Tuesday, January 10, 2017

Tim Taylor: narrative economics and the Laffer Curve


Tim Taylor - narrative economics and the Laffer Curve. Big long reprint of a talk by Shiller about the apocryphal story of Laffer having dinner with Cheney and Rumsfeld, and as if that's not bad enough, drawing the Laffer curve on a fine linen napkin.

But this is the neat bit:

The point of Shiller's talk is that while a homo sapiens discussion of the empirical evidence behind the Laffer curve can be interesting in its own way, understanding the political and cultural impulse behind tax-cutting from the late 1970s up to the present requires genuine intellectual opennees to a homo narrativus explanation--that is, an understanding of what narratives have force at certain times, how such narratives come into being, why the narratives are powerful, and how the narratives affect various forms of economic behavior.

My own sense is that homo sapiens can be a slippery character in drawing conclusions. Homo sapiens likes to protest that all conclusions come from a dispassionate consideration of the evidence. But again and again, you will observe that when a certain homo sapiens agrees with the main thrust of a certain narrative, the supposedly dispassionate consideration of evidence involves compiling every factoid and theory in support, as well as denigrating those who believe otherwise as liars and fools; conversely, when a different homo sapiens disagrees with the main thrust of certain narrative, the supposedly dispassionate consideration of the evidence involves compiling every factoid and theory in opposition, and again denigrating those who believe otherwise as liars and fools. Homo sapiens often brandishes facts and theories as a nearly transparent cover for the homo narrativus within.

Though I'd say there's something special about economics that makes it easier to baffle with narrative, as opposed to a field like physics.


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