Why Oh Why Can't We Have a Better Press Corps?

Yes, it's another National Review edition! Larry Kudlow writes appropos of Ben Bernanke's nomination to be Chair of the Federal Reserve:

The Corner on National Review Online : Thank heavens that Fed board member Donald Kohn, who is a demand-sider and a Phillips Curver, did not get the nod.

But Ben Bernanke is a demand-sider and a Phillips Curver. Here's a representative speech:

FRB: Speech, Bernanke--An unwelcome fall in inflation?--July 23, 2003: Much of the analytic framework used by the [Federal Reserve] staff and other leading forecasters can be summarized by an expectations-augmented Phillips curve, of the type implied by the work of [Milton] Friedman (1968) and [Ned] Phelps (1969), further augmented by measures of "supply shocks," as suggested for example by the work of Robert Gordon (for a recent application, see Gordon, 1998). This model is familiar from many textbook treatments. In addition, most variants of the model include dynamic elements, in order to capture aspects of expectations formation, multi-year contracts, and other factors.... If aggregate demand is below potential output, implying a positive output gap, the rate of increase in labor compensation and other input costs should slow, firms should be less able to pass price increases, and thus inflation should slow.... Of course, this model, like any model, will have an error term, which represents a portion of the behavior of inflation that we can't reliably explain or predict.... You may have noted that I did not include money growth in this list of inflation determinants. Ultimately, inflation is a monetary phenomenon, as suggested by Milton Friedman's famous dictum. However, no contradiction exists, as the expectational Phillips curve is fully consistent with inflation's being determined by monetary forces in the long run. This point, originally made by Friedman himself, has been demonstrated in many textbooks and so I will not discuss it further here. I only note that, as an empirical matter, instabilities in money demand, financial innovation, and many special factors affecting the monetary aggregates make them relatively poor predictors of inflation at medium-term horizons. For this reason, the role of the money supply remains implicit in this discussion...

Comments

[Collounsbury]

Reference to Philips Curve and demand side analysis is an insult chez the Review?

My, they have become Rigth Wing Bolsheviks haven't they.

[VJ]

Well, you must forgive Larry, for he is a fool.

I've considered opening a Wall Street firm, the basis of which would be that we would do exactly the opposite of whatever forecasts are made by Kudlow & Co.

Over the years, we would have made millions.

[policywonk]

Does anyone really think that Larry Kudlow is a "journalist."

[Jean-Philippe Stijns]

Imagine what kind of deep sh-t this Administration must feel it is in to resort to competence as a selection criterion to such a politically and economically important job! ;-)

[Brad R.]

Does anyone really think that Larry Kudlow is a "journalist."

Yeah, I agree. The question should really be, "Why oh why can't we have cleverer GOP hacks?"

[MiltonFriedmanisGod]

Summary of Keynes:

I wish I had a million dollars. The government should give it to me, as long as I spend it all, because that is good for economic growth.

And that will have no effects on how hard the people whom the million dollars was taxed from will work.

[Charles Kinbote]

Does anyone really think that Larry Kudlow is a "journalist."

Sadly, Kudlow does not hold himself out to b a journalist. He participates in public life under the guise of being an economist.

So, to restate:

Does anyone really think that Lary Kudlow is an "economist?"

[pgl]

Does Kudlow recall the Tamny criticism of Bernanke?

[pgl]

Milton Friedman understood what Keynes wrote but me thinks MiltonFriedmanisGod does not. If you are going to adopt Friedman's name - please don't insult the man.

[liberal]

MiltonFriedmanisGod,

Since you like to argue by appeal to authority, I suppose you think land should be heavily taxed:

"In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago." -- Milton Friedman

[Ken Houghton]

Larry Kudlow was Chief Economist at Bear Stearns until the coke caused him to miss a major investor meeting.

That position is currently held by David Malpass, also an NRO contributor.

So the least we can say is that the NRO is consistent with its economists.

[Brad DeLong]

The 22nd Amendment reads: "Section 1. No person shall be elected to the office of the President more than twice, and no person who has held the office of President, or acted as President, for more than two years of a term to which some other person was elected President shall be elected to the office of the President more than once...."

This would seem to allow for a person who has been elected to the office of president twice to *succeed* to the office according to the normal succession...

[AllenM]

Brad, Looks like typepad screwed up where the comment goes. I think that Kudlow is crazy.

[Neil the Ethical Werewolf]

Brad, could you use your awesome economist powers to post something a bit longer on Bernanke and why he's so good? I am a werewolf who knows little of economics and I would like to know what I should think about this nomination.

[Les Brunswick]

National Review's John Tamny doesn't like Bernanke. Tamny's problem is Bernanke is not a supply-sider.

http://www.nationalreview.com/nrof_comment/tamny200508110924.asp

[Kirill Nils Senior]

It's the "expectations-augmented" and "expectational" that would throw someone like Kudlow. He once read long ago about the problems with the Phillips Curve but never got beyond the first few paragraphs on how to fix it. An ostensible econ-journalist who doesn't know how to read...or is too lazy to read all the way to the end. Sounds like a modern reublican to me.

[kharris]

If it matters what Kudlow is, then we ought to think harder about what Kudlow is. He is not a trained economist, in the sense that he (as I understand it) never finished a degree in anything but tennis. He went to the White House because he knew how to sell half-baked ideas. When Reagan's economic team was shopping their ideas around, they came to the Bear and Kudlow did a better presentation of their ideas than they could. They grabbed him. A bank economist (sic) who can do a convincing presentation is an asset to the bank. If that is his only skill, though, it makes him a dangerous source of views on policy.

Nowadays, Kudlow (who never thought very deeply about economics) spends a huge amount of time on the set. That is time in which he participates in shallow patter about any story that is current, and throws in supply-side buzzwords to stake out some territory. This leaves little time - or necessity - for reading, thinking or conversing about economic policy or events. It does, however, put him squarely in front of an audience that appreciates his approach to economics. Bush would like him - he never talks over anybody's head.

[me]

Larry is a drug addict, just like Rush Limbaugh is a drug addict. You must live in Lala Land to belive the crap that comes out of their mouths.

[robert waldmann]

Dear Brad

I see you also make this point in a comment on my blog. Wow that's a switch. Actually I got your point immediately after posting my astonishment at Kudlow reaching a sensible conclusion, because I surfed right over here immediately after posting.