Look Back Before You Act

The Onion:

With the United States facing a daunting array of problems at home and abroad, leading historians courteously reminded the nation Thursday that when making tough choices, it never hurts to stop a moment, take a look at similar situations from the past, and then think about whether the decisions people made back then were good or bad.

According to the historians, by looking at things that have already happened, Americans can learn a lot about which actions made things better versus which actions made things worse, and can then plan their own actions accordingly.

"In the coming weeks and months, people will have to make some really important decisions about some really important issues," Columbia University historian Douglas R. Collins said during a press conference, speaking very slowly and clearly so the nation could follow his words. "And one thing we can do, before making a choice that has permanent consequences for our entire civilization, is check real quick first to see if human beings have ever done anything like it previously, and see if turned out to be a good idea or not...."

While the new strategy, known as "Look Back Before You Act," has raised concerns among people worried they will have to remember lots of events from long ago, the historians have assured Americans they won't be required to read all the way through thick books or memorize anything.

Instead, citizens have been told they can just find a large-print, illustrated timeline of historical events, place their finger on an important moment, and then look to the right of that point to see what happened afterward, paying especially close attention to whether things got worse or better.

"You know how the economy is not doing so well right now?" Professor Elizabeth Schuller of the University of North Carolina said. "Well, in the 1930s, financial markets—no, wait, I'm sorry. Here: A long, long time ago, way far in the past, certain things happened that were a lot like things now, and they made people hungry and sad."

"How do you feel when you're hungry? Doesn't feel good, does it?" Schuller added. "So, maybe we should avoid doing those things that caused people to feel that way, don't you think?..."

Paul Krugman:

Kevin O’Rourke follows up on some of what I’ve been writing, and argues that doing good macroeconomics depends crucially on knowing a fair bit about economic history. Indeed....

I’d also say that there’s history and then there’s history. Knowing the time-series properties of US quarterly data since 1947 isn’t what I mean. In macro, in particular, you need to know about drastic events. I don’t have it in front of me, but in his book on the German hyperinflation Frank Graham said roughly this: “Disorder is, for the social sciences, the sole substitute for the controlled experiments of the natural sciences.” That means knowing about prewar experience; it also means knowing about international experience — for there have been numerous crises even since World War II, just not in the United States.

Indeed, my sense is that international macroeconomists — people who followed the ERM crises of the early 1990s, the Latin American debt crisis, the Asian crisis of the late 90s, and so on — were caught much less flat-footed than economists who limited most of their interest to the United States. The now-infamous 2003 Lucas remark about how the problem of depression-prevention has been solved was not something you would have heard from an economist who had paid attention to Mexico, Indonesia, Argentina etc..

Unfortunately, many economists have not learned from the past. And that’s at least part of the reason we are apparently condemned to repeat it.

Cross-posted at Daily Kos.