A Nobel for Thomas Sargent

What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus

No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

[Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

Sargent: He did not attend the macro seminar at Princeton when I was there.

Interviewer: Oh.

In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Jeff||

    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

  • Ego||

    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

  • Paul Krugman||

    He may have won a Nobel, but we refuse his admission into the group of Top Men.

  • ||

    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

  • Tony||

    Paul....I'd be your "bottom" any old time!

  • A fan||

    Human centipede: Krugs, Obama, Tony. All very satisfied.

  • Restoras||

    Maybe Herman Cain will hire him as Treasury Secretary.

  • ||

    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

  • ||

    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

  • k2000k||

    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

  • Chris||

    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

  • ||

    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

  • your old man was an idiot||

    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

  • ||

    Fuck you.

  • A fan||

    RCD - irony!

  • Fiscal Meth||

    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

  • JohnD||

    Well, "Your Old Man..", You just proved the old Marines point. Moron.

  • l0b0t||

    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

  • Pontius Pilate||

    To be a Marine, you've got to be:

    1. Strong as an ox.

    2. Twice as smart.

  • BRM||

    Not cool.

  • Radioactive||

    To be Pontious Pilate, you've got to be;
    1. A huge douchebag
    2. A fucking moron

  • Paul||

    In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus

    Wow, what a nice summary for almost everything Obama does with such fantastic confidence...

  • Gilbert Martin||

    And Obama is trying to pull the exact same shit with his new so-called "jobs" bill,

    I heard a sound bite of him the other day where he said that "independent experts", people who "do this for a living" have endorsed his plan as being a viable plan to create jobs.

  • Paul||

    President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    But here the professor shows his naiveté... the fiscal stimulus isn't about making the economy better, it's a means to a more powerful end.

  • Paul||

    if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    Define "inadvertent"...

  • Tman||

    I still don't understand the fascination (besides culture envy) that the left in the US has with Europe.

    Europe has had double digit unemployment for half a century, has immigration problems that make ours look positively benign, and they are all dependent on the US for military protection.

    This is something to emulate?

    I understand the romance with the healthcare system and paid vacations, but don't they understand that emulating these policies will just make our current problems worse?

    It's a rhetorical question, I suppose.

  • The American Left||

    It's quite simple, really: we're retarded.

  • grief time||

    reason.org reason.com reason.tv donate previous link REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) REASON.TV VIDEO:
    Philosopher Matt Zwolinski on "Bleeding-Heart Libertarians… (10.5) REASON.TV VIDEO:
    John Tierney - Willpower: Rediscovering the Greatest Human… (10.4) REASON.TV VIDEO:
    Couple Heading to Court after Hosting Home Bible Study! (Nanny… (10.3) REASON.TV VIDEO:
    Ken Burns on PBS Funding, Being a "Yellow-Dog Democrat… (10.2) REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) next link✕Loading...more sharingStumbleUpon Digg Reddit close videoSubscribe
    Print
    E-Reader
    Android App
    iPhone App
    Reason E-Mail Lists
    Reason Stuff
    Subscriber Services
    Share
    Reason on Facebook
    Reason on Twitter
    Reason on Youtube
    Reason RSS
    About
    About
    Contact
    Privacy
    Reason Foundation
    Submission Guidelines
    Staff
    Staff
    Contributors
    Archives
    Archives
    Print Issues
    Cover Gallery
    Hit & Run Blog
    Brickbats
    Topics
    Poll
    Feeds
    Podcasts
    RSS
    Events
    Advertise
    Donate
    Print|Email
    A Nobel for Thomas Sargent
    What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus
    Ira Stoll | October 10, 2011

    No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

    So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

    That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

    [Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

    Sargent: He did not attend the macro seminar at Princeton when I was there.

    Interviewer: Oh.

    In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

    Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

    Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

    In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

    In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

    Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

    The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

    And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

    Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

    Reason needs your support. Please donate today!

    more sharingStumbleUpon Digg Reddit Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

    See all 73 comments | Leave a comment
    Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

    Jeff|10.10.11 @ 4:35PM|#
    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

    reply to this
    Ego|10.10.11 @ 4:48PM|#
    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

    reply to this
    Paul Krugman|10.10.11 @ 4:39PM|#
    He may have won a Nobel, but we refuse his admission into the group of Top Men.

    reply to this
    Res Publica Americana|10.10.11 @ 4:49PM|#
    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

    reply to this
    Tony|10.10.11 @ 5:05PM|#
    Paul....I'd be your "bottom" any old time!

    reply to this
    A fan|10.10.11 @ 8:43PM|#
    Human centipede: Krugs, Obama, Tony. All very satisfied.

    reply to this
    Restoras|10.10.11 @ 4:49PM|#
    Maybe Herman Cain will hire him as Treasury Secretary.

    reply to this
    jacob the barbarian|10.10.11 @ 5:54PM|#
    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

    reply to this
    Res Publica Americana|10.10.11 @ 4:52PM|#
    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

    reply to this
    k2000k|10.10.11 @ 5:15PM|#
    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

    reply to this
    Chris|10.10.11 @ 5:35PM|#
    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

    reply to this
    R C Dean|10.10.11 @ 6:05PM|#
    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

    reply to this
    your old man was an idiot|10.10.11 @ 6:45PM|#
    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

    reply to this
    R C Dean|10.10.11 @ 8:24PM|#
    Fuck you.

    reply to this
    A fan|10.10.11 @ 8:46PM|#
    RCD - irony!

    reply to this
    Fiscal Meth|10.10.11 @ 9:15PM|#
    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

    reply to this
    JohnD|10.11.11 @ 10:26AM|#
    Well, "Your Old Man..", You just proved the old Marines point. Moron.

    reply to this
    l0b0t|10.10.11 @ 10:10PM|#
    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

    reply to this

  • ||

    If you go to Western Europe, but don't live there, and don't have to go through the hell of finding a job and the pain of extremely high taxes, it's unbelievably awesome. I love it there; the food, the history, everything. That's what the left sees too, without realizing that living in Europe is not the same as a vacation.

  • Tman||

    I suppose that makes sense. I thoroughly enjoyed my trips to Europe and as you said, the food, the history, the art, all so rich and satisfying in innumerate ways. But all I ever really saw when I visited were the parts that make Europe so special. I never saw any of the banlieus in France that supposedly make downtown Detroit look upper middle class, for instance, nor did I ever receive a paycheck that was missing 55% of my income when I stayed there.

    It reminds me of one of my favorite PJ Quotes-

    Americans hate foreign policy. Americans hate foreign policy because Americans hate foreigners. Americans hate foreigners because Americans are foreigners. We all come from foreign lands, even if we came 10,000 years ago on a land bridge across the Bering Strait.

    America is not "globally conscious" or "multi-cultural." Americans didn't come to America to be Limey Poofters, Frog-Eaters, Bucket Heads, Micks, Spicks, Sheenies or Wogs. If we'd wanted foreign entanglements, we would have stayed home. Or - in the case of those of us who were shipped to America against our will - as slaves, exiles, or transported prisoners - we would have gone back.

    Being foreigners ourselves, we Americans know what foreigners are up to with their foreign policy - their venomous convents, lying alliances, greedy agreements and trick-or-treaties. America is not a wily, sneaky nation. We don't think that way.

    We don't think much at all, thank God. Start thinking and pretty soon you get ideas, and then you get idealism, and the next thing you know you've got ideology, with millions dead in concentration camps and gulags. A fundamental American question is: "What's the big idea?"
  • grief time||

    reason.org reason.com reason.tv donate previous link REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) REASON.TV VIDEO:
    Philosopher Matt Zwolinski on "Bleeding-Heart Libertarians… (10.5) REASON.TV VIDEO:
    John Tierney - Willpower: Rediscovering the Greatest Human… (10.4) REASON.TV VIDEO:
    Couple Heading to Court after Hosting Home Bible Study! (Nanny… (10.3) REASON.TV VIDEO:
    Ken Burns on PBS Funding, Being a "Yellow-Dog Democrat… (10.2) REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) next link✕Loading...more sharingStumbleUpon Digg Reddit close videoSubscribe
    Print
    E-Reader
    Android App
    iPhone App
    Reason E-Mail Lists
    Reason Stuff
    Subscriber Services
    Share
    Reason on Facebook
    Reason on Twitter
    Reason on Youtube
    Reason RSS
    About
    About
    Contact
    Privacy
    Reason Foundation
    Submission Guidelines
    Staff
    Staff
    Contributors
    Archives
    Archives
    Print Issues
    Cover Gallery
    Hit & Run Blog
    Brickbats
    Topics
    Poll
    Feeds
    Podcasts
    RSS
    Events
    Advertise
    Donate
    Print|Email
    A Nobel for Thomas Sargent
    What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus
    Ira Stoll | October 10, 2011

    No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

    So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

    That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

    [Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

    Sargent: He did not attend the macro seminar at Princeton when I was there.

    Interviewer: Oh.

    In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

    Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

    Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

    In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

    In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

    Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

    The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

    And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

    Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

    Reason needs your support. Please donate today!

    more sharingStumbleUpon Digg Reddit Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

    See all 73 comments | Leave a comment
    Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

    Jeff|10.10.11 @ 4:35PM|#
    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

    reply to this
    Ego|10.10.11 @ 4:48PM|#
    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

    reply to this
    Paul Krugman|10.10.11 @ 4:39PM|#
    He may have won a Nobel, but we refuse his admission into the group of Top Men.

    reply to this
    Res Publica Americana|10.10.11 @ 4:49PM|#
    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

    reply to this
    Tony|10.10.11 @ 5:05PM|#
    Paul....I'd be your "bottom" any old time!

    reply to this
    A fan|10.10.11 @ 8:43PM|#
    Human centipede: Krugs, Obama, Tony. All very satisfied.

    reply to this
    Restoras|10.10.11 @ 4:49PM|#
    Maybe Herman Cain will hire him as Treasury Secretary.

    reply to this
    jacob the barbarian|10.10.11 @ 5:54PM|#
    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

    reply to this
    Res Publica Americana|10.10.11 @ 4:52PM|#
    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

    reply to this
    k2000k|10.10.11 @ 5:15PM|#
    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

    reply to this
    Chris|10.10.11 @ 5:35PM|#
    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

    reply to this
    R C Dean|10.10.11 @ 6:05PM|#
    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

    reply to this
    your old man was an idiot|10.10.11 @ 6:45PM|#
    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

    reply to this
    R C Dean|10.10.11 @ 8:24PM|#
    Fuck you.

    reply to this
    A fan|10.10.11 @ 8:46PM|#
    RCD - irony!

    reply to this
    Fiscal Meth|10.10.11 @ 9:15PM|#
    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

    reply to this
    JohnD|10.11.11 @ 10:26AM|#
    Well, "Your Old Man..", You just proved the old Marines point. Moron.

    reply to this
    l0b0t|10.10.11 @ 10:10PM|#
    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

    reply to this

  • BRM||

    +1

    The Europe of living there can be approximated by trying to call a business colleage in any of the "socialist paradises" after Dec. 15th and before Jan 15th. Anyone paid enough Euros to have to pay the 50% income tax is gone for the season. Better to take a month of unpaid leave than to work like we do only to see it all go in taxes once you make the jump to 75% income tax.

    Definitely better here, though if the WH and Congress don't get a bit more donkey-penic, we are going to go that way.

  • ||

    Having lived in France I would say July and August are the slowest months there, since a great deal of people take their 28-day holiday during summer ; even boulangeries close for weeks. It's great if you're employed, not so great if you're unemployed because your company has relocated to Poland or China to reduce labour costs.

  • ||

    I visit France and Italy often. Beautiful places. Italy in particular is crazy amazing. BUT...practically and pragmatically speaking, I would never,ever,never,ever,never,ever,NEVER,EVER live there for a second. Ever.

    Unless I was recruited to work for a major, stable company of course.

    North America - narrowly defined as Canada and USA - is where I shall live and die. For now it's Canada. It ain't perfect but it's better than the skeleton known as Europe - and I mean this with the utmost respect to our Western ancestors.

    I live in peaceful comfort here and enjoy my frequent excursions to New England.

  • ||

    I can totally understand why an American or Canadian libertarian wouldn't even consider to live in France, but then again I'm Brazilian so I found France a freer and more liveable country than Brazil. Never been to North America though (for the freedom of movement isn't its forte...)

  • ||

    It's all relative and situational I suppose. For me, it's not even a libertarian thing. I just feel overall it's good here.

  • ||

    "You'd really like America. We've got the Liberty Bell, Disneyland on both coasts. It's happening."

  • Jim||

    @Episiarch

    Good point. I've been going to Europe for over 20 years. What is disappointing is watching the standard of living degrade through self-imposed policy.

    What is even more disappointing is that most people believe the meme that there is nothing they can do; too many people, humans have ruined the environment.

    A culture does not self-destruct and self-terminate without an appropriate story.

  • ||

    The only American I've ever known who lived in Europe who actually thinks we should run our country like theirs was a woman who had kids over there. Of course, the year and a half she was allowed to sit on her ass and do nothing on her employer's time & dime probably helped her just luuurrrve Europe. For the rest of us, however, Europe is a lovely place to visit for a few weeks, but a wackily corrupt, intrusive, and overpriced place to live.

    I have many European co-workers (gee, why? Oh, because they can't get jobs back home) and have known many Americans who contracted or worked over in Europe. And America is a paradise to them. Turn an American expat or a new visitor from Europe loose in a nice, big grocery store sometime, and listen to them marvel at the sheer range of choices, the competitive prices, and the freshness and quality of the food. Watch as an American contractor living in Dublin loads up her basket with Advil and Claritin and Pepcid and other OTC meds that are a pain in the ass to get back in "the old country." Watch as her Irish-native co-worker jumps for joy in the produce aisle because she's never seen this many fresh vegetables and fruits in her life.

    I won't even get into the anecdotes about the level of government corruption Europeans tolerate just in the day-to-day. Let's ask Amanda Knox how she likes those carabinieri.

  • Corey S. ||

    I'm in my third year of law school and I've met many European LLMs over the last two years who want to live here in America and get JDs. I'm not sure why, exactly, but I'd guess it's because the job market here is much better. Which is sad.

  • AZ||

    Holy fuck that must be bleak if the US legal employment scene looks better.

  • grief time||

    reason.org reason.com reason.tv donate previous link REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) REASON.TV VIDEO:
    Philosopher Matt Zwolinski on "Bleeding-Heart Libertarians… (10.5) REASON.TV VIDEO:
    John Tierney - Willpower: Rediscovering the Greatest Human… (10.4) REASON.TV VIDEO:
    Couple Heading to Court after Hosting Home Bible Study! (Nanny… (10.3) REASON.TV VIDEO:
    Ken Burns on PBS Funding, Being a "Yellow-Dog Democrat… (10.2) REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) next link✕Loading...more sharingStumbleUpon Digg Reddit close videoSubscribe
    Print
    E-Reader
    Android App
    iPhone App
    Reason E-Mail Lists
    Reason Stuff
    Subscriber Services
    Share
    Reason on Facebook
    Reason on Twitter
    Reason on Youtube
    Reason RSS
    About
    About
    Contact
    Privacy
    Reason Foundation
    Submission Guidelines
    Staff
    Staff
    Contributors
    Archives
    Archives
    Print Issues
    Cover Gallery
    Hit & Run Blog
    Brickbats
    Topics
    Poll
    Feeds
    Podcasts
    RSS
    Events
    Advertise
    Donate
    Print|Email
    A Nobel for Thomas Sargent
    What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus
    Ira Stoll | October 10, 2011

    No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

    So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

    That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

    [Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

    Sargent: He did not attend the macro seminar at Princeton when I was there.

    Interviewer: Oh.

    In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

    Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

    Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

    In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

    In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

    Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

    The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

    And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

    Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

    Reason needs your support. Please donate today!

    more sharingStumbleUpon Digg Reddit Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

    See all 73 comments | Leave a comment
    Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

    Jeff|10.10.11 @ 4:35PM|#
    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

    reply to this
    Ego|10.10.11 @ 4:48PM|#
    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

    reply to this
    Paul Krugman|10.10.11 @ 4:39PM|#
    He may have won a Nobel, but we refuse his admission into the group of Top Men.

    reply to this
    Res Publica Americana|10.10.11 @ 4:49PM|#
    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

    reply to this
    Tony|10.10.11 @ 5:05PM|#
    Paul....I'd be your "bottom" any old time!

    reply to this
    A fan|10.10.11 @ 8:43PM|#
    Human centipede: Krugs, Obama, Tony. All very satisfied.

    reply to this
    Restoras|10.10.11 @ 4:49PM|#
    Maybe Herman Cain will hire him as Treasury Secretary.

    reply to this
    jacob the barbarian|10.10.11 @ 5:54PM|#
    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

    reply to this
    Res Publica Americana|10.10.11 @ 4:52PM|#
    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

    reply to this
    k2000k|10.10.11 @ 5:15PM|#
    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

    reply to this
    Chris|10.10.11 @ 5:35PM|#
    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

    reply to this
    R C Dean|10.10.11 @ 6:05PM|#
    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

    reply to this
    your old man was an idiot|10.10.11 @ 6:45PM|#
    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

    reply to this
    R C Dean|10.10.11 @ 8:24PM|#
    Fuck you.

    reply to this
    A fan|10.10.11 @ 8:46PM|#
    RCD - irony!

    reply to this
    Fiscal Meth|10.10.11 @ 9:15PM|#
    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

    reply to this
    JohnD|10.11.11 @ 10:26AM|#
    Well, "Your Old Man..", You just proved the old Marines point. Moron.

    reply to this
    l0b0t|10.10.11 @ 10:10PM|#
    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

    reply to this

  • Pontius Pilate||

    In observable reality, Western democratic socialist Europe is awesome.

    In Libertarian theory, Western democratic socialist Europe sucks.

    Seems that libertarian theory and reality have a negative correlation.

  • BRM||

    It is great if you are getting the benefits. If you are paying for the benefits, or are working for an international market oriented company where the prices are not able to be raised to cover the immense cost of doing business over there, not so much.

    If a European company has a fixed cost of 2 euro/item and is competing against a Japanese or American company that has a fixed cost of 1 euro/item, then their employees are often not so excited about the socialist paradise they live in.

  • Radioactive||

    Observable Reality? Is that what happens when you have your head up your ass, that you think the sun is brown?

  • ||

    Its like visiting Disneyland - awsome for the tourist, living hell for the Goofy...entertainment "employees".
    Minnie Mouse is insane.Why do you say that? Cause she's fucking Goofy...

  • grief time!||

    reason.org reason.com reason.tv donate previous link REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) REASON.TV VIDEO:
    Philosopher Matt Zwolinski on "Bleeding-Heart Libertarians… (10.5) REASON.TV VIDEO:
    John Tierney - Willpower: Rediscovering the Greatest Human… (10.4) REASON.TV VIDEO:
    Couple Heading to Court after Hosting Home Bible Study! (Nanny… (10.3) REASON.TV VIDEO:
    Ken Burns on PBS Funding, Being a "Yellow-Dog Democrat… (10.2) REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) next link✕Loading...more sharingStumbleUpon Digg Reddit close videoSubscribe
    Print
    E-Reader
    Android App
    iPhone App
    Reason E-Mail Lists
    Reason Stuff
    Subscriber Services
    Share
    Reason on Facebook
    Reason on Twitter
    Reason on Youtube
    Reason RSS
    About
    About
    Contact
    Privacy
    Reason Foundation
    Submission Guidelines
    Staff
    Staff
    Contributors
    Archives
    Archives
    Print Issues
    Cover Gallery
    Hit & Run Blog
    Brickbats
    Topics
    Poll
    Feeds
    Podcasts
    RSS
    Events
    Advertise
    Donate
    Print|Email
    A Nobel for Thomas Sargent
    What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus
    Ira Stoll | October 10, 2011

    No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

    So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

    That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

    [Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

    Sargent: He did not attend the macro seminar at Princeton when I was there.

    Interviewer: Oh.

    In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

    Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

    Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

    In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

    In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

    Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

    The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

    And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

    Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

    Reason needs your support. Please donate today!

    more sharingStumbleUpon Digg Reddit Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

    See all 73 comments | Leave a comment
    Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

    Jeff|10.10.11 @ 4:35PM|#
    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

    reply to this
    Ego|10.10.11 @ 4:48PM|#
    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

    reply to this
    Paul Krugman|10.10.11 @ 4:39PM|#
    He may have won a Nobel, but we refuse his admission into the group of Top Men.

    reply to this
    Res Publica Americana|10.10.11 @ 4:49PM|#
    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

    reply to this
    Tony|10.10.11 @ 5:05PM|#
    Paul....I'd be your "bottom" any old time!

    reply to this
    A fan|10.10.11 @ 8:43PM|#
    Human centipede: Krugs, Obama, Tony. All very satisfied.

    reply to this
    Restoras|10.10.11 @ 4:49PM|#
    Maybe Herman Cain will hire him as Treasury Secretary.

    reply to this
    jacob the barbarian|10.10.11 @ 5:54PM|#
    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

    reply to this
    Res Publica Americana|10.10.11 @ 4:52PM|#
    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

    reply to this
    k2000k|10.10.11 @ 5:15PM|#
    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

    reply to this
    Chris|10.10.11 @ 5:35PM|#
    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

    reply to this
    R C Dean|10.10.11 @ 6:05PM|#
    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

    reply to this
    your old man was an idiot|10.10.11 @ 6:45PM|#
    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

    reply to this
    R C Dean|10.10.11 @ 8:24PM|#
    Fuck you.

    reply to this
    A fan|10.10.11 @ 8:46PM|#
    RCD - irony!

    reply to this
    Fiscal Meth|10.10.11 @ 9:15PM|#
    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

    reply to this
    JohnD|10.11.11 @ 10:26AM|#
    Well, "Your Old Man..", You just proved the old Marines point. Moron.

    reply to this
    l0b0t|10.10.11 @ 10:10PM|#
    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

  • Sven||

    Compared to Europe, or more specifically Northern Europe, living in the US feels more like living in a Third World country.

  • BRM||

    If you are used to getting months of free money, and months of vacation, then yes, I could see why you would feel that way.

    I look at Europe from the perspective of colleagues who get to pay for those freebies. I look at it from the perspective of medicine, where long lines and bureaucratic caps on services prevent many people in Europe from getting the quality of care they could otherwise get.

    From a perspective of a poor person or a person with a great deal of wealth outside of Europe, its a great place.

  • Sven||

    No, I really just mean the feel of it. Americans don't really have an eye for it, but if you go to Germany and pay attention to the infrastructure, you realize that the US is closer to Brazil than Northern Europe. Here in New York, the streets look worse than in Sao Paulo, the subway system looks like it's out of a Mad Max movie. I drove from coast to coast last year, and I can tell you, this country is falling apart.

  • BRM||

    Agreed, but this is due to a different problem. In Europe, the roads are short, the climate is more stable in most parts. Here in Nebraska, we have 170 degree F swings in temp during the year. We have ecofascists that caused the Missouri river to flood and the outcome of that is that all roads in the valley that were perpendicular to the river now look like someone bombed them (literally). We have a lot of people who want to build pretty buildings and not a lot of people who want to go down in history as the guy who got the roads paved. Ego is killing us in the infrastructure.

  • Politician||

    “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’),

    I'm not seeing the problem here.

  • BRM||

    So if you buy a bond and then buy default insurance on that bond specifically, no problems. You are paying a premium to insure your own downside risk. The premium is likely calculated such that the risk of paying off is so low that the insurance company makes a tidy profit and you sleep easier knowing that your bond is safe.

    The problem with Debt Credit Swaps is that they were sold as their own instrument, separate from a given bond. Once you could choose to buy a derivative DCS independent of any specific bond, it was belly up to the Roullette wheel time.

    You could buy DCS's cheaper than the bonds and bet them down like short selling stock, using a pre-1929 margin account. Little or no money of yours at risk, and nice profit after the bond the DCS was based on went into Junk status.

    Basically, in the old bond insurance game, everyone involved wanted the bond to pay off. You made more money getting the bond return than from the insurance, and the insurance company kept your premium. With the commoditized DCS's, someone is making money like a Colombian drug lord off the PIIGS in Euro land.

  • BRM||

    Think of it as buying life insurance on yourself (old school bond insurance) vs the ability to buy life insurance on anyone. Including death row inmates.

    The new insurance isn't priced according to risk, its commoditized against the best risk group (say marathon runners.)

    A guy could buy a policy on a Texas Death Row inmate, pay a couple of month's premiums and then get a big payday once Texas does it's thing.

    If you could pay 500 bucks in premiums and walk away with $25,000 each time Texas offed somebody, you would become a big fan of Texas's execution policy.

    Same with the eurobonds. Greece was paying interest at 0.16% more than Germany because of the shared risk of the Eurozone. As the DCS's are priced based on the bond price, you could buy Greek DCS's for cheap and then roll in money like Scrooge McDuck every time Greece failed on a bond.

  • ||

    back in the days of joe when he so confidently, smugly and condescendingly told us that the entire profession of economist backed massive stimulus, and only fringe kooks disagreed? And those of us with actual degrees and professional experience in the field responded with, 'the broad consensus post 70's Keynesian meltdown in the economics departments we studied say we don't do big stimulus anymore, as they are counter productive,' and he was all like, 'Racist!'

    Well, nya. nya. nya.

  • ||

    joe confidently, smugly, and condescendingly said a lot of shit that has been utterly wrong. And that's why he no longer posts here; unlike the media with pundits, we will repeatedly bring up all his mistakes and discredit him every time.

    The fantasy world he inhabits must be getting more and more disconnected from reality by the day.

  • grief time||

    reason.org reason.com reason.tv donate previous link REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) REASON.TV VIDEO:
    Philosopher Matt Zwolinski on "Bleeding-Heart Libertarians… (10.5) REASON.TV VIDEO:
    John Tierney - Willpower: Rediscovering the Greatest Human… (10.4) REASON.TV VIDEO:
    Couple Heading to Court after Hosting Home Bible Study! (Nanny… (10.3) REASON.TV VIDEO:
    Ken Burns on PBS Funding, Being a "Yellow-Dog Democrat… (10.2) REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) next link✕Loading...more sharingStumbleUpon Digg Reddit close videoSubscribe
    Print
    E-Reader
    Android App
    iPhone App
    Reason E-Mail Lists
    Reason Stuff
    Subscriber Services
    Share
    Reason on Facebook
    Reason on Twitter
    Reason on Youtube
    Reason RSS
    About
    About
    Contact
    Privacy
    Reason Foundation
    Submission Guidelines
    Staff
    Staff
    Contributors
    Archives
    Archives
    Print Issues
    Cover Gallery
    Hit & Run Blog
    Brickbats
    Topics
    Poll
    Feeds
    Podcasts
    RSS
    Events
    Advertise
    Donate
    Print|Email
    A Nobel for Thomas Sargent
    What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus
    Ira Stoll | October 10, 2011

    No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

    So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

    That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

    [Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

    Sargent: He did not attend the macro seminar at Princeton when I was there.

    Interviewer: Oh.

    In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

    Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

    Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

    In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

    In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

    Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

    The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

    And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

    Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

    Reason needs your support. Please donate today!

    more sharingStumbleUpon Digg Reddit Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

    See all 73 comments | Leave a comment
    Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

    Jeff|10.10.11 @ 4:35PM|#
    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

    reply to this
    Ego|10.10.11 @ 4:48PM|#
    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

    reply to this
    Paul Krugman|10.10.11 @ 4:39PM|#
    He may have won a Nobel, but we refuse his admission into the group of Top Men.

    reply to this
    Res Publica Americana|10.10.11 @ 4:49PM|#
    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

    reply to this
    Tony|10.10.11 @ 5:05PM|#
    Paul....I'd be your "bottom" any old time!

    reply to this
    A fan|10.10.11 @ 8:43PM|#
    Human centipede: Krugs, Obama, Tony. All very satisfied.

    reply to this
    Restoras|10.10.11 @ 4:49PM|#
    Maybe Herman Cain will hire him as Treasury Secretary.

    reply to this
    jacob the barbarian|10.10.11 @ 5:54PM|#
    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

    reply to this
    Res Publica Americana|10.10.11 @ 4:52PM|#
    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

    reply to this
    k2000k|10.10.11 @ 5:15PM|#
    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

    reply to this
    Chris|10.10.11 @ 5:35PM|#
    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

    reply to this
    R C Dean|10.10.11 @ 6:05PM|#
    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

    reply to this
    your old man was an idiot|10.10.11 @ 6:45PM|#
    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

    reply to this
    R C Dean|10.10.11 @ 8:24PM|#
    Fuck you.

    reply to this
    A fan|10.10.11 @ 8:46PM|#
    RCD - irony!

    reply to this
    Fiscal Meth|10.10.11 @ 9:15PM|#
    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

    reply to this
    JohnD|10.11.11 @ 10:26AM|#
    Well, "Your Old Man..", You just proved the old Marines point. Moron.

    reply to this
    l0b0t|10.10.11 @ 10:10PM|#
    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

    reply to this

  • Paul||

    Racist!

  • grief time||

    reason.org reason.com reason.tv donate previous link REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) REASON.TV VIDEO:
    Philosopher Matt Zwolinski on "Bleeding-Heart Libertarians… (10.5) REASON.TV VIDEO:
    John Tierney - Willpower: Rediscovering the Greatest Human… (10.4) REASON.TV VIDEO:
    Couple Heading to Court after Hosting Home Bible Study! (Nanny… (10.3) REASON.TV VIDEO:
    Ken Burns on PBS Funding, Being a "Yellow-Dog Democrat… (10.2) REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) next link✕Loading...more sharingStumbleUpon Digg Reddit close videoSubscribe
    Print
    E-Reader
    Android App
    iPhone App
    Reason E-Mail Lists
    Reason Stuff
    Subscriber Services
    Share
    Reason on Facebook
    Reason on Twitter
    Reason on Youtube
    Reason RSS
    About
    About
    Contact
    Privacy
    Reason Foundation
    Submission Guidelines
    Staff
    Staff
    Contributors
    Archives
    Archives
    Print Issues
    Cover Gallery
    Hit & Run Blog
    Brickbats
    Topics
    Poll
    Feeds
    Podcasts
    RSS
    Events
    Advertise
    Donate
    Print|Email
    A Nobel for Thomas Sargent
    What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus
    Ira Stoll | October 10, 2011

    No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

    So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

    That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

    [Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

    Sargent: He did not attend the macro seminar at Princeton when I was there.

    Interviewer: Oh.

    In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

    Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

    Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

    In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

    In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

    Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

    The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

    And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

    Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

    Reason needs your support. Please donate today!

    more sharingStumbleUpon Digg Reddit Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

    See all 73 comments | Leave a comment
    Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

    Jeff|10.10.11 @ 4:35PM|#
    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

    reply to this
    Ego|10.10.11 @ 4:48PM|#
    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

    reply to this
    Paul Krugman|10.10.11 @ 4:39PM|#
    He may have won a Nobel, but we refuse his admission into the group of Top Men.

    reply to this
    Res Publica Americana|10.10.11 @ 4:49PM|#
    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

    reply to this
    Tony|10.10.11 @ 5:05PM|#
    Paul....I'd be your "bottom" any old time!

    reply to this
    A fan|10.10.11 @ 8:43PM|#
    Human centipede: Krugs, Obama, Tony. All very satisfied.

    reply to this
    Restoras|10.10.11 @ 4:49PM|#
    Maybe Herman Cain will hire him as Treasury Secretary.

    reply to this
    jacob the barbarian|10.10.11 @ 5:54PM|#
    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

    reply to this
    Res Publica Americana|10.10.11 @ 4:52PM|#
    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

    reply to this
    k2000k|10.10.11 @ 5:15PM|#
    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

    reply to this
    Chris|10.10.11 @ 5:35PM|#
    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

    reply to this
    R C Dean|10.10.11 @ 6:05PM|#
    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

    reply to this
    your old man was an idiot|10.10.11 @ 6:45PM|#
    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

    reply to this
    R C Dean|10.10.11 @ 8:24PM|#
    Fuck you.

    reply to this
    A fan|10.10.11 @ 8:46PM|#
    RCD - irony!

    reply to this
    Fiscal Meth|10.10.11 @ 9:15PM|#
    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

    reply to this
    JohnD|10.11.11 @ 10:26AM|#
    Well, "Your Old Man..", You just proved the old Marines point. Moron.

    reply to this
    l0b0t|10.10.11 @ 10:10PM|#
    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

    reply to this

  • grief time||

    reason.org reason.com reason.tv donate previous link REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) REASON.TV VIDEO:
    Philosopher Matt Zwolinski on "Bleeding-Heart Libertarians… (10.5) REASON.TV VIDEO:
    John Tierney - Willpower: Rediscovering the Greatest Human… (10.4) REASON.TV VIDEO:
    Couple Heading to Court after Hosting Home Bible Study! (Nanny… (10.3) REASON.TV VIDEO:
    Ken Burns on PBS Funding, Being a "Yellow-Dog Democrat… (10.2) REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) next link✕Loading...more sharingStumbleUpon Digg Reddit close videoSubscribe
    Print
    E-Reader
    Android App
    iPhone App
    Reason E-Mail Lists
    Reason Stuff
    Subscriber Services
    Share
    Reason on Facebook
    Reason on Twitter
    Reason on Youtube
    Reason RSS
    About
    About
    Contact
    Privacy
    Reason Foundation
    Submission Guidelines
    Staff
    Staff
    Contributors
    Archives
    Archives
    Print Issues
    Cover Gallery
    Hit & Run Blog
    Brickbats
    Topics
    Poll
    Feeds
    Podcasts
    RSS
    Events
    Advertise
    Donate
    Print|Email
    A Nobel for Thomas Sargent
    What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus
    Ira Stoll | October 10, 2011

    No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

    So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

    That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

    [Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

    Sargent: He did not attend the macro seminar at Princeton when I was there.

    Interviewer: Oh.

    In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

    Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

    Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

    In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

    In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

    Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

    The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

    And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

    Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

    Reason needs your support. Please donate today!

    more sharingStumbleUpon Digg Reddit Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

    See all 73 comments | Leave a comment
    Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

    Jeff|10.10.11 @ 4:35PM|#
    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

    reply to this
    Ego|10.10.11 @ 4:48PM|#
    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

    reply to this
    Paul Krugman|10.10.11 @ 4:39PM|#
    He may have won a Nobel, but we refuse his admission into the group of Top Men.

    reply to this
    Res Publica Americana|10.10.11 @ 4:49PM|#
    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

    reply to this
    Tony|10.10.11 @ 5:05PM|#
    Paul....I'd be your "bottom" any old time!

    reply to this
    A fan|10.10.11 @ 8:43PM|#
    Human centipede: Krugs, Obama, Tony. All very satisfied.

    reply to this
    Restoras|10.10.11 @ 4:49PM|#
    Maybe Herman Cain will hire him as Treasury Secretary.

    reply to this
    jacob the barbarian|10.10.11 @ 5:54PM|#
    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

    reply to this
    Res Publica Americana|10.10.11 @ 4:52PM|#
    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

    reply to this
    k2000k|10.10.11 @ 5:15PM|#
    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

    reply to this
    Chris|10.10.11 @ 5:35PM|#
    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

    reply to this
    R C Dean|10.10.11 @ 6:05PM|#
    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

    reply to this
    your old man was an idiot|10.10.11 @ 6:45PM|#
    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

    reply to this
    R C Dean|10.10.11 @ 8:24PM|#
    Fuck you.

    reply to this
    A fan|10.10.11 @ 8:46PM|#
    RCD - irony!

    reply to this
    Fiscal Meth|10.10.11 @ 9:15PM|#
    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

    reply to this
    JohnD|10.11.11 @ 10:26AM|#
    Well, "Your Old Man..", You just proved the old Marines point. Moron.

    reply to this
    l0b0t|10.10.11 @ 10:10PM|#
    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

    reply to this

  • sevo||

    So, do the former honorees attend the award ceremonies for the new ones?

  • grief time||

    reason.org reason.com reason.tv donate previous link REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) REASON.TV VIDEO:
    Philosopher Matt Zwolinski on "Bleeding-Heart Libertarians… (10.5) REASON.TV VIDEO:
    John Tierney - Willpower: Rediscovering the Greatest Human… (10.4) REASON.TV VIDEO:
    Couple Heading to Court after Hosting Home Bible Study! (Nanny… (10.3) REASON.TV VIDEO:
    Ken Burns on PBS Funding, Being a "Yellow-Dog Democrat… (10.2) REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) next link✕Loading...more sharingStumbleUpon Digg Reddit close videoSubscribe
    Print
    E-Reader
    Android App
    iPhone App
    Reason E-Mail Lists
    Reason Stuff
    Subscriber Services
    Share
    Reason on Facebook
    Reason on Twitter
    Reason on Youtube
    Reason RSS
    About
    About
    Contact
    Privacy
    Reason Foundation
    Submission Guidelines
    Staff
    Staff
    Contributors
    Archives
    Archives
    Print Issues
    Cover Gallery
    Hit & Run Blog
    Brickbats
    Topics
    Poll
    Feeds
    Podcasts
    RSS
    Events
    Advertise
    Donate
    Print|Email
    A Nobel for Thomas Sargent
    What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus
    Ira Stoll | October 10, 2011

    No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

    So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

    That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

    [Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

    Sargent: He did not attend the macro seminar at Princeton when I was there.

    Interviewer: Oh.

    In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

    Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

    Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

    In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

    In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

    Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

    The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

    And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

    Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

    Reason needs your support. Please donate today!

    more sharingStumbleUpon Digg Reddit Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

    See all 73 comments | Leave a comment
    Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

    Jeff|10.10.11 @ 4:35PM|#
    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

    reply to this
    Ego|10.10.11 @ 4:48PM|#
    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

    reply to this
    Paul Krugman|10.10.11 @ 4:39PM|#
    He may have won a Nobel, but we refuse his admission into the group of Top Men.

    reply to this
    Res Publica Americana|10.10.11 @ 4:49PM|#
    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

    reply to this
    Tony|10.10.11 @ 5:05PM|#
    Paul....I'd be your "bottom" any old time!

    reply to this
    A fan|10.10.11 @ 8:43PM|#
    Human centipede: Krugs, Obama, Tony. All very satisfied.

    reply to this
    Restoras|10.10.11 @ 4:49PM|#
    Maybe Herman Cain will hire him as Treasury Secretary.

    reply to this
    jacob the barbarian|10.10.11 @ 5:54PM|#
    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

    reply to this
    Res Publica Americana|10.10.11 @ 4:52PM|#
    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

    reply to this
    k2000k|10.10.11 @ 5:15PM|#
    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

    reply to this
    Chris|10.10.11 @ 5:35PM|#
    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

    reply to this
    R C Dean|10.10.11 @ 6:05PM|#
    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

    reply to this
    your old man was an idiot|10.10.11 @ 6:45PM|#
    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

    reply to this
    R C Dean|10.10.11 @ 8:24PM|#
    Fuck you.

    reply to this
    A fan|10.10.11 @ 8:46PM|#
    RCD - irony!

    reply to this
    Fiscal Meth|10.10.11 @ 9:15PM|#
    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

    reply to this
    JohnD|10.11.11 @ 10:26AM|#
    Well, "Your Old Man..", You just proved the old Marines point. Moron.

    reply to this
    l0b0t|10.10.11 @ 10:10PM|#
    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

    reply to this

  • Spencer||

    Would have been better if he had said "Krugnuts" wasn't there.

  • grief time||

    reason.org reason.com reason.tv donate previous link REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) REASON.TV VIDEO:
    Philosopher Matt Zwolinski on "Bleeding-Heart Libertarians… (10.5) REASON.TV VIDEO:
    John Tierney - Willpower: Rediscovering the Greatest Human… (10.4) REASON.TV VIDEO:
    Couple Heading to Court after Hosting Home Bible Study! (Nanny… (10.3) REASON.TV VIDEO:
    Ken Burns on PBS Funding, Being a "Yellow-Dog Democrat… (10.2) REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) next link✕Loading...more sharingStumbleUpon Digg Reddit close videoSubscribe
    Print
    E-Reader
    Android App
    iPhone App
    Reason E-Mail Lists
    Reason Stuff
    Subscriber Services
    Share
    Reason on Facebook
    Reason on Twitter
    Reason on Youtube
    Reason RSS
    About
    About
    Contact
    Privacy
    Reason Foundation
    Submission Guidelines
    Staff
    Staff
    Contributors
    Archives
    Archives
    Print Issues
    Cover Gallery
    Hit & Run Blog
    Brickbats
    Topics
    Poll
    Feeds
    Podcasts
    RSS
    Events
    Advertise
    Donate
    Print|Email
    A Nobel for Thomas Sargent
    What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus
    Ira Stoll | October 10, 2011

    No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

    So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

    That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

    [Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

    Sargent: He did not attend the macro seminar at Princeton when I was there.

    Interviewer: Oh.

    In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

    Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

    Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

    In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

    In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

    Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

    The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

    And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

    Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

    Reason needs your support. Please donate today!

    more sharingStumbleUpon Digg Reddit Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

    See all 73 comments | Leave a comment
    Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

    Jeff|10.10.11 @ 4:35PM|#
    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

    reply to this
    Ego|10.10.11 @ 4:48PM|#
    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

    reply to this
    Paul Krugman|10.10.11 @ 4:39PM|#
    He may have won a Nobel, but we refuse his admission into the group of Top Men.

    reply to this
    Res Publica Americana|10.10.11 @ 4:49PM|#
    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

    reply to this
    Tony|10.10.11 @ 5:05PM|#
    Paul....I'd be your "bottom" any old time!

    reply to this
    A fan|10.10.11 @ 8:43PM|#
    Human centipede: Krugs, Obama, Tony. All very satisfied.

    reply to this
    Restoras|10.10.11 @ 4:49PM|#
    Maybe Herman Cain will hire him as Treasury Secretary.

    reply to this
    jacob the barbarian|10.10.11 @ 5:54PM|#
    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

    reply to this
    Res Publica Americana|10.10.11 @ 4:52PM|#
    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

    reply to this
    k2000k|10.10.11 @ 5:15PM|#
    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

    reply to this
    Chris|10.10.11 @ 5:35PM|#
    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

    reply to this
    R C Dean|10.10.11 @ 6:05PM|#
    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

    reply to this
    your old man was an idiot|10.10.11 @ 6:45PM|#
    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

    reply to this
    R C Dean|10.10.11 @ 8:24PM|#
    Fuck you.

    reply to this
    A fan|10.10.11 @ 8:46PM|#
    RCD - irony!

    reply to this
    Fiscal Meth|10.10.11 @ 9:15PM|#
    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

    reply to this
    JohnD|10.11.11 @ 10:26AM|#
    Well, "Your Old Man..", You just proved the old Marines point. Moron.

    reply to this
    l0b0t|10.10.11 @ 10:10PM|#
    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

    reply to this

  • ||

    As he does not endorse the idea that more government intervention in the economy is a GOOD THING, he will be ignored.

    By both Team Blue and Team Red, although the latter may give lip service to the notion.

  • Brandon||

    Damn, but he sounds a lot like Ron Paul...

  • ||

    Yup. Both, obviously, racists.

  • serious economist||

    Only lunatic neo-confederates (even though they had insane inflation) have anything nice to say about gold!

  • BRM||

    The Gold Standard did have one good aspect.

    It meant that money meant something and you felt it. There are only so many pounds of gold in Ft. Knox. There are only so many more pounds extractable in the US. The gold backed dollar had a value.

    If you feel money in sense of its value rather than as a method of counting, you tend to be more thrifty in how you spend it. If you are the fed and you can always print more, then wasteful spending is not so bad as long as the people whose votes you bought stay bought.

    If you are the fed and you can't print more, you have to be picking in what you spend and who you try to buy. The outcome of this is that govt spending is restrained intrinsically.

  • Article 1, Section 10||

    At least I haven't been forgotten.

  • mr burns||

    Having a commodity backed currency has the advantage that it doesnt confer infinite wealth (and concomitant power) to a small unelected elite of central bankers .

  • ||

    Nice to see that in an era where being Not Bush is all it takes to get the Peace Prize (not that having a Not Bush foreign policy is a bad thing, but it shouldn't be enough to get you the Prize...and boy, I bet some of those faces are red now that Obama's foreign policy has proven to not be as Not Bush as he advertised) the Econ prize is not selected based on dogma.

  • Tony||

    No matter how skeptical one is of the authority of “experts,”

    The only reason anyone has to be skeptical of experts is if experts tend to be skeptical of what you believe.

  • Brandon||

    This is the stupidest thing I've read in recent memory.

  • sevo||

    Not sure.
    Shithead has lowered the bar such that it may *not* be the stupidest.
    You sort of have to prioritize political/economic/philosophy metrics and award values to each one to find which of shitheads comments are the most stupid.
    I'm not going to waste my time; stupid is as stupid does.

  • grief time||

    reason.org reason.com reason.tv donate previous link REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) REASON.TV VIDEO:
    Philosopher Matt Zwolinski on "Bleeding-Heart Libertarians… (10.5) REASON.TV VIDEO:
    John Tierney - Willpower: Rediscovering the Greatest Human… (10.4) REASON.TV VIDEO:
    Couple Heading to Court after Hosting Home Bible Study! (Nanny… (10.3) REASON.TV VIDEO:
    Ken Burns on PBS Funding, Being a "Yellow-Dog Democrat… (10.2) REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) next link✕Loading...more sharingStumbleUpon Digg Reddit close videoSubscribe
    Print
    E-Reader
    Android App
    iPhone App
    Reason E-Mail Lists
    Reason Stuff
    Subscriber Services
    Share
    Reason on Facebook
    Reason on Twitter
    Reason on Youtube
    Reason RSS
    About
    About
    Contact
    Privacy
    Reason Foundation
    Submission Guidelines
    Staff
    Staff
    Contributors
    Archives
    Archives
    Print Issues
    Cover Gallery
    Hit & Run Blog
    Brickbats
    Topics
    Poll
    Feeds
    Podcasts
    RSS
    Events
    Advertise
    Donate
    Print|Email
    A Nobel for Thomas Sargent
    What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus
    Ira Stoll | October 10, 2011

    No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

    So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

    That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

    [Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

    Sargent: He did not attend the macro seminar at Princeton when I was there.

    Interviewer: Oh.

    In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

    Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

    Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

    In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

    In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

    Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

    The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

    And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

    Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

    Reason needs your support. Please donate today!

    more sharingStumbleUpon Digg Reddit Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

    See all 73 comments | Leave a comment
    Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

    Jeff|10.10.11 @ 4:35PM|#
    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

    reply to this
    Ego|10.10.11 @ 4:48PM|#
    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

    reply to this
    Paul Krugman|10.10.11 @ 4:39PM|#
    He may have won a Nobel, but we refuse his admission into the group of Top Men.

    reply to this
    Res Publica Americana|10.10.11 @ 4:49PM|#
    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

    reply to this
    Tony|10.10.11 @ 5:05PM|#
    Paul....I'd be your "bottom" any old time!

    reply to this
    A fan|10.10.11 @ 8:43PM|#
    Human centipede: Krugs, Obama, Tony. All very satisfied.

    reply to this
    Restoras|10.10.11 @ 4:49PM|#
    Maybe Herman Cain will hire him as Treasury Secretary.

    reply to this
    jacob the barbarian|10.10.11 @ 5:54PM|#
    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

    reply to this
    Res Publica Americana|10.10.11 @ 4:52PM|#
    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

    reply to this
    k2000k|10.10.11 @ 5:15PM|#
    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

    reply to this
    Chris|10.10.11 @ 5:35PM|#
    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

    reply to this
    R C Dean|10.10.11 @ 6:05PM|#
    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

    reply to this
    your old man was an idiot|10.10.11 @ 6:45PM|#
    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

    reply to this
    R C Dean|10.10.11 @ 8:24PM|#
    Fuck you.

    reply to this
    A fan|10.10.11 @ 8:46PM|#
    RCD - irony!

    reply to this
    Fiscal Meth|10.10.11 @ 9:15PM|#
    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

    reply to this
    JohnD|10.11.11 @ 10:26AM|#
    Well, "Your Old Man..", You just proved the old Marines point. Moron.

    reply to this
    l0b0t|10.10.11 @ 10:10PM|#
    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

    reply to this

  • grief time||

    reason.org reason.com reason.tv donate previous link REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) REASON.TV VIDEO:
    Philosopher Matt Zwolinski on "Bleeding-Heart Libertarians… (10.5) REASON.TV VIDEO:
    John Tierney - Willpower: Rediscovering the Greatest Human… (10.4) REASON.TV VIDEO:
    Couple Heading to Court after Hosting Home Bible Study! (Nanny… (10.3) REASON.TV VIDEO:
    Ken Burns on PBS Funding, Being a "Yellow-Dog Democrat… (10.2) REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) next link✕Loading...more sharingStumbleUpon Digg Reddit close videoSubscribe
    Print
    E-Reader
    Android App
    iPhone App
    Reason E-Mail Lists
    Reason Stuff
    Subscriber Services
    Share
    Reason on Facebook
    Reason on Twitter
    Reason on Youtube
    Reason RSS
    About
    About
    Contact
    Privacy
    Reason Foundation
    Submission Guidelines
    Staff
    Staff
    Contributors
    Archives
    Archives
    Print Issues
    Cover Gallery
    Hit & Run Blog
    Brickbats
    Topics
    Poll
    Feeds
    Podcasts
    RSS
    Events
    Advertise
    Donate
    Print|Email
    A Nobel for Thomas Sargent
    What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus
    Ira Stoll | October 10, 2011

    No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

    So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

    That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

    [Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

    Sargent: He did not attend the macro seminar at Princeton when I was there.

    Interviewer: Oh.

    In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

    Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

    Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

    In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

    In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

    Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

    The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

    And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

    Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

    Reason needs your support. Please donate today!

    more sharingStumbleUpon Digg Reddit Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

    See all 73 comments | Leave a comment
    Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

    Jeff|10.10.11 @ 4:35PM|#
    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

    reply to this
    Ego|10.10.11 @ 4:48PM|#
    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

    reply to this
    Paul Krugman|10.10.11 @ 4:39PM|#
    He may have won a Nobel, but we refuse his admission into the group of Top Men.

    reply to this
    Res Publica Americana|10.10.11 @ 4:49PM|#
    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

    reply to this
    Tony|10.10.11 @ 5:05PM|#
    Paul....I'd be your "bottom" any old time!

    reply to this
    A fan|10.10.11 @ 8:43PM|#
    Human centipede: Krugs, Obama, Tony. All very satisfied.

    reply to this
    Restoras|10.10.11 @ 4:49PM|#
    Maybe Herman Cain will hire him as Treasury Secretary.

    reply to this
    jacob the barbarian|10.10.11 @ 5:54PM|#
    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

    reply to this
    Res Publica Americana|10.10.11 @ 4:52PM|#
    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

    reply to this
    k2000k|10.10.11 @ 5:15PM|#
    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

    reply to this
    Chris|10.10.11 @ 5:35PM|#
    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

    reply to this
    R C Dean|10.10.11 @ 6:05PM|#
    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

    reply to this
    your old man was an idiot|10.10.11 @ 6:45PM|#
    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

    reply to this
    R C Dean|10.10.11 @ 8:24PM|#
    Fuck you.

    reply to this
    A fan|10.10.11 @ 8:46PM|#
    RCD - irony!

    reply to this
    Fiscal Meth|10.10.11 @ 9:15PM|#
    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

    reply to this
    JohnD|10.11.11 @ 10:26AM|#
    Well, "Your Old Man..", You just proved the old Marines point. Moron.

    reply to this
    l0b0t|10.10.11 @ 10:10PM|#
    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

    reply to this

  • grief time||

    reason.org reason.com reason.tv donate previous link REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) REASON.TV VIDEO:
    Philosopher Matt Zwolinski on "Bleeding-Heart Libertarians… (10.5) REASON.TV VIDEO:
    John Tierney - Willpower: Rediscovering the Greatest Human… (10.4) REASON.TV VIDEO:
    Couple Heading to Court after Hosting Home Bible Study! (Nanny… (10.3) REASON.TV VIDEO:
    Ken Burns on PBS Funding, Being a "Yellow-Dog Democrat… (10.2) REASON.TV VIDEO:
    Ken Burns: Prohibition, Drug Laws, & Unintended Consequences (10.2) REASON.TV VIDEO:
    Interview with Reason Cartoonist Peter Bagge (9.30) REASON.TV VIDEO:
    Prohibition Vogue: Boardwalk Empire, Ken Burns and What it… (9.29) REASON.TV VIDEO:
    Remy's Occupy Wall Street Protest Song (10.8) REASON.TV VIDEO:
    What We Saw at the Occupy Wall Street Protest (10.7) REASON.TV VIDEO:
    Abandoned in Guatemala: The Failure of International Adoption… (10.6) next link✕Loading...more sharingStumbleUpon Digg Reddit close videoSubscribe
    Print
    E-Reader
    Android App
    iPhone App
    Reason E-Mail Lists
    Reason Stuff
    Subscriber Services
    Share
    Reason on Facebook
    Reason on Twitter
    Reason on Youtube
    Reason RSS
    About
    About
    Contact
    Privacy
    Reason Foundation
    Submission Guidelines
    Staff
    Staff
    Contributors
    Archives
    Archives
    Print Issues
    Cover Gallery
    Hit & Run Blog
    Brickbats
    Topics
    Poll
    Feeds
    Podcasts
    RSS
    Events
    Advertise
    Donate
    Print|Email
    A Nobel for Thomas Sargent
    What the latest Nobel winner has to say about economics, Paul Krugman, and Obama's stimulus
    Ira Stoll | October 10, 2011

    No matter how skeptical one is of the authority of “experts,” it’s hard to avoid paying at least some attention to the people who award the Nobel prize—especially when they give one to someone who tends to support some things one tended to believe already.

    So it is in the case of Thomas Sargent, the New York University professor who was announced Monday as a winner of the Nobel in economics. An interview of Professor Sargent by the Minneapolis Fed in August 2010 summed up some of his contributions succinctly: “Policymakers can’t manipulate the economy by systematically ‘tricking’ people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy, as Sargent demonstrated with Neil Wallace, because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.”

    That interview is also notable for Professor Sargent’s icy dismissal of another Nobel laureate in Economics, Paul Krugman of Princeton University and The New York Times opinion page.

    [Minneapolis Fed interviewer]: What was Paul Krugman’s opinion about those Princeton macro seminar presentations that advocated modern macro?

    Sargent: He did not attend the macro seminar at Princeton when I was there.

    Interviewer: Oh.

    In the same interview, Professor Sargent was also skeptical of President Obama’s stimulus:

    Interviewer: A January 2009 article quotes you as saying, “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.” What calculations had you seen?

    Sargent: I said something like that to a reporter. I had just read an Obama administration’s Council of Economic Advisers document e-mailed to me by my friend John Taylor. I agreed with John that the CEA calculations were surprisingly naive for 2009. They were not informed by what we learned after 1945….In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.

    In the same interview, Professor Sargent says, “Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment….Our models imply that people in Europe, especially older workers, are suffering from long-term unemployment because of the adverse incentives brought about by a generous social safety net when it interacts with these human capital dynamics….if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.”

    And in the same interview, Professor Sargent speaks of how a gold standard for monetary policy imposed fiscal discipline: “what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.”

    In a 2007 graduation speech to economics undergraduates at the University of California, Berkeley, Professor Sargent offered “a short list of valuable lessons that our beautiful subject teaches,” among them, “Many things that are desirable are not feasible,” and, “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

    In both the Minneapolis Fed interview and his February 2010 Phillips Lecture at the London School of Economics, Professor Sargent gave a respectful summary of a criticism of federal bank deposit insurance: “The deposit insurance allows shareholders to gamble on favorable terms with other peoples’ money (the tax payers’), and shareholders want to do this as much as possible. The bank is bound to fail sooner or later, and then the government will have to pay the depositors.”

    Toward the end of the Phillips Lecture, Professor Sargent also cites Walter Bagehot, who “said that what he called a ‘natural’ competitive banking system without a ‘central’ bank would be better…. ‘nothing can be more surely established by a larger experience than that a Government which interferes with any trade injures that trade. The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’”

    The best thing undeniably that a government can do with many things is to let them take care of themselves. Now there’s a phrase that it’d be nice to see etched into some granite above the entryways of some buildings in Washington.

    And if the chance of that actually happening is some elections away, the Nobel committee’s decision to give a prize to Professor Sargent may help bring the moment closer.

    Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

    Reason needs your support. Please donate today!

    more sharingStumbleUpon Digg Reddit Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

    See all 73 comments | Leave a comment
    Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

    Jeff|10.10.11 @ 4:35PM|#
    In the same interview, Professor Sargent says, "Europe’s generous unemployment compensation system has made an important contribution to sustained high European unemployment."

    Paul Krugman used to say the exact same thing before the 2000 election rendered him utterly insane.

    reply to this
    Ego|10.10.11 @ 4:48PM|#
    Behold! I have ever been The Destroyer of Great Men, and of Greater Reputations.

    reply to this
    Paul Krugman|10.10.11 @ 4:39PM|#
    He may have won a Nobel, but we refuse his admission into the group of Top Men.

    reply to this
    Res Publica Americana|10.10.11 @ 4:49PM|#
    The brown stains on your pillow indicate you've got shit for brains, Krugman. Take a fucking hint.

    reply to this
    Tony|10.10.11 @ 5:05PM|#
    Paul....I'd be your "bottom" any old time!

    reply to this
    A fan|10.10.11 @ 8:43PM|#
    Human centipede: Krugs, Obama, Tony. All very satisfied.

    reply to this
    Restoras|10.10.11 @ 4:49PM|#
    Maybe Herman Cain will hire him as Treasury Secretary.

    reply to this
    jacob the barbarian|10.10.11 @ 5:54PM|#
    Its either Krugman or 'White Indian', but which one? Kind of like a Chinese menu for catastrophes.

    reply to this
    Res Publica Americana|10.10.11 @ 4:52PM|#
    It's pretty awesome when fairly prominent, known people can subtly convey messages like "what a fucking moron", "go fuck yourself", and "kiss my ass" with extensive knowledge of their field by diving into some sort of lecture on the given subject, often mind-fucking the interviewer, too.

    This guy belongs at the right side of God, because the respectfulness and wording with which he's saying Obama is a shithead is extraordinary.

    reply to this
    k2000k|10.10.11 @ 5:15PM|#
    Theres being pwned, and then theres being pwned with class.

    Mindless female reporter: "Well do you have a degree in economics?

    Congressman: "Yes I do, magna cum laude."

    Mindless reporter woman: "derp..."

    reply to this
    Chris|10.10.11 @ 5:35PM|#
    ^ This. I noticed how he kept it professional with a dry wit and minimal abuse of the person or persons in need of godsmacking, but damned them all the same.

    Like Larry Carlton playing guitar. The space between the notes are as relevant to the composition as the notes themselves.

    reply to this
    R C Dean|10.10.11 @ 6:05PM|#
    Like my old man, the Marine, used to say: "Cursing is a crutch for the weak-minded."

    reply to this
    your old man was an idiot|10.10.11 @ 6:45PM|#
    cursing is like salt and pepper are to cooking, the right amount, in just the right place at the right time, can make magic

    your old man was wrong, and that quote has been moronic since it was first uttered

    reply to this
    R C Dean|10.10.11 @ 8:24PM|#
    Fuck you.

    reply to this
    A fan|10.10.11 @ 8:46PM|#
    RCD - irony!

    reply to this
    Fiscal Meth|10.10.11 @ 9:15PM|#
    Another way to make magic is to be an anonymous tough guy and insult someone's father on a website. You runny fuckstain.

    reply to this
    JohnD|10.11.11 @ 10:26AM|#
    Well, "Your Old Man..", You just proved the old Marines point. Moron.

    reply to this
    l0b0t|10.10.11 @ 10:10PM|#
    I was always partial to Vonnegut's line from Hocus Pocus -
    "...profanity and obscenity entitle people who don't want unpleasant information to close their ears and eyes to you."

    reply to this

  • Chris||

    Now, that's some Grade A Trolling. All the decadence of our modern irrationalist academia wrapped up in one short annoying sentence. It is enough to drive a sane, sensible man to despair with it's elegant batshittery if he so believed in the sincerity of the writer.

    I'm likely to become a huge fan of your work.

  • ||

    "The only reason anyone has to be skeptical of experts is if experts tend to be skeptical of what you believe."

    Ok Tony can you tell me the DIFFERENCE between a "belief" and the truth?....And can you tell me what one belongs with reality?

    You have time....we know this will stump you.

  • ||

    I went to University. Not everyone there is smart; professors included. You can be "research" and "book" smart and still be a complete idiot in the real world. In fact, there are a lot of idiots sitting in them there classes.

    I remember watching a show where the interviewer asked a Yale (or Princeton or Harvard - whatver) professor what political system Canada had. The professor was unsure.

    CANADA!

    Fuck me parliamentarian arse, eh?

  • ||

    the interviewer asked a Yale (or Princeton or Harvard - whatver) professor what political system Canada had.

    Umm, a Canadian one?

  • George V||

    Wrong...a Canadian one, eh!

  • ||

    That's fucking right!

    Canadian!

    And don't you forget it!

    *Flips to SCTV. Slams remote down on chesterfield. Bounces back up hitting the face, spilling beer.*

  • Jim||

    How did Sargent ever win a Nobel Prize?

    I thought they vetted guys like this so they wouldn't win. Some committee was asleep at the wheel.

  • sevo||

    I'm curious for the same reason; Sweden isn't the center of market-based economics.
    I'm also wondering who gets the "You Aren't W" prize this year and in which category.
    And I'm checking to see it there's an "Ooops" category to, well, remove the "Peace" prize from the guy who's continued several wars and started a new one.

  • Realist||

    The Nobel Peace prize and the Nobel Prize for Economics are on the same footing.

  • Chaos Punk||

    Who doesn't have a nobel prize? shit is stupid. I'd rather hop freight trains with the scumfucks.

  • Chaos Punk||

    Wasn't this award split with someone else?

  • New Englander||

    Wow. I didn't know that there was this country called "Europe" that had one big homogeneous policy for thirty years yielding one big homogeneous result in economic outcomes.
    Thanks for the update, Thomas Sargent! The only "Europe" I had heard of before was a collection of soveriegn countries with vastly different individual geographic, cultural and economic situations, each with its own democratic process that resulted in fairly regular changes in political control and policy initiatives.

    Say Thomas Sargent, this "Europe" place sure sounds a lot simpler than the United States, with 50-plus jurisdictions pursuing zig-zag economic policies as political control changes hands in different elections. That kind of complexity can make it hard to figure out policy effects over the long term. But I guess this "Europe" that your speak of can give us the kind of lab-like conditions we need to figure out how things really work.

    Oh, btw, Thomas Sargent, what do you think the unemployment statistics would be in this "Europe" place if they had a policy of imprisoning two percent of the male population and put another 1.5-2% in a massive globe-spanning military force?

  • Radioactive||

    Can you say Euro? you douche

  • Colonel_Angus||

    "I didn't know that there was this country called "Europe" that had one big homogeneous policy for thirty years yielding one big homogeneous result in economic outcomes."

    Then you must not be highly familiar with the common economic policies applied in any country of the continent. Literally, any one of them.

  • ||

    Yes. That's the point of the EU - to funnel everything through Brussels.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Video Game Nation: How gaming is making America freer – and more fun.
  • Matt Welch: How the left turned against free speech.
  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.

SUBSCRIBE

advertisement