“Not even wrong” is not praise

At one point in Zombie Economics, I tried a Popperian (or maybe Paulian) smackdown, saying that some defenders of EMH used arguments that effectively rendered it unfalsifiable. I thought that was a bad thing, but apparently at least one reviewer disagrees. Following my stoush with Murdoch, a commenter pointed me to this piece by Stephen Williamson of Washington University at St Louis, who has apparently been asked to review the book for the Journal of Economic Literature. Williamson claims that I am badly confused about the EMH, and that

Market efficiency is simply an assumption of rationality. As such it has no implications. If it has no implications, it can’t be wrong.

He follows up with “Like the “efficient markets hypothesis,” DSGE has no implications, and therefore can’t be wrong.””

That’s right, Williamson not only defends the EMH on the basis that it’s not even wrong, but follows up by making the same claim about the whole of modern macro. Those are, quite literally, his only criticisms of these chapters. His commenters (none of whom seem particularly favorably inclined towards me) try to suggest that isn’t the most effective line of attack, but he comprehensively misses the point.

Williamson’s comments on my other chapters aren’t much better. He doesn’t present a single piece of empirical evidence. Responding to my chapter on Trickle Down, his only argument is

On some level, it seems obvious that economic growth benefits all residents of a country. Whatever my skill set, I would rather ply my trade in the United States than in Malawi.

Honestly, my lamest blog commenters can do better than that, and the smae is true his snarky comments on the privatisation chapter.

Williamson does have a good line in personal condescension. St Louis is about as close to the geographical centre of the economics profession as you can get, while Brisbane is about as far away as it gets. So it’s time for a bit of provincial-bashing

What is Quiggin’s claim to fame? His early work is an odd mix of agricultural economics and decision theory, but he seems to have distinguished himself mainly in public policy. He writes regularly in the mainstream media, writes a blog, and Zombie Economics appears to have sold well. Now, what is Quiggin up to in Zombie Economics? Roughly, Quiggin is the Australian farm team in the Krugman/Thoma/DeLong league.

Pursuing the baseball metaphor, I’m reminded of Casey at the Bat, except that, after the defiant eye-gleam and lip-curling sneer, and the bottom-of-the-ninth strike-out, our Casey heads off for a run around the bases in the manner of a home-run hitter.

30 thoughts on ““Not even wrong” is not praise

  1. Cool name Hristos.
    If anyone should know anything you should.
    [Er, thats appreciation not sarcasm or anything similar just in case you wondered. The nick name tickled my fancy]

  2. I, of course, have no idea what EMH and DSGE are, my knowledge of the dismal pseudo-science being restricted to economic ponerology, the psychopathology of unrequited greed and the deleterious effects of over-stimulating the private sector, but I reckon News Corpse et al must be acting for you as PR agents. After all, at least 99% of morally sane individuals acquainted with Murdoch and his Evil Empire see its as a peripatetic dung-heap, with Cock Rupert atop, crowing out a mixture of blarney and baloney. To be monstered by his apparatchiki is as eloquent a testimony to one’s virtues as a pat on the head from Beethoven was to the boy Liszt. This fellow has possibly become acquainted with the Empire’s distaste for your thought crime, and is advertising his suitability for a gig as economics adviser to Bill O’Reilly or some other Fox News paladin. After all Chris Mitchell advertised his readiness for greater things with his scoop of the ‘secret Manning Clark Order of Lenin’. And judging by the way they still savage Manning at every opportunity, you can confidently expect to be pilloried long after death. That’s real celebrity! I’ve often wondered if Rupert sees a little of his old self in Mitchell. Perhaps, when James takes the rap, Rupe might formally adopt him as heir apparent.

  3. Yes, I’m jealous John, I try and try to annoy these clowns but they ignore me. Farm team or not you have put a burr under their neocon saddlecloth, and they certainly aren’t ignoring you. Oh and belated congatluations on your award. It’t obviously the Year of the Quiggin!

  4. When all else fails, try playing the player rather than the ball. Obviously, Williamson knows that too. But this doesn’t compensate for his lack of knowledge of the EMH literature, both the Finance literature (eg Fama) and the math econ literature(‘Fully Revealing Rational Expectations Equilibria’) literature.

    Talking about ‘the farm’. Cherries and lemons ‘made in the USA’ are for sale at Wollies. So the farmers in the USA are still ‘productive’. GOD help them if they have to pay off the debt generated by the Wall Street bankers with the blessing of some faith healers.

  5. I am surprised and disappointed that this Williamson fellow ‘has apparently been asked to review the book for the Journal of Economic Literature’ if those quotes above are some of his comments. What next? Will JEL be asking G W Bush, Rupert Murdoch, or John Howard to do book reviews? Yet another sliming and possibly less coherent than the Oz piece.

    “…is simply an assumption of rationality. As such it has no implications. If it has no implications, it can’t be wrong.”

    What does this mean? Does it mean that because it is an assumption, ‘it has no implications’ therefore it must be right? Surely not?

    “… it seems obvious that economic growth benefits all…”

    Clearly, the textbooks need to be re-written. And…

    “…What is Quiggin’s claim to fame? …”

    Oh. The rest of his review was apparently gratuitous. The ultimate ad hominem sliming. This superstar of ‘I chopped down the cherry tree’ University, should really not have been called on to lower himself to review this trash written by some nobody in some far flung colony anyway.

    Even JEL is being FoxNewified these days! Maybe they asked him to review Zombie Economics because Ann Coulter was otherwise occupied?

  6. @rog

    Having been accused, by Krugman, of ‘pulling rank’ on Quiggin, Williamson then attempts, on his blog, to pull rank on Krugman, explaining, amongst other things, Krugman’s narrow knowledge base (presumably, compared to his own) and in particular, Krugman’s lack of knowledge about modern macroeconomics (“…with little or no knowledge of what makes modern macroeconomics tick…”) apparently something he also shares with JQ.

    In what couldn’t have been intended, but turns out to be, a very amusing self-parody, Williamson reminds one of the delusional mouse having sex with an elephant when the elephant happens to be hit on the head by a falling coconut.

  7. Three (unrelated) points:

    1. Perhaps coming out of Woop Woop
    of Canada and arriving at the big
    tent of St. Louis, he thinks he is
    the BSD.

    2. The way DSGE model is actually
    USED by the Central Banks and
    other private forecasting places,
    and I have seen a few up close
    and personal, you see ad hoc
    assumptions being made all over
    the place. So much so, it would
    make Lucas weep! Most private
    forecasters (privately) admit that
    the models actually used are very
    very fragile. Small changes in
    parameters blow up the models.
    The robustness that earlier purists
    have talked about is a pipe dream.

    3. And JQ’s highest cited paper (the
    one in JEBO) is more than three
    times the one by SW. Take that
    you twit!

    Tapen

  8. I see!? A Manxman. That means that you must have no tail, and those nasty things young Chris scrawled on the News Corpse executive geezer must be,,,Lies!

  9. @Tapen Sinha

    I don’t buy your first point. St Louis is no metropolis, and some very fine people have been born in Canada. Unfortunately, no country appears immune when it comes to producing the occasional one who is not.

  10. Hmmm, a sliming and a flaming :-; That’s two high badges of honour, so what is the hat trick?

  11. @Freelander
    I guess my tongue in cheek joke fell flat.
    Neither SL was meant to be a big city nor
    did I say that ALL of Canada is Woop Woop.
    Nor was it implied that all the Canadians are
    like that. For the record, I have written several
    books with my good Canadian friend, the WTO
    Chair Professor, Bradly Condon.

  12. Quiggin: Steve Williamson is the senior editor of the Journal of Monetary Economics. He is also an Editor for the Review of Economic Dynamics. These are leading journals in macroeconomics and monetary economics. He also has a well known textbook in Economics. He certainly knows what the efficient markets hypothesis is. Your followers can be excused for their ignorance, but you should know better.

  13. As I explain in the book, the term EMH in various forms (weak, semi-strong and strong) is commonly used to refer to claims about the informational efficiency of markets which rest on a combination of rationality, expected value as the objective, different assumptions about access to information and so on. I go on to say that the version I am criticising includes additional (usually implicit) hypotheses most importantly the completeness of financial markets.

    If Williamson wants to say (and you want to agree) that the term EMH just means a trivial version of rationality (the existence of some complete ordering) and has no implications, you are both welcome. But a series of definitional quibbles does not constitute a book review.

  14. Interesting. Does his editorships mean he is not responsible for his own words?

    “you should know better”

    What are you being accused of now? Lèse majesté? If Williamson’s pedigree is so wonderful and so relevant, has he heard of noblesse oblige?

  15. Of course, these definitions aren’t mine, they were proposed by Eugene Fama. But what would he know, compared to an editor of JME and a troll with a pretentious pseudonym?

  16. I see – the fabled ‘Efficient Markets Hypothesis’. And I thought it was ‘Exhibiting Maximum Hyperbole’ and was the News Corpse de facto motto, and the secret password to the Kippax Street executive geezer….BSDs only.

  17. @Mr MIT

    I have commented on Stephen Williamson’s critique of John Quiggin’s treatment of the efficient market hypothesis. I have done so not as a ‘follower’ of John Quiggin but on the basis of my own research.

    My own research was assessed by three established authors in mathematical economics from three countries. One of them was the editor of the Journal of Economic Theory.

    Whether you like it or not, in his review of Prof Quiggin’s book, as publicised on Williamson’s blog site, Stephen Williamson shows a remarkable and disappointing lack of depth in methodological questions.

    To the best of my knowledge, Prof Quiggin is not fond of cheer crowds.

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