Cosa diavolo è la "narrativa"? (parte 3)

Allo scopo di informare il lettore sul tema della "narrativa" dominante sulla stampa specializzata e della massima attualità, riportiamo qui un estratto di un articolo di John Authers del Financial Times, a proposito del contributo del Nobel Robert Shiller proprio sul tema della narrativa.

This week's Long View covers Robert Shiller's interest in narrative economics, the likely subject of a forthcoming book. This was the subject of his address to the American Economic Association last year, which can be found here. In brief, he points out that over history, narratives tend to take hold, spread, and then die out following the same pattern as epidemics.

The mathematical tools used by epidemiologists also work beautifully for narratives. His address, he says, considers the epidemiology of narratives relevant to economic fluctuations.

The human brain has always been highly tuned towards narratives, whether factual or not, to justify ongoing actions, even such basic actions as spending and investing. Stories motivate and connect activities to deeply felt values and needs. Narratives “go viral” and spread far, even worldwide, with economic impact. The 1920-21 Depression, the Great Depression of the 1930s, the so-called “Great Recession” of 2007-9 and the contentious political economic situation of today, are considered as the results of the popular narratives of their respective times. Though these narratives are deeply human phenomena that are difficult to study in a scientific manner, quantitative analysis may help us gain a better understanding of these epidemics in the future.

It is worth reading in full, but I will quickly now offer some of his examples from his talk, as well as some new examples from a talk he gave this week at Columbia. A classic example of narrative that went viral is the Laffer Curve, the supply-side economist Arthur Laffer's idea that total tax revenue would vary according to the tax rate, with revenues of zero when taxes were at zero or 100 per cent (because at these levels taxes would have deterred everyone from productive work). It followed that tax rates might be set so high that a reduction in tax rates could lead to increased tax revenues. This idea had two great things going for it. One was that cutting taxes without cutting government spending might actually be a responsible thing to do. The second was that it came with a great story. Mr Laffer drew his curve on a napkin over dinner in a restaurant, according to that story. As a result, the Laffer Curve spread like a virus. Its popularity collapsed once the deficits that followed the Ronald Reagan tax cuts showed that tax rates had not been so high that cutting them could lead to greater revenues. But, like a medical epidemic, it has shown the propensity to recur.

Bob also applied this analysis to different popular macroeconomic models. Here we see the ebb and flow of IS-LM analysis (to which I had to devote two years while working for my degree in the 1980s, but which apparently is now out of fashion), along with other models, such as the multiplier-accelerator.

One further idea that came and went was the narrative that blamed "profiteers" for the brief but severe depression of 1921 (in which prices deflated by 15 per cent in a year). "Profiteers" had been blamed towards the end of world war one for making money at others' expense, and their narrative boomed in the early 1920s, after the war ended, as people became convinced that they were suffering due to others' greed. If this was not a Keynesian depression, as Bob put it, "it was an angry depression". The narratives from that depression dominated reactions to the next (Great) Depression, and helped lead to many policy mistakes.

One other interesting footnote is that the narrative of "peak oil" (that oil production has peaked and we have started a process of steadily running out of it, amid rising prices) recurs whenever the oil price rises, as it did in 1920. Bob refers to "dire predictions" by May 1920 from David White, chief geologist at the USGS, that oil production would peak “probably within five years and possibly in three years.” In fact, new oil discoveries brought the price of oil down after 1920, and peak oil production has still not been reached almost a century later, although epidemics of the narrative still recur.

One final example from his address concerns the Great Depression, which was almost never described as such while it was going on, but suddenly spiked in interest in 2008. This helped ensure that the label "Great Recession" stuck for the recession that ensued, even though on some sensible measures the recessions of the 1970s or the early 1980s could be said to be greater: Other nuggets that Bob has dug up from the archives include the fact that Karl Marx never took off as a narrative until decades after his death, and has never, at any point, attracted as much attention as the Greek god Zeus (even though Zeus, unlike Karl Marx, did not exist). He also found that it was popular both in 1920 and particularly in the Great Depression to blame automation for problems. Already in 1928 the unemployment rate was thought to be too high, thanks to advances that, in one popular narrative, meant that human beings were no longer required to fill cereal boxes in cereal factories. In fact, we now know, the process of automation had a lot further to run.

He has admitted under questioning that he had applied the analysis to his own narrative. Bob Shiller remains one of the world's most cited economists. His price/earnings ratio is now an ever more widely cited narrative, even though it is now under far more attack than it was when he first began promulgating it more than 20 years ago. His Case-Shiller house price indices, which once dominated attention as they arrived just in time to chart a collapse in the price of US homes a decade ago, have however gone into eclipse.

Some other narratives I would suggest he look at might include "Minsky Moment" (I got my degree in economics thirty years ago, when all the research for which Hyman Minsky made his name had already been published, without ever hearing the name Minsky mentioned); "Too Big To Fail"; hyperinflation (with a particular interest in Weimar Germany and Zimbabwe); "Black Swans"; and "The Phillips Curve". Any other suggestions out there? This is fascinating research, and worth your time.