've read at least one article by each, and it isn't that I walked away merely unimpressed, its that I really found nothing there. Mankiw's paper isn't that special in that regard -- there are zillions pretty much just like it.

[chauchau]

& obviously, j/k about the me being tenured bit...

[chauchau]

sorry for continuing to beat a dead horse, but upon reading more of the WSJ article, which mankiw posted up on his blog, i think it's hard to walk way from it without concluding that mankiw & i don't just have a policy disagreement, the guy is being willfully dishonest. Sound crazy?

 

I quote the WSJ article "To the champions of bigger government, the important truth of the Mankiw study was that the amount of tax on induced economic growth was insufficient to make up for all of the revenues lost to the Treasury from the original tax cut. Ergo, the government has less money to spend. Ergo, tax cuts are bad.

To those of us who prefer economic growth over government growth, the Mankiw study confirmed a different truth. If Congress is willing to forego 50 cents of revenue, the economy would grow and people would have $2 more income. If given the choice, most people would take the $2."

 

But the Mankiw study didn't even remotely confirm this "truth". The model Mankiw was working with was NOT a model of the US economy. That the WSJ would write this is no surprise -- it's never really had a policy of being very upfront with its readers, who eat this stuff up -- but Mankiw putting it on his own blog means he's saying his paper was a model of the US economy (never mind about the lump-sum taxes & competitive markets) when, quite clearly, it wasn't...

[PCG]

Seriously, you sound like the thing you criticize Mankiw of being. You're going on and on without really making any substantive critique. Maybe when you get to davis next fall you can start doing something more constructive than spouting off left-wing propaganda on some lame web forum and start working on an alternative model that counter's Mankiw's model with actual reasoning and results.

 

Personally, I think it is a worthy research topic, and while there are certainly areas to critique his paper (as with any paper) at least he is contributing something.

[Cassin]

Seriously, you sound like the thing you criticize Mankiw of being. You're going on and on without really making any substantive critique. Maybe when you get to davis next fall you can start doing something more constructive than spouting off left-wing propaganda on some lame web forum and start working on an alternative model that counter's Mankiw's model with actual reasoning and results.

 

Personally, I think it is a worthy research topic, and while there are certainly areas to critique his paper (as with any paper) at least he is contributing something.

 

I am not a fan of Neo-Keynesian work, I haven't used Mankiw's book (use one by Michael Parkin in first year), I don't go to Harvard and in the equation "$1 tax cut brings $X in growth" I am not committed to any particular X or that X>0. Nevertheless, I find chauchau's criticisms petty and too ideological ex-ante: some results might go against one's values and we need to be able to accept them, e.g. I think Virginia Tech shooting is horrible but that doesn't mean it hasn't happened.

 

Assuming the conclusion is not how science (or whatever economics is, a social science) should be done. Especially if you, chauchau, think Mankiw is stacking the deck in his own favour (I don't know if he does or not), then you don't want to do the same to remain on a higher moral ground. I think the proper way is to make a model that makes different assumptions, take it to the data and see if X=1.5 or X=1 or X=0 or X~=1.95 after all. See what the necessary/sufficient conditions for the result are - argue whether they are likely or unlikely. Then go to a conference with the paper, get feedback and try to publish it. If you, chauchau, find that X=0 - that's good for you, you'll prove Mankiw is wrong (under a clear set of assumptions that you make about human capital etc) - just don't reach a conclusion side-stepping the modeling, the theorizing or the data work (that you say is important). All the best.

[ekonomiks]

I'm a little more open with respect to methodology, i.e. I don't always need to see a model as long as the argument makes sense. So far, however, you haven't offered a sensible and coherent argument, chauchau. When you do, some people will start to listen.