Sargent on Lucas
I learned that Bob had read the paper (Sargent, 1977) when he called me on the phone to tell me that the Boston Federal Reserve Bank research department director had invited him to write for the Bank’s annual Martha Vineyard Conference––a paper that would explain in ‘plain English’ what rational expectations macroeconomics was really about, unencumbered by equations. Bob proposed that we join forces and write a joint paper for the conference, so we wrote After Keynesian economics (Lucas & Sargent, 1979) and we both traveled to Martha’s Vineyard in June to attend the conference.
I presented our paper at Bob’s request. Ben Friedman discussed it. Ben wanted the audience to know that he really disliked the line of research described in the paper. He disliked it so much that he announced to the audience that when he quoted or paraphrased us, he would put on a black hat and that when he said what he himself thought he would wear a white hat. So, Ben switched hats on and off provoking laughter from the audience each time he switched hats. The audience liked that. Bob was not amused, nor was I. But actually, the hat switching was the best part of Ben’s discussion. Ben did not have much of value to say other than that he did not like what we were up to.
This is from Thomas J. Sargent, “Learning from Lucas.” It’s his reminiscences of how he learned from Robert E. Lucas. It gets pretty technical. The reason I’m quoting the above is that it depicts a mindset that a number of establishment left-of-center economists had then and that many of their counterparts have now. As you can see from the quote above, Tom Sargent’s conclusion was that Ben Friedman substituted ridicule for analysis.
Here’s my bio of Sargent in David R. Henderson, ed., The Concise Encyclopedia of Economics.
May 21 2023 at 10:47am
According to zoologist Richard D. Alexander, successfully landing a joke raises a person’s status while also lowering the status of anyone who’s the butt of a joke. Friedman may have lost on merit, but he won over the audience with his funny little hat trick.
Like Charles Dickens said, “There is nothing in the world so irresistibly contagious as laughter and good humor.”
May 21 2023 at 11:53am
True. I’m not sure it was good humor, though. It sounded like nasty humor. Of course I wasn’t there.
My guess is that, given that it was at Martha’s Vineyard and that the Boston Fed sponsored it, a large majority of the audience was looking for ways to reject Bob’s and Tom’s thoughts.
May 21 2023 at 2:21pm
Oh well. Lucas and Sargent both laughed last by winning the Nobel in 1995 and 2011, respectively, for their ideas. Friedman?