The almost two-decade long colonial money cage match pitting Ron Michener (and me a bit too, but not for a long while) against Farley Grubb is still being fought but Michener may have finally landed a knockout blow. In his most recent article, "Re-examination of the Theoretical and Historical Evidence Concerning Colonial New Jersey's Paper Money: A Further Comment on Grubb," Michener hints in the final paragraphs that the Journal of Economic History (JEH) ought to retract Grubb's recent article on New Jersey's colonial money.
If the JEH actually followed through with a retraction, it would be an almost unprecedented move. Economics journals rarely retract and, in fact, it is difficult to get space in them to rebut. Ben Bernanke was good enough to ensure that Michener and I could rebut one of Grubb's first forays into monetary economics in the American Economic Review just before he went off to head the Fed. I don't know, maybe economists consider bad articles sunk costs but the fact is, without venues like Dan Klein's Econ Journal Watch, future generations of scholars may not know that some articles of dubious merit get published, even in economics journals.
Economists seem to fetishize asterisks, which signify statistical significance, even after being repeatedly reminded by Todd Ziliak and Deirdre McCloskey that statistical significance does not equate to economic, or in other words real world, importance. Apparently, though, many economists still believe that any half-cheek model tested with crappy data is "science" if it is statistically significant at the 5 (or, gulp! 10) percent level. Reminds me of a study significant at the 5 percent level that "found" that college students had ESP when it came to pornographic images, a study that has never been replicated because all that significance at 5 percent means is that 1 time in 20 the results are specious AF.
Steven Payson, the founder of AIRLEAP (Association for Integrity and Responsible Leadership in Economics and Associated Professions), has written several books, including How Economics Professors Can Stop Failing Us, that shows that many economics journals are skewed in favor of certain high profile economists and their students. De facto single blind review (the reviewers know who the authors are) has long been practiced in lieu of more rigorous double blind review (nobody knows the identity of anyone except the editors) and editors often make "desk rejections," rejecting manuscripts without peer review, on whatever grounds they want.
The system sucks for non-economists like me but also economists who did not have top name advisors at top name schools. Their papers often meet with desk rejection while papers of equal, or even inferior quality Payson suggests, get published. Connections, he says, matter more than quality. So a lot of top economists are a lot like actor Nick Cage. Sure, they have a hit every now and again but most of their stuff sucks.
Professor Grubb is definitely on the pre-eminent divide within the economics profession. He graduated from Chicago under Galenson and rode his royal horse with aplomb, into a full professorship at the Alfred Lerner School of Business and Economics at the University of Delaware, not far from the home of our putative future POTUS. He is also in Delaware's history department and is a research associate at the very prestigious National Bureau of Economic Research (NBER), which is located near Harvard University, or perhaps I should say that Harvard is located near NBER! He has written two books and runs a book series (one that I founded coincidentally) and has published so many articles and written so many working papers that his C.V. runs to nine pages long.
A lot of people would give a major body part for a C.V. like that, including Michener, who also has a Ph.D. from Chicago but who was more interested in discovering The Truth than in publishing for the sake of his career. Contrary to rumor, Michener doesn't seem to have a personal vendetta against Grubb, he just thinks that a lot of what Grubb has written is demonstrably wrong. And Michener would know as he has devoted almost his entire career to studying one of the most difficult subjects in economic history imaginable, American colonial money. The importance of the topic is clear and evidenced by the eminent economists, like Grubb and Charlie Calomiris, Mike Bordo, and Ben McCallum, who have dropped in over the years, offering theory where more empirical evidence is needed.
I have neither the time nor the inclination to reprise the entire Michener-Grubb debate. Some of it gets a little technical in terms of economic theory, but I think I could successfully explain it. Some of its gets quite technical in terms of time series econometrics (using statistics to make causal claims) which I am equally sure I could not explain even to myself, much less to others. And some of it gets technical in terms of historical concepts. That is my forte and where I helped Michener early on in the cage match. I withdrew with a bloody nose after Grubb used his power within the profession to sucker punch me by bashing one of my books in a review that the JEH should never have run knowing Grubb's bias in the matter. But Grubb is a superstar and, alas, I am not.
So if you want to figure out all the ins and outs of the controversy, you will have to look at the articles cited in the Michener piece linked to above. What I want to explain is just one key piece of the controversy, Grubb's claim that an exchange rate quotation of "25 per cent" meant one needed to pay L.NJ 400 (400 pounds, as in units of currency, of New Jersey money) to purchase L.stg. 100, or in other words that NJ's money was worth only one quarter that of Britain's in 1741.
My goal is not so much to protect Michener, who can handle himself, as it is to help John McCusker, the eminent historian who decades ago painstakingly created the colonial exchange rate series still used by researchers today. (I've helped to create three major data/capta sets on early securities prices, early government bond trades, and early corporations so I am sensitive to the amount of work that goes into such largely thankless yet essential tasks.) McCusker has always found this battle royale distasteful and is unlikely to chime in publicly.
McCusker, Michener, and myself (and the handful of other people to have actually looked) all KNOW that a quotation of "25 per cent" meant that one needed to pay L.125 of local currency for L.100 of sterling. The evidence, including account books that show precisely that, is overwhelming and incontrovertible. There is no need for the jury to retire!
Grubb's claim that McCusker's interpretation is wrong is an obvious attempt to manipulate the data, which is way too thin to do what he wants it to do anyway, to generate one of those magical asterisks. This isn't a close call, a difference of opinion between gentlemen and scholars, it is a blatant manipulation without rational foundation that Grubb has not, and indeed cannot, refute.
I know, in a year when mass looting and destruction was called "mostly peaceful protesting" and mathematics and grammar were declared racist it is difficult to get worked up about colonial money. But the specific content matters to monetary policy and the processes that journals use to vet articles also matters for the credibility of higher education and science.
Specifically, Grubb's views could be used to bolster Modern Monetary Theory (MMT). Kooky as MMT is, in a year when governments throughout the world used an unrealistic epidemiological model to destroy economies and civil liberties we can no longer take any chances. Michener is right: error in all forms must be pilloried until it slinks back to the septic abyss from which it springs.
In short, the JEH ought to take Michener's call seriously and consider retracting Grubb's article. Maybe other journals will follow suit and we can expunge the record not of all error but of the most egregious abuses of power.
