Now, Ms. Shlaes has found a new target: John Maynard Keynes. There’s a lot to critique in this piece, but this one takes the cake:
But the most telling fact about the new rush to spend is that its advocates have insisted on invoking the New Deal. They tend to gloss over the period when the phrase, “We are all Keynesians now,” was actually first uttered: the mid-1960s. (Uttered by Friedman, in fact, though he meant only that we all work in the terms of the Keynesian lexicon.)
The Great Society of that period was the ultimate Keynesian experiment, and it didn’t work very well.
Grr. Keynesianism says that deficit spending can help create jobs when the economy is depressed. The Great Society wasn’t deficit spending, it wasn’t intended to create jobs, and the economy of the 1960s wasn’t depressed. It was social engineering; we can talk about how well or badly it worked, but it had nothing whatsoever to do with Keynesian economics.
the fact that the country and President Bush personally were already mobilised for disaster has saved lives.… The level of preparedness for a giant storm may not have been obvious outside the country, filled as it was the London bombings and the constitutional challenges in Iraq. But the US was prepared for Katrina. All the old and new federal offices worked together and confronted the storm early.
… chutzpah and a complete lack of intellectual scruples ….
The Edge of the American West 
12 comments
November 19, 2008 at 11:46 pm
urbino
Misogynist.
November 19, 2008 at 11:47 pm
urbino
Also: I saw her on Charlie Rose the other night, and little starbursts came out of the tv.
November 20, 2008 at 3:48 am
Michael Turner
Are we to believe that Shlaes is a CFR fellow in economic history, but doesn’t know what qualifies (even roughly) as Keynesian stimulus? The point of my jaw just left a dent in the floor.
I mean, when kid bitzer here wonders why we’re not nominating Ben Franklin as the most intellectual U.S. president, that’s OK — kb’s quite amusing and intelligent, and not pretending to qualify for a fellowship in, say, American history. Certainly, nobody at The History Channel is paying him for what he writes.
What would be Shlaes’ excuse for not knowing anything worthwhile about Keynesian economics? Could it be the difficulty of laying hands on good sources? No. She links to econlib.com from her own links page, and there you’ll find Alan Blinder’s lucid discussion of the subject.
Y’know, I’d like to think she’s just staggeringly ignorant, and a lousy researcher. But, it’s not “just”. Throw in a dash of arrogance. Hell, dump the whole can of arrogance in there and stir briskly over high heat until the house stinks of it. Take a look at The Supply-Side Revolution.
Uh, how it is that can you come to such a lofty, nuanced assessment of Keynes and still not know what constitutes Keynesian stimulus? Not long after, a quote that suggests the answer to this question:
Ah, there you go: it’s laziness! As I pointed out in earlier comments, it was Milton Friedman who said that, and that’s not even really what he said. Anybody with a glancing education in the recent history of economics would know this, and my economic education is so glancing that I don’t think anybody even heard it when my head ricocheted off what little I’ve studied.
Still, she’s at least disingenuous, if not glaringly mendacious. It’s not just ignorance, laziness and arrogance. She lies. In the bit Krugman cites, she’s saying that Bush’s tax rebate mostly got pocketed — this, she claims, is an example of how Keynesian stimulus does not work as theory predicts. But in The Supply-Side Revolution, she and her co-author wrote this:
So snide in that last sentence. And yet, back when the tax rebate was being debated earlier this year, many economists, including Krugman, were saying it wouldn’t be as efficient a stimulus as measures specifically aimed at lower income groups –people who really could use the money, and therefore people who really would use the money. What happens when you hand out $1000 to everybody regardless of whether they really need it? (So you can call it a “tax cut”, the touted GOP panacea?) Huh, that’s funny: a lot of it didn’t get spent.
Suddenly, the failure of a not-very-Keynesian measure (which we can naturally assume she’d know from her own writing) is a convenient argument against Keynesian measures? She gets to have it both ways?
Color me disgusted. Council on Foreign Relations: hire me. I don’t need a fancy title like “Fellow in Economic History”. You can call me “that fella in economic something-or-other.” I’ll work for less than Amity. I promise I’ll check at least every other fact. And I’ll only lie if you ask me about my sex life. Deal?
November 20, 2008 at 4:09 am
kid bitzer
“when kid bitzer here wonders why we’re not nominating Ben Franklin as the most intellectual U.S. president, that’s OK”
there’s also the mitigating factor that kid bitzer was re-telling one of the oldest jokes in the book. the variant that involves franklin’s appearance on the $100 bill has popped up a few times now, too.
whether there’s any excuse for his belief that very old jokes are still amusing, even when everyone is in on them, i do not know. but this speaks more to doubts about his sense of humor than to doubts about his knowledge of american history.
and yes, in fact i have been featured in a history channel video, though i appeared on camera rather than writing for them, and i did not discuss franklin on that occasion.
November 20, 2008 at 4:19 am
Michael Turner
Pardon Michael Turner, then, he was taken in by the joke. He has no sense of humor, he supposes.
November 20, 2008 at 6:35 am
kid bitzer
he has an excellent sense of humor, in my opinion. but then, i’ve already said there’s reason to doubt my own.
November 20, 2008 at 6:38 am
Matt W
. In the bit Krugman cites, she’s saying that Bush’s tax rebate mostly got pocketed — this, she claims, is an example of how Keynesian stimulus does not work as theory predicts.
And at the time Krugman made pretty much that exact criticism of Bush’s tax cut; the back-loaded tax cuts were actually anti-stimulative and prevented stimulative measures at the time, and the only stimulative part were the rebates Democrats insisted on, which weren’t all spent anyway. BTW, your paraphrase is too kind to Shlaes; she doesn’t about Bush’s 2001 rebates but about his 2001 “stimulus.” In other words, the whole shebang, which as Krugman observed at the time wasn’t even a stimulus package but was the exact same tax cuts for the rich Bush had always wanted.
As for how Shlaes can fail to understand these things, a great man once said that it is impossible to get anyone to understand something when their salary depends on not understanding it. The question is why the CFR keeps paying her that salary (her other paymasters I understand).
November 20, 2008 at 7:36 am
Ben Alpers
Shlaes is a mendacious, partisan hack. She’s a version of Ann Coulter designed for slightly more polite company.
Whether the mental state from which her work arises principally consists of stupidity, laziness, or a belief in the need to lie for the cause is a pretty academic question.
Given the serious attention she gets, it is certainly worth continuing to argue against her, but in doing so one should always point out the basic nature of the performance, which has nothing to do with arriving at an honest assessment of the subjects about which she purports to write.
Why the CFR thinks it’s worth keeping her in its stable is a more interesting question.
November 20, 2008 at 7:39 am
Michael Turner
I should note that Shlaes gets it right about “We’re all Keynesians now” in the piece Krugman quotes. OTOH, maybe she got to EoftheAE after Krugman’s link, read the comments, and saw my comment on that confusion of Nixon with Friedman as the source. So maybe she only has, well, me to thank, for finally getting that one right? What a frightening thought.
Shlaes never talks about jobs programs designed with Keynesian 3-t (“timed, targeted, temporary”) criteria in mind. In the piece Krugman links, she faults a certain kind of stimulus spending for acting only with a lag, if at all: the one where you put money in the pockets of people who are mostly reasonably well employed, but who are increasingly fearful of ending up otherwise, and therefore turning ever more thrifty. Well, that’s pretty lousy stimulus, I think we can all agree. After all, if the government is mailing out checks in times of bad economic news, it’s practically like Dubya’s screaming, “We’re so scared of a recession that we’re gonna give you some money — now go out and buy $28 worth of socks at J.C. Penney or something, fer chrissake, like my dad tried to get you to do that time, back when he was president during a recession!”
It should be obvious, however, that if you can put impoverished and unemployed people to work almost overnight, and pay them by Friday of the same week, you’ll see an effect on consumer spending measurable in local cash registers before Monday morning. Virtually no lag. Yet Shales never seems to take up this point.
Maybe Shlaes is utterly unacquainted with this species of Keynesianism? I have to say I doubt it. From p.185-6 of The Forgotten Man:
Eccles is an interesting case. Not to encourage Mitt Romney or anything, but it would seem one can be a social conservative (Eccles was a Mormon), a fiscal conservative (he clashed with Truman and Morgenthau later over inflation and the budget), but also a proper Keynesian in the crunch, if the Minneapolis Fed bio for him is to be believed.
Amity Shlaes unpacks the various components of Keynesian stimulus spending, but then identifies as “Keynesian” almost any government action that happens to share one or more of those attributes, even calling it “Keynesian” at times when such spending wasn’t particularly addressing a recession. From what I can tell, she should know better. One could hardly be an economic historian of the time without knowing better. Heck, econ is just one of several dilettantish interests of mine, and even I know better. If she doesn’t want to be called a liar, she should tell us what other explanation still stands after the application of Occam’s Razor. All I can see is rank intellectual dishonesty.
November 20, 2008 at 8:16 am
Michael Turner
“timed, targeted, temporary” — make that “timely”, sorry.
Which brings up a point, an admitted weakness in my argument actually. It’s well known that infrastructure spending can have long lead times. And, as Brad Delong points out, you can’t (and probably shouldn’t) say with any authority that you’re got a recession coming until you’re already in one. So I admit it’s hard to get “timely” with spending intended to create jobs for those out of work, at least if the projects make any long-term sense. However, if it’s understood that such spending has one of the best multipliers, you can make policy around that understanding: always try to have a number of projects almost ready to go in case you might need them. Other high-efficiency spending can help fill the lead-time gap as you’re gearing up for those projects.
BTW, my quotes from The Forgotten Man are from Amazon’s Look Inside — no way will I be buying this gobbler — and the text is somewhat munged up. So that might be “pollitical analyst”, not “political scientist”, above, but it hardy matters.
November 20, 2008 at 10:10 am
urbino
After all, if the government is mailing out checks in times of bad economic news, it’s practically like Dubya’s screaming, “We’re so scared of a recession that we’re gonna give you some money — now go out and buy $28 worth of socks at J.C. Penney or something, fer chrissake, like my dad tried to get you to do that time, back when he was president during a recession!”
Ah, but W has a Higher Father, who, as it turns out, offered a higher rebate. W, of course, went that far only for Wall Street. Simul justus et peccator, I suppose.
November 20, 2008 at 3:54 pm
Barry
Michael, this is why I was getting critical over on Crooked Timber – somebody like Amity is as much a fraud as any Discovery Institute ‘researcher’ on Intelligent Design, any denier of the link between smoking and cancer, or the neocons who still insist that the War in Iraq was justified to protect us against Saddam.
She’s also well paid to do so, so she can keep it up long past the point of rationality (or rather, a paycheck carries its own rationality…).