Krueger

by
Peter Radford
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from Peter Radford

I want to note, with sadness, the death of Alan Krueger who was one of those economists undaunted by the existence of the real world and all its complexity, and had the courage to present conclusions based on empirical work rather than on pure theory.

Others will write more cogently than I can about his impact on the profession, so I will simply note that his work, with David Card, on debunking the notion that a rise in the minimum wage will always cause higher unemployment ended the anti-social grip of textbook economics on a very key issue for tens of millions of his fellow citizens.  And ended that grip on a positive note.

So much did that research roil the ideologically pristine waters of mainstream economics that no less a character than Nobel prize winner James Buchanan wrote in the Wall Street Journal (where else?), that Krueger and Card were undermining the very credibility of economics as a discipline and that they and their allies were nothing but “a bevy of camp-following whores.”

Such is the sensitivity of the mainstream to criticism.  Such is its devotion to data driven thought.  Such is its commitment to scientific discovery.

It is the likes of Buchanan that drag the reputation and standing of economics into the mud.  The willful ignorance that such erstwhile experts propagate in the name of intellectual rigor and in defense of economics “as a discipline” is in sharp contrast to the refreshing and humane work of those, like Krueger, who dare to think and respond to real world data.

Economics is a social science.  It is not an empty pursuit of an ideologically determined logic, despite whatever Buchanan and his confreres might assert.  The mainstream has forgotten, or more likely abandoned, the “social” in the social science in order to pretend the science.

And a pretense it is in the absence of real world data.

I am more familiar with Krueger’s work on inequality.  His efforts at calling attention to what he called the “Great Gatsby Curve” is another instance of his daring to throw dirt into the wheels of the mainstream.  That higher inequality is associated with lower inter-generational socio-economic mobility radically undermines the idea that inequality does not matter.  Recall the infamous and insensitive comment by arch-villain Robert Lucas, who’s said in 2004:

“Of the tendencies which are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on the question of distribution.”

There are few more succinct statements of the utterly anti-social stance of mainstream economics than that.  Damn the evidence. The preservation of something called  “sound economics” simply does not allow certain topics into the discussion.   Why not?  Because the intrusion of facts might undermine central assumptions needed to prop up the logic.  And logic matters above all else, especially reality.  Lucas has always been, in my mind, the archetype of what Keynes was describing when he said: “how, starting with a mistake, a remorseless logician can end in bedlam.”

Krueger will be remembered very differently.  He tried to begin in facts.  He then applied his logic.  He rarely, if ever, arrived in bedlam.

He will be missed.