Las Vegas Sun

November 30, 2021

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If you’re wrong enough, you can succeed on the right

Evidence has a well-known liberal bias. And that, presumably, is why conservatives prefer “experts” who not only consistently get things wrong, but refuse to admit or learn from their mistakes.

There has been a lot of commentary about Stephen Moore, the man President Donald Trump wants to put on the Fed’s Board of Governors. It turns out he has a lot of personal baggage: He was held in contempt of court for failing to pay alimony and child support, and his past writings show an extraordinary degree of misogyny. He misstates facts so much that one newspaper editor vowed never to publish him again, and he has been caught outright lying about his past support for a gold standard. Oh, and he has described the cities of the U.S. heartland as “armpits of America.”

But it’s also important to put Moore in context. Until he decided that the Fed should roll those printing presses to help Trump, he was part of a fairly broad group that advocated tight money in the aftermath of the global financial crisis. This group bitterly criticized both the Fed’s low interest rates and its efforts to boost the economy by buying bonds, so-called “quantitative easing.” Its members warned that these policies would lead to runaway inflation, and seized on a rise in commodity prices in 2011-12 as the harbinger of an inflationary surge.

Meanwhile, economists at the Fed and elsewhere argued that there was no inflationary risk given the depressed state of the economy, and that “core” inflation, which excludes volatile food and energy prices, was a much better indicator of inflationary pressure than commodity prices. Sure enough, the commodity price surge was a temporary blip, and runaway inflation never happened.

The Fed was right, and its hard-money critics were wrong. In fact, it’s hard to think of other events in economic history in which rival doctrines received such a clear test, and in which one of them emerged so decisively as the winner. When it comes to evidence settling an economic dispute, the monetary events of 2009-14 or so were as good as it gets.

But two funny things happened once the verdict of the evidence was in. First, aside from a vague mea culpa from Larry Kudlow, none of the Fed’s critics were willing to admit that they were wrong. In 2014, Bloomberg contacted signatories of a 2010 open letter to then-Fed Chairman Ben Bernanke warning of an inflationary explosion, to ask what they thought given subdued inflation and a solid economic recovery. Not one was willing to admit that the letter’s warnings had proved incorrect.

Second, the people who got it wrong were rewarded for their errors. Moore, who was among the right-wingers who called for interest rate hikes in 2007-08 to head off what they saw as looming inflation as the Great Recession was already underway, was wrong about everything during the financial crisis. He remained a fixture on the right-wing conference circuit, and in 2014, the Heritage Foundation appointed him as its chief economist. Kudlow, who dismissed those warning about the housing bubble as “bubbleheads” and warned about looming inflation in the depths of recession, is now the Trump administration’s chief economist.

So the attempt to install Moore at the Fed is right in character. And let’s be clear: The issue is not simply one of having made some bad forecasts. It’s about being consistently wrong about everything, and refusing to learn from error.

Recently, Moore declared that the Fed is “filled with hundreds of economists who are worthless, who have the wrong model in their mind. They should all be, they should all be fired, and they should be replaced by good economists.” Given the respective track records of Moore and the Fed over the past decade and more, what he apparently means by the “wrong model” is a view of inflation that has repeatedly been proved right, as opposed to his own analysis, which has always been wrong.

But so far not a single Republican senator has questioned Moore’s qualifications. When it comes to right-wing economists, what we see is a clear pattern of survival of the wrongest.

Paul Krugman is a columnist for The New York Times.