N.GREGORY MANKIW, the delightfully nerdy chairman of the president’s Council of Economic Advisers, has experienced a noteworthy public lashing in recent weeks. First he was caught up in the outsourcing spectacle, then a furor ignited when Paul Krugman of the New York Times began a crusade against his jobs forecast. The forecast was, Krugman wrote, “the signature of a corrupted policy process in which political propaganda takes the place of professional analysis.” The ensuing uproar discouraged even administration officials, who have publicly distanced themselves from the council chairman and his forecasts.
Mankiw is one of the brightest and most successful economists of our time. It is interesting to pause and ask how it could be that such a man could find himself embroiled in controversy. The answer provides a troubling lesson to those who hope to participate in productive public policy debate. Mankiw was gobbled up by a character-assassination machine that increasingly is trying to turn Democrats and Republicans into Serbs and Croats or Hutus and Tutsis. If the “shock pundits” are not stopped by public disapproval, they may well succeed.
The jobs story is instructive. To indict Mankiw, the New York Times ran a graph headed “Wishful Thinking on Jobs,” which we reproduce at right. The graph depicts the administration’s jobs forecast for each of the past three years.
In 2001, for example, the administration believed that 2002 employment would increase sharply. When the jobs picture failed to meet expectations, the administration forecasted a similar correction starting from a slightly lower point a year later. When that forecast turned out to be short of the mark, the administration simply tried the same upward trajectory once again.
The chart reveals that job creation fell far short of expectations in 2001, 2002, and 2003. Krugman did not argue that the administration’s forecasters were bad practitioners, but that the motive of their work was evil. “Wishful thinking on this scale,” he wrote, “is unprecedented” and “corrupted.” Such a startling accusation is sadly par for the course these days. It gives the uneducated the impression that forecasts by the Council of Economic Advisers are so contrary to professional standards that corruption is the only possible explanation.
The accusation is simply wrong. Mankiw has no motive to prostitute himself in Washington. He is a highly regarded professor at Harvard. He was once the youngest tenured there ever, and has made millions of dollars from his popular textbooks. Why would such a fellow risk it all, and for what?
The answer is, he didn’t. He simply signed on to forecasts that met current professional standards. Indeed, economists who forecast job creation have just about all made the same mistakes as the council. For the past two years, job creation has been well behind the level we might normally have expected to see given the level of economic growth. For example, the highly regarded industry forecaster Macroeconomic Advisers kindly provided me with its jobs forecasts for the past few years. They are shown in the lower graph.
The second chart is, of course, stunningly similar to the first. Clearly, the errors are not a sign of corruption, but rather, an indication that the world surprises all economists from time to time. Those surprises challenge us to build better models.
If a graduate student presented a seminar attempting to establish bias at the Council of Economic Advisers with that chart, he would immediately be shot down by professionals who would see through the subterfuge. If he submitted his analysis to a peer-reviewed journal, it would be rejected. But in the new media culture, Krugman can insert into the public debate blatantly misleading content and the vilest accusations without suffering any negative consequences. As the blogosphere has documented, Krugman does such things all the time. This is tabloid economics, shock punditry, and apparently acceptable journalism.
Gentlemen like Mankiw suffer, but he is not alone. Many Democrats appear to want to believe that Republicans have foul intent. Republicans do the same in reverse. Accordingly, a kind of tabloid culture has arisen wherein wonks outdo each other in the attempt to insult and humiliate their opponents. It does not matter who is accurate or fair. The more shocking the accusation, the better. “Greg Mankiw is corrupt.” How delicious! As Al Franken, Ann Coulter, and Paul Krugman have shown, being artful in this line can be quite profitable.
But it is also harmful. It destroys the climate necessary for honest debate and encourages cynicism in voters. Further, it is harmful because the Mankiws of the world more and more are deciding that public service is not worth the bother. Those choices may hand the public policy terrain to the lowest common denominator.
A wise rector once told my congregation: “One should never ascribe to malice that which equally well could be ascribed to stupidity.” Shock pundits degrade the public discourse. The fact is, most Democrats I know want to make the world better. Most Republicans do too. They disagree about the methods, and one side might even be right. That does not make the other side dishonest.
Shock pundits, on the other hand, are not stupid.
Kevin Hassett is director of economic policy studies at the American Enterprise Institute.
