Friday, May 15, 2015

The Horror of the Confidence Fairy (part i)


(source)

"Victory has a thousand fathers, but defeat is an orphan."
(John F. Kennedy)

If you, like yours truly, are interested in economic theory, policy and/or history of economic thought, chances are you have found the Confidence Fairy somewhere on the net.

It's not that she is ubiquitous. She isn't. A recent Google search for the string "confidence fairy" returned "about 20,100 results". To put that in perspective, a search for "Justin Bieber" reported approximately 213,000,000.

But she is considerably more popular -- among econo-aficionados, at least -- than other related economic creatures: her older brothers, the "Bond Vigilantes", only got some 8,700 results.

She isn't old, either: little more than 4 years of age. The earliest memory all-knowing Google has of little Confy (as her friends call her) goes back to April Fool's Day, 2011, when the Seattle Times published the appropriately titled "The Confidence Fairy and other GOP Economic Fallacies", by Prof. Paul Krugman, the noted Keynesian:
"It [i.e. liquidationism] also invokes the confidence fairy; that is, it suggests that cuts in public spending will stimulate private spending by raising consumer and business confidence, leading to economic expansion."
But, in spite of her angelic looks, Krugman, who apparently christened little Confy, never was much of a loving godfather to her (here between us, her paternity has been a bit of a mystery and Krugman -- who as godfather might know who her real father is -- has been discreet on this).

In fact, barely months later, chillingly sinister thoughts were already crossing Krugman's mind: "The Death of the Confidence Fairy" (NY Times, 19-09-2011) and "Death of a Fairy Tale" (NY Times, 27-04-2012).

He is not alone on that. Among the Keynesian major-league names, Joseph Stiglitz, Jared Bernstein, Simon Wren-Lewis, and even the always polite Mark Thoma had also piled abuse on her. Among the other Keynesians, James K. Galbraith, Paul Davidson, Lars P. Syll ("The Confidence Fairy Bleeding", yikes!), and Dean Baker have also taken turns to threaten her mercilessly. You could be forgiven to think this is yet another version of "The Texas Chain Saw Massacre".

Unlike Vicky, beloved and pampered by all, fatherless and lonely Confy -- surrounded by a crowd of wild middle/old age men, fire in their eyes and blood in their minds -- seems to have no friend or protector in the WWW (whole wide world).

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In this series we'll show who the real father of the Confidence Fairy is.

(To be continued)

UPDATE
22-08-2015. Prof. Krugman is pretty sure he coined the Confidence Fairy phrase. It was "a snappy way to characterize the deep implausibility of the Alesina-Ardagna stuff that was sweeping Brussels and other corridors of power in 2010". (here)

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