A reader asks:
How about some comments on the refusal by Krugman to bet some of his Nobel money against Mankiw?
Put aside Krugman and Mankiw and let's consider the issue in the abstract. Bryan Caplan believes that scholars should be ashamed if they do not publicly bet their views. In contrast I fear this requirement would become a tax upon ideas. How would you feel about an obligation (if only a moral one) for scholars and commentators to publicly reveal the content of their investment portfolios? Those portfolios are their real bets. Yet I still favor the privacy norm and I should note that Bryan never has (nor need he) revealed his portfolio to others at GMU, much less to the broader public.
Let's say that I, as a prolific blogger, express opinions on hundreds of economic policy topics, often involving either explicit or implicit predictions. Then say that hundreds of people wish to bet with me. Can I not simply turn them all down as a matter of policy and practicality?
If you're wondering, I practice "buy and hold and diversify," with no surprises in the portfolio and a conservative ratio of equity purchases. But those investment decisions don't necessarily reflect my views on any given day. I think it is intellectually legitimate (though perhaps not always prudent) to engage in mental accounting and separate those two spheres of my life. I change my mind lots of times, on many economic issues, but does that mean I have to become an active trader? I hope not and I'm not going to.
On long-run economic growth I'm still an optimist, though I am increasingly uncertain as to how much extant firms will capture those gains. On the short run issue at hand, I am fully with Mankiw, and Megan McArdle, in very much doubting the "rosy scenario" emanating from the Obama budget process.