Other Fields are Taking Notice

Some liberals seem to believe that all the good progressive monetarists are dead, and that the conservative movement is left with nothing but austerian neanderthals.  But in other fields the influence of market monetarism is increasingly noticed.  Here’s an example written by Jeremy W. Fox and published in a journal called Ideas in Ecology and Evolution:

The above list makes the case that blogs are useful. But it doesn’t really do justice to the full potential of blogs to transform how ecology is conducted and communicated. In order to illustrate that potential, I next turn to an example from economics: an obscure economics blogger may just have saved the entire US economy.

His name is Scott Sumner, he’s an economics professor at Bentley University, and since 2009 he’s written The Money Illusion blog. He’s a macroeconomist, which means he works on the economics of entire countries, as opposed to the “microeconomics” of individual households or businesses. Like many macroeconomists, he started blogging in the aftermath of the 2008 financial crisis and the ensuing “Great Recession”.  Macroeconomists were mostly blindsided by these events; the broad consensus in the field had been that we knew enough macroeconomics to prevent such serious recessions from ever occurring. In response, many macroeconomists began debating and soul-searching about what caused the crisis, how policymakers ought to respond, and whether the foundations of textbook macroeconomics needed rethinking.

One very important US economic policy-making institution is the Federal Reserve, the US central bank. Very roughly, the “Fed” manages the money supply. When the economy is struggling, it reduces interest rates, thereby injecting money into the economy and spurring consumers and businesses to spend. But what can the Fed do if, as is the currently the case, interest rates are already as low as they can go (interest rates can’t go negative)? Until recently, most economists would have answered “nothing” or “not much”. On his blog, Scott Sumner answered “a lot”. His idea is that the Fed, instead of targeting interest rates, should engage in ”nominal gross domestic product (NGDP) targeting.”  Very briefly and loosely, NGDP targeting attempts to change, not current interest rates, but expectations of future interest rates, on the grounds that economic decisions in the present often reflect expectations about the future (see The Money Illusion blog for details).  At the time Scott Sumner began blogging about NGDP targeting, it was far outside the economic mainstream, although not totally unheard of or without antecedents.  But over time, NGDP targeting started winning adherents. First, other, more widely-read economics bloggers. Then, some prominent non-blogging academic economists, of various political persuasions and representing various opposing schools of macroeconomic thought. Then Paul Krugman, a Nobel Prize-winning economist, New York Times columnist, and blogger. Then, a senior Federal Reserve official. Then Mark Woodford, perhaps the most influential academic macroeconomist in the world. And in September 2012 the Federal Reserve itself announced, in a break with previous policy, its plan to attempt something fairly close to NGDP targeting (precisely how close is the subject of some debate). In summary: in three years, a radical macroeconomics idea proposed by an initially-unknown blogger has come close to being adopted as the official policy of perhaps the most important economics policymaking institution in the world. For more on this history, see recent articles in The Atlantic (http://www.theatlantic.com/business/archive/2012/09/the-blogger-who-savedthe-economy/262394/) and Business Insider (http://www.businessinsider.com/who-is-scott-sumner-2012-9).

Unless you follow economics, it might be difficult to appreciate just how remarkable all this is. Here’s an imperfect but useful ecological analogy. Imagine that Steve Hubbell’s Neutral Theory of Biodiversity (Hubbell 2001) had not previously been seriously explored in evolutionary biology when it was first proposed. Imagine further that that ecologist who first proposed it was not the already-prominent Steve Hubbell, but someone little known, at an obscure university. Imagine that that ecologist didn’t publish Neutral Theory in a Princeton Monograph or a Nature paper, but in a series of blog posts. And imagine that Neutral Theory didn’t merely become a “hot” research topic (as it has), but within three years was widely accepted by academic ecologists and policymakers as the appropriate basis for national and international conservation policymaking, our best chance to reduce historically-high rates of species loss, and preserve vital ecosystem services.

Now, Scott Sumner’s example is an extreme case, and extreme cases are rare by definition. Most bloggers will never have that much influence, just as most scientists will never be extremely widely cited. It takes exactly the right combination of circumstances for an idea to go from blog post to Fed policy as quickly as NGDP targeting did. One of those circumstances is having lots of colleagues who blog. Blogging is central to how economists exchange ideas. Many dozens of economists, including many prominent senior economists, have blogs (see the compilation of economics blogs on Mark Thoma’s Economist’s View blog). Even economists who don’t blog themselves routinely read and comment on the blogs of others. It is this culture of blogging, not the remarkable influence of a single blogger, that really separates economics and ecology, and that would represent a fundamental transformation in how ecologists share ideas. So will this transformation ever happen? Will blogging ever become as central to the conduct of ecology as it now is to the conduct of economics?

Of course this greatly exaggerates my role and underrates the role of the other MMs.  They tend to be more modest individuals than I am.  For instance, we know from a footnote that Nick Rowe gave the author of this paper some advice, and yet he doesn’t really appear, despite the fact that he’s also been hugely influential in shaping the debate.  Canadians are not as self-promoting as us Americans.

PS.  I don’t want to discuss the specific content of the article.  He’s not an economist and obviously he isn’t expected to get all the nuances correct.  That’s not the point.

HT:  Peter Schwechheimer

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