# Noting an error in Inadequate Equilibria

I think I've uncovered an error in Eliezer Yudkowsky's book [Inadequate Equilibria](https://equilibriabook.com/) that undermines a key point in the book. Here are some of my observations. 

First, let me provide some context. In the [first chapter](https://equilibriabook.com/inadequacy-and-modesty/), Yudkowsky states that prior to Shinzo Abe's tenure as Prime Minister of Japan, the Bank of Japan had implemented a bad monetary policy that cost Japan trillions of dollars in real economic growth.

His point was that he was able to spot this mistake, and confidently know better than the experts employed at the Bank of Japan, despite not being an expert in economic policy himself. In a dialogue, he wrote,

> CONVENTIONAL CYNICAL ECONOMIST: So, Eliezer, you think you know better than the Bank of Japan and many other central banks around the world, do you?
> 
> ELIEZER:  Yep. Or rather, by reading econblogs, I believe myself to have identified which econbloggers know better, like Scott Sumner.
> 
> C.C.E.: Even though literally trillions of dollars of real value are at stake?
> 
> ELIEZER:  Yep.

To demonstrate that he was correct on this issue, Yudkowsky said the following,

> When we critique a government, we don’t usually get to see what would actually happen if the government took our advice. But in this one case, less than a month after my exchange with John, the Bank of Japan—under the new leadership of Haruhiko Kuroda, and under unprecedented pressure from recently elected Prime Minister Shinzo Abe, who included monetary policy in his campaign platform—embarked on an attempt to print huge amounts of money, with a stated goal of doubling the Japanese money supply.[^5^](https://equilibriabook.com/inadequacy-and-modesty/#footnote-5-definition)

> Immediately after, Japan experienced real GDP growth of 2.3%, where the previous trend was for falling RGDP. Their economy was operating that far under capacity due to lack of money.[^6^](https://equilibriabook.com/inadequacy-and-modesty/#footnote-6-definition)

However, that last part is not correct, as far as I can tell.

According to official [government data](https://fred.stlouisfed.org/series/JPNRGDPEXP), Japan's RGDP had not been falling prior to 2013, other than the fall caused by the Great Recession. RGDP did grow by ~2.0% in 2013, but I cannot discern any significant change in the trend after Haruhiko Kuroda began serving as governor at the Bank of Japan.

![](https://39669.cdn.cke-cs.com/rQvD3VnunXZu34m86e5f/images/bcb91fe8f07309e80c8998d6cd0aabc21e88f34e2bcb0431.png)

![](https://39669.cdn.cke-cs.com/rQvD3VnunXZu34m86e5f/images/59a7a9fff5354783878b52a946ab3289692e365213826693.png)

In his footnote, Yudkowsky cites [this article](https://archive.is/ufnXt) from 2017 to provide a "more recent update" about Japan's successful monetary policy. However, I don't think the article demonstrates that Yudkowsky was correct in any major way about the point he made.

The article never presents data on RGDP. Instead, it focuses primarily on how unemployment has fallen since 2013. However, it's hard for me to see any significant impact that Japan's shift in monetary policy had on unemployment when examining [the data](https://fred.stlouisfed.org/series/LRUN64TTJPM156S).

![](https://39669.cdn.cke-cs.com/rQvD3VnunXZu34m86e5f/images/7818a3c948eab6a05b78920786da08d5ff7861801654de08.png)

The only data series presented in the article is this plot of the prime age labor force participation rate. However, the effect looks kind of weak to me, and I don't think raising prime age LFPR is a standard target of monetary policy. (For example, the Bank of Japan had a webpage called "Outline of Monetary Policy" from the time the article was published, and it [focused solely](https://web.archive.org/web/20170504100019/http://www.boj.or.jp/en/mopo/outline/index.htm) on the goal of price stability at 2% inflation, and didn't mention employment levels.)

![](https://39669.cdn.cke-cs.com/rQvD3VnunXZu34m86e5f/images/3e1596387d0158cdd96eeebe435b66b1b9afc2ec3a311673.webp)

After looking at a more standard target, it seems that Japan's new monetary policy isn't achieving its goals, as Japan experienced [no substantial sustained inflation](https://fred.stlouisfed.org/series/JPNCPIALLMINMEI) after Haruhiko Kuroda took charge of the Bank of Japan in March 2013, despite their target of 2% inflation (at least until 2022).

![](https://39669.cdn.cke-cs.com/rQvD3VnunXZu34m86e5f/images/7edb33843fa3037a8bd741b21ada2e5d25519e33a337e809.png)

Note that the brief spike in Japan's CPI in April 2014 was almost certainly a result of [their VAT hike](https://www.nippon.com/en/features/h00013/the-political-history-of-japan%E2%80%99s-consumption-tax.html), rather than any change in monetary policy at the time.

That's not to say that I think the Bank of Japan was wrong to print more money. In fact, I am not aware of any strong disagreements that I have with Scott Sumner's general view on monetary policy, which is where Yudkowsky says he got (at least some of) his opinions from.

However, I think this error undermines a significant part of Yudkowsky's thesis. This example was one of two major anecdotes that Yudkowsky presented to show that he can often know better than experts, and he cited it repeatedly throughout the book. Yet, I think he got it wrong.