Scott Sumner Makes It Hard to Judge the Economic Impact of the Internet
September 14, 2012 Leave a comment
There’s a longstanding debate about the internet’s impact on economic growth, and today’s good news from the Federal Reserve illustrates how difficult it is to resolve. QE3 may be a precursor to NGDP targeting, and as Matthew Yglesias points out, the idea of NGDP targeting only spread because of Scott Sumner’s blog.
Professors at Bentley University who’ve never published a famous book don’t normally shift the public debate. But Sumner’s vigorous and relentless blogging throughout the crisis on the potential of expectations-focused monetary policy really broke through. It all began with some links from Tyler Cowen and perhaps a tiff with Paul Krugman. I became a regular reader and his ideas have done a lot to influence me, and you can clearly see the influence on Ryan Avent at the Economist, Matt O’Brien at the Atlantic, Ramesh Ponnuru at National Review, Josh Barro at Bloomberg, and a few of the Wonkblog contributors. Outside the exciting world of online economics punditry, NGDP targeting hasn’t (yet!) caught fire as rapidly but it gained explicit allegiance from Christina Romer, Krugman, the economics team at Goldman Sachs, and eventually Chicago Federal Reserve President Charles Evans who started out with a different but similar-in-spirit program.
In a pre-internet world there’s no telling how long it would have taken for Sumner’s ideas to spread to the necessary people. The slog of conferences, peer-reviewed articles, and op-eds that would have been necessary to move the needle could have pushed the tipping point 15-20 years down the road. If NGDP targeting proves to be a valuable policy innovation, we’ll have less severe downtowns and more growth years sooner than we would have had them in a parallel non-internet world.
This is all to say that it’s difficult to quantify how the internet contributes to the formation and spread of ideas. If two people on a chemistry message board were to create a silver-bullet renewable energy source, how do you measure the internet’s contribution? In a future that’s more connected things will only get murkier — hopefully the rise of NGDP targeting is the start of a trend where the internet helps obscure but smart policy ideas rapidly gain influence.