Two Mea Culpas
By Bryan Caplan
If there’s one thing I’ve learned from Tetlock, it’s that you should openly admit your errors and update your beliefs in response to evidence. So let me now share two mea culpas with you.
1. Last September, I wrote:
If the bail-out happens, and unemployment stays below 8% for the next two years, I’m going to become less confident
that the bail-out prevented disaster. After all, even a near-miss with
disaster should look pretty ugly. Alternately, if the bail-out happens,
and unemployment hits 8% or higher during the next two years, I’m going
to become more confident that the bail-out prevented disaster. I still won’t be convinced, but I’ll be less skeptical than I am now.
Now that unemployment has passed 8%, I now admit to having underestimated the severity of the threat, and marginally reduce my skepticism about the effectiveness of the bail-out. I still think it’s a bad idea, but at least it’s no longer much ado about nothing. (HT: Josiah Neeley)
2. In 2005, I wrote:
Bernanke is admittedly a mainstream economist – and I’m not. I’m sure
we’d disagree on a great many issues. But at the same time, he is
living proof that the mainstream of economics has vastly improved since
the dark days of the 60’s. Bush’s Number One economic mistake is not
appointing Bernanke to head the CEA. In fact, Bush’s Number One
economic mistake is a lot more likely to be habitually ignoring the advice of the excellent economist he appointed.
Boy, was I wrong. I doubt that even the dinosaur Keynesians of the 60’s would have embraced big government, bail-outs, and crony capitalism like Bernanke did. And I doubt that Bush would have come up with all these radical changes if Bernanke hadn’t embraced them first.
When I studied monetary economics with him in 1995, Bernanke showed humility about the power of government to mitigate economic crises. He thought about long-run policy consequences – and recognized that a “do something – anything!” mentality often makes a bad downturn worse. Now he looks like any other DC demagogue. What a disappointment.