Solow v. Kudlow on National Savings
I have posted something like the following several times:
the fiscal irresponsibility of the Bush Administration changed all of that so we now have a fairly low national savings rate. David links to several folks who are “reminding us that saving calculated from the National Income and Product Accounts does not really measure changes in the value of assets – a more appropriate measure of saving” … So if someone told you that real wealth per capita grew by only 1.1% over a 7-year period, doesn’t that sound like a low net private savings rate? And let’s also remember that real government debt per capita has also grown during this period.
Here I was following up on another excellent post from David Altig. Brad DeLong let’s us know that Lawrence Kudlow has not been paying attention:
Bob Solow was sitting on the left end–Solow, Shapiro, Schwartz, Rohatyn, Kudlow, Kerrey, Kosterlitz, Hormats, DeLong. Bob Solow expressed concern and worry over the declines in the U.S. savings rate over the past generation. Larry Kudlow, in the middle of the panel, aggressively launched into a rant–about how the NIPA savings rate was wrong, about how the right savings rate was the change in household net worth, about how there was no potential problem with America saving too little, that the economy was strong, and that that day’s employment report had been wonderful, and that Paul Krugman had predicted nine out of the last zero recessions, et cetera, et cetera, et cetera. What is one to do? You watch a guy – Bob Solow – one of the smartest and most thoughtful people I know, having his intellectual impact neutralized by a guy – Kudlow – who really isn’t in the intellectual inquiry business anymore. Kudlow clearly has not thought through the biases and gaps in the household net worth number: if he had, there is no way he could say what he is saying.
This is just a slice of what Brad has to offer on Kudlow’s rant. Kevin Drum picks up on a comment to Brad’s post:
In the law business, I see it all the time. The Federalists put on a panel with one lefty, a few centrists, a few conservatives, and a raving nutbag. Who wins the debate? Who cares? The nutbag is always legitimated by being there. And that’s the point of the debate.
One has to wonder – why was Kudlow invited in the first place?
Update: Mark Thoma picks up on a comment from Bruce Bartlett:
When you saw that the organizers had stupidly put too many people on the panel, you should have refused to participate. You should have also asked who else was invited. When you saw that they had invited some whom you view as having insufficient stature to participate, you should have refused to participate. If more scholars did this, conference organizers and talk show producers might improve the quality of such events.
This would be Gresham’s Law in action. Asking a clown like Kudlow causing a scholar like Brad not to show! But Bruce is right – Kudlow was to “insufficient stature to participate”.