Þe Unqualified-to-Opine-on-Anything John Cochrane
& BRIEFLY NOTED: For 2022-01-23 Su
CONDITION: 70F & Sunny:
First: The Unqualified-to-Opine-on-Anything John Cochrane
Sigh. It looks like it is time for some more intellectual garbage cleanup with respect to well-qualified (and extremely sharp) Fed Governor nominee-designate Lisa Cook, whom a bunch of Republicans have decided is a soft target. Because Black…
Damned if I can see why somebody who in November 2008 thought “we should have a recession. People who spend their lives pounding nails in Nevada need something else to do…” is qualified to opine on Federal Reseve personnel, or indeed on anything else.
For one thing, he was then under the false illusion that housing construction was then in some sense above trend, and we needed to shift labor out of construction to rebalance the economy. The structural adjustment had already been carried out over the previous 2 1/2 years, as construction spending had stood down and domestic consumer and equipment manufacturing had stood up, and has labor had flowed out of construction and into other sectors:
For another, he was then under the false illusion that structural adjustment is accomplished by pushing people out of low-social-value occupations into the zero-social-value occupation that is “being unemployed”. It is not. Structural adjustment is accomplished by pulling people into high-social-value occupations.
For a third, he has never, ever taken even small steps to attempt to mark any of his beliefs to market.
I have written about this before. Time to hoist it again:
Apropos of John Cochrane’s late-2008 declaration—”We should have a recession. People who spend their lives pounding nails in Nevada need something else to do…”. It was made at a time when the share of the U.S. labor force in construction was below its long-run average, and had been below its long-run average for fifteen months. It was made at a moment when the structural-adjustment climb-down from the housing boom had already taken place. And it was made with no recognition at all that structural adjustment takes place by pulling people into high-value jobs, not by pushing them out of low-value jobs into zero-value non-job
Cochrane’s remark was reported by John Lippert of Bloomberg. Cochrane took great exception:
I did not write this. It is an attribution, taken out of context, from a <http://bloomberg.com> article, written by a reporter with whom I spent about 10 hours patiently trying to explain some basics, and who also turned out only to be on a hunt for embarrassing quotes. Nevertheless, I was trying to explain how sectoral shifts contribute to unemployment. I never asserted that ‘it takes mass unemployment across the whole nation to get carpenters to move out of Nevada’…
Paul Krugman’s glossed on this as “[Cochrane claims] it takes mass unemployment across the whole nation to get carpenters to move out of Nevada…” That, to me, seems an eminently fair gloss on Cochrane’s ”We should have a recession. People who spend their lives pounding nails in Nevada need something else to do…” What else, in this context, could “We should have a recession…” possibly mean?
Yet, for Cochrane. being accurately quoted was some kind of vicious personal attack:
The level of personal attack in [Paul Krugman’s] New York Times article, and the fudging of the facts to achieve it, is simply amazing. As one little example, take my quotation about carpenters in Nevada. Krugman writes: ‘And Cochrane declares that high unemployment is actually good…. You cannot even dredge up an out-of-context quote for that monstrously made-up opinion
Let’s consider Cochrane’s claim that Bloomberg reporter John Lippert “turned out only to be on a hunt for embarrassing quotes”, that Cochrane “spent about 10 hours patiently trying to explain some basics”, and that Cochrane “did not write this. It is an attribution, taken out of context”. And Cochrane implies the context was him patiently explaining things to a reporter.
Cochrane’s implication is false. It was not in a private conversation with a reporter. It was the thesis of Cochrane’s 2008 CRISP Forum Keynote Address. Scott Gosnell reports:
I was there. I may even have a recording down in the archives and may have sprained my eyes I rolled them so hard…. I went to all of those econ talks at Gleacher while I lived in Chicago. The noticeable thing about Cochrane was that he was very good at financial economics, but fell apart when he tried to jump to macro. But of course faculty could say all kinds of things without getting much skepticism. Being a Mellon-style liquidationist was sort of edgy and cool among the Republican-leaning economists at the time…. Where before, Austrian economics would get you a glance askance, in 2008, it would get you a $300+ bottle of wine at dinner with Paul Ryan.
The kind and gracious John Lippert tells a very different story than Cochrane about where the quote came from, and asserts that it is in context, and is a direct quotation, not “an attribution”, whatever that might mean:
Hi Professor DeLong:
Thanks for your note. Professor Cochrane’s complaint [about my story] is something of which I became aware several months after we published our story in 2008....
The bottom line is that Bloomberg did not respond to Cochrane’s comments. He never sent them to us, despite my request that he do so. When we became aware of his complaint, we saw no reason to make a correction. Cochrane made the ‘pounding nails’ comment at a Chicago Booth forum at the Gleacher Center in downtown Chicago in November 2008. It was part of an ongoing lecture series, as I recall. It was kind of a big event, with a couple hundred people. So they may have a recording that you can access.
Good luck with your inquiries.
Tks,
John Lippert
I have been unable to get a copy of the recording from the Gleacher Center at the University of Chicago…
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Back in Genesis 10 there is a guy named Magog. He is the author of a tribe of people, and thus, eventually, a nation, Magog, for it is standard in the Hebrew Bible to refer to peoples by the name of their eponymous ancestor.
By the time Ezekiel is prophesying, in Ezekiel 38, Magog is a land, and Gog is the Prince of Magog:
Son of man, direct your face against Gog, of the land of Magog, the prince, leader of Meshech and Tubal, and prophesy concerning him. Say: Thus said the Lord: Behold, I am against you, Gog, the prince, leader of Meshech and Tubal...
But later writers do not appear to have copies of the Book of Ezekiel handy. They relied on their memory, which played them false. They turned “Gog from Magog” to “Gog and Magog”. And so we have John the Theologian on the island of Patmos:
When the thousand years are over, Satan will be released from his prison and will go out to deceive the nations in the four corners of the Earth—Gog and Magog—and to gather them for battle. In number they are like the sand on the seashore…
Ronald Reagan appears to have been one of those who thought “leader of Meshech” in Hebrew—rosh Meshek—was “Russia Moscow”. And French leaks report the rumor that George W. Bush told Jacques Chirac about Gog and Magog back before he launched the attack on Iraq back in 2003.
Yet somehow confidence in prophecy is not dented by the fact that somewhere on the line there was static: either the divinely inspired Ezekiel misheard the message, and transformed the nation of Gog into a person “of the land of Magog, the prince, leader of Meshech and Tubal…” or John of Patmos and his posse simply did not have a good enough memory to accurately recall the Ezekiel verses they were adapting for their own address to the Seven Congregations of Asia Minor, the message of which is: “Hunker down! Don’t try to smite our enemies! For soon God will smite our enemies in a way that will gladden your heart beyond your wildest imaginings!”
The theology of that message, of course, does not sound very Christian to me. But the most deeply disturbing thing is people eager for a war that will kill hundreds of thousands or more, because they think God has willed it, based on two written-down prophecies… at least one of which has to be wrong.
And a description of the Chicago Plan of 1933.
I better see Henry Simons in that book.