I got a lot out of the class discussion today, and wanted to post some of the things for future use.
1) Clarifying, I tossed out a label for non neo-classical economists as Marxist/radical/heterodox/post-Keynesian and now ... progressive. First off, I would not say that those are all the same, and the people practicing those would definitely make big distinctions. My view is that there's a spectrum from one end to the other (and I'm not sure about the order of the last two, or where progressive would fit into that at all). I also made a throwaway comment about progressives. I would say that there's a lot of overlap between progressive and Marxist/radical/heterodox/post-Keynesian, but I would not say the one implies the other or vice versa. I would definitely say there's an intellectual marriage of convenience going on: a lot of hard Marxists thinking "OK let's call ourselves progressive for a while", and a lot of erstwhile (mainstream) Democrats thinking "I'm calling myself a progressive, and this time around I'm OK with the Marxists being in my group".
2) CM brought up Plato's thoughts on government. For those who have not been exposed to this, the one line summary is that Plato's ideal government is one in which wise experts make the decisions. I want to be very clear that I am not supportive of that idea, generally, or specifically in the context of the "Biden stimulus package". Instead, what I am pointing out is that in many ways macroeconomic policy making was already very, very, far away from that, with tons of input from non-experts. If anything, we're taking a deeper dive into that now.
3) CM also brought up an excellent point. One way to view things is that neo-classicals and Marxist/radical/heterodox/post-Keynesians differ in the axioms they assume to think about the world (like, say, supply and demand is relevant and useful). Another way it to look at their outputs: it doesn't matter if the inputs differ if the two groups want to form conclusions about the same macroeconomy and policies. I think this parallels Sowell's idea that there is a conflict of visions: some people judge thinking on motivations, and others on consequences. I don't think CM was saying I was wrong (although I could be wrong here too), but rather that there's 2 ways of looking at it, and I just mentioned one of them.
4) I also want to fatten up what I wrote about observational equivalence a bit. It does not mean that we can't differentiate between theories from non-experimental data. But it often means it's a lot of work, and work that most people simply don't do. There were a lot of econometric advances made in the 70s and 80s — and ultimately Nobel prizes for Sargent, Sims, and Hansen — for figuring out what we could say and how sure we could be.
For example, suppose people anticipate monetary policy, but do so imperfectly. The thing is, those anticipations are in their heads, not in our data. Anyway, assume that changes in M can be divided so that M = A + U, where those are for anticipated and unanticipated. A Keynesian would say both affect the economy equally, so the same coefficient or weight would apply to A and U. A new classical, like Lucas, would say that only U affects the economy, so the coefficient or weight on A is zero. Each is great as a theory, but remember that the A and U are inside people's heads. So when the economist is estimating how monetary policy gets M to cause Y, they'll estimate the A and U and well as their coefficients at the same time, so when one changes they all do. Observational equivalence is the idea that there's a whole realm of uncertainty there that people who don't do this stuff for a living haven't even thought of. But, of course, that doesn't stop them from blithely announcing that they know the right answer, like say M causes Y. But the new classical would say, no, M is correlated with Y, but only the U part causes Y. Fifty years ago, macroeconomists didn't realize that there's a differences — but once they figured that out we now recognize that it's too easy to put together casual evidence that supports some political position, and awfully hard to actually get it right.
5) I'm synthesizing a little here about my interpretation of how policy works, and why Mason is happy with this policy. I think there are policy ideas or programs from both parties, that they find desirable, but which they were unable to pass in the past: too controversial, too unusual, too politically one-sided, too far out of the mainstream, and so on. But people didn't forget about them; they were "on the shelf". Then Congressional leadership comes along and decides this time around I think we can pass a bill for spending $1.9T. This is like a big empty bin. Into it, they pile those "on the shelf" ideas that their party has. I think Mason's point is that 1) because the bin was so large this time, and 2) because the neoclassical naysayers from the Democratic party were pushed to the side this time, that the "Biden stimulus package" is different. It includes more Marxist/radical/heterodox/post-Keynesian ideas than any other bill that's ever been passed. So Mason is thinking that it's great that all this stuff he's sure will work is finally going to get tried. On the other hand, a big chunk of traditional Democratic macroeconomists are saying that they blocked this stuff for decades with very good reason.
I am reminded of this political cartoon that circulated widely as a meme about 2 years ago. Mason is sure the fork is plastic. He's glad Summers has been sidelined because he wants a smaller fork, and thinks the guy in the mauve shirt should wear gloves just to be safe. Cochrane is the guy in the blue shirt; he's sure this fork is stainless steel. Cowen is saying maybe not, but ya'know we checked every fork around here yesterday, and they were all stainless steel ... and besides, no one has had the sense to even go to the store and see if they can find some plastic forks. Tufte thinks it might work out OK because they probably won't be able to get the fork in the outlet at all, and if they can't it doesn't matter what it's made of.
FWIW: socialism is more of a political label. I know of no one who calls themself a socialist economist. They prefer the flavors in that Marxist/radical/heterodox/post-Keynesian grouping I've been using.
P.S. I absolutely think the Mason post is something to bookmark and come back to once year until about 2035. If things work out OK, update your thinking in the direction of Mason. If things don't work out, definitely pull it out and show it to people who say socialism has never really been tried. When push comes to shove, this time around the progressives have said quite clearly it's their showcase.
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