Thursday, July 12, 2012

On you, Marcus

At Historinhas, Marcus writes:

The chart shows that monetary policy is crucial for macroeconomic stability. During “Keynesianism Rules” (a.k.a. “The Great Inflation”) a rising spending (NGDP) trend initially bolsters real growth (RGDP above trend) a fact that got the 1960s to be called “Golden Age”(!). Soon, most of the rising spending managed only to make inflation roar.

I don't like the name "golden age" either. But Marcus lies. It is not "the 1960s" that's called the golden age. It is the entire post-WWII period, from 1947 until the 1974 recession. Because economic growth was good.

And yeah, it really ended more like in 1967. And yeah, it was the "Great Inflation" -- or, really, it was the thing that caused the great inflation -- that brought the "golden age" to an end. But I'm pointing that out, as opposed to what Marcus is doing: re-defining dates and corrupting concepts in order to make them fit his graph, so he can sell his story.


Yeah, I'm gonna call it a lie. Because I like Marcus.


The Arthurian said...

In Did The Postwar System Fail? Krugman writes: "I’ve been posting about the contrast between the popular perception on the right that America had slow growth until Reagan came along, and the reality that we did fine pre-Reagan, in fact better..."

Stuart Staniford points out that Growth Was So Faster in the Post War Years

Jude Wanniski said "you have to have lived in the 1950s and 1960s to have experienced a good economy."

Marcus Nunes reduces the golden age to a brief moment of rising NGDP in the [early] 1960s, ended by the great inflation it inspired, perhaps in 1965.

One of us has it wrong, Marcus.

What disturbs me most is that you are attempting to re-write history in order to make your analysis sound true, as part of the hard-sell of your [NGDP Targeting] theme. It's the same technique conservatives use.

João Marcus said...

No guys, I wasn´t 'lying' to try and fit...or re-write history
My recolection about the 'Golden Age' was associated with the decade of the 60s, 'Camelot', the Kennedy/Heller CEA, the view of permanent prosperity through economic policy...

João Marcus said...

In addition
I always thought it refered to "Golden Age" of economics more than the economy.

The Arthurian said...

Thanks for being a gentleman, Marcus, when I was not. Usually I trust my instincts in the early-morning writing, but this one bothered me all day. I apologize.

But I think if we're going to use the phrases "great moderation" and "great inflation" as though they are technical terms, then the phrase "golden age" deserves the same professional treatment.

I collect things like The Real Economic Crisis and the Wanniski link in an effort to evaluate that phrase and economic performance of the Keynesian era.

I'm just a hobbyist; I could easily be wrong. But if you are doing the hard sell (on NGDP Level Targeting) you weaken your argument by relying on easily-disputed recollections that certainly look like revisionist history.

If the golden age is as you say, convince me of it.