Regular readers have likely witnessed the way I’ve changed course a bit in the last year. I would say, by far, the most difficult thing I battled in 2012 was the creation of Monetary Realism. Of course, I was previously very sympathetic to the post-keynesian schools which I believe present a much more accurate view of our monetary system than most neoclassical schools. But something was just not quite right there. Their were loose ends in these descriptions that needed further development. Our evolution to MR is the result of what I like to think of as a growth, learning and evolving process. I guess you could say I was wrong to some degree prior to founding MR with Mike, JKH, Carlos and Brett. That’s fine. I am happy to admit when I am wrong. I embrace being wrong because it’s in being wrong that we learn to be right. And I think that the development of MR has resulted in a much clearer and more accurate description of the current monetary system AS IT IS.
Anyhow, I got to thinking about this as I read Paul Krugman’s piece this morning in which he described how he also shifted gears a bit in 2012:
“Paul Solman has a post on Greg Mankiw’s attempt at a gotcha over my views circa 2003 on the consequences of deficits. As Solman notes, not only are the situations very different, I’ve also long since acknowledged that I was wrong, and have explained how and why I modified my views as a result. Extra bonus: notice how Mankiw, faced with the failure of his gotcha, immediately tries to claim that he wasn’t actually saying what he was, in fact, saying.
Anyway, as I told Joe Weisenthal, you’re supposed to change your views when events don’t pan out as you expected. The real gotchas should come on people who stick with their ideology no matter how badly it performs in practice.”
That’s a big comment. Here we have a Nobel prize winning economist who is admitting that his thinking has evolved as the facts have proven his previous thoughts incorrect. We’re all learning and evolving with this dynamic monetary system. No one knows everything. But if we’re open-minded enough to learn to evolve with the system then we’re a lot more likely to obtain a superior understanding of that system.