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May 4, 2013

'Keynes, Keynesians, the Long Run, and Fiscal Policy'

Paul Krugman on how to tell when someone is "pretending to be an authority on economics":
Keynes, Keynesians, the Long Run, and Fiscal Policy: One dead giveaway that someone pretending to be an authority on economics is in fact faking it is misuse of the famous Keynes line about the long run. Here’s the actual quote:
But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.
As I’ve written before, Keynes’s point here is that economic models are incomplete, suspect, and not much use if they can’t explain what happens year to year, but can only tell you where things will supposedly end up after a lot of time has passed. It’s an appeal for better analysis, not for ignoring the future; and anyone who tries to make it into some kind of moral indictment of Keynesian thought has forfeited any right to be taken seriously. ...
I thought the target of these remarks had forfeited any right to be taken seriously long ago (except, of course and unfortunately, by Very Serious People). [Krugman goes on to tackle several other topics.]

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