A sadist is someone one gets pleasure from inflicting pain. Krugman draws upon the word sadomonetarists to describe the behavior of central bankers in Sweden who hiked interest rates even though unemployment was high and inflation low and falling. In Krugman’s view, bankers want to be seen as Very Serious People (VSP) who are willing to inflict pain on others to achieve a higher social goal.
Colleges (like my own) do the same thing, insisting that students study a full semester abroad speaking a strange language and engrossed in a novel culture. The point of a semester immersion is that it probably takes six weeks for the novelty and euphoria of being in a new culture to fade, being replaced by depression and loneliness. Out of the crisis of homesickness, it is believed, students will develop their own inner resources that will make them stronger and more self-confident. Pain is the necessary component of personal growth, and is built into many academic and virtue-ethics programs.
Likely many central bankers also feel that pain is a necessary part of economic growth. Any gains without pain are … immoral! Stolen delights! Krugman notes that the basis for sadomonetarism is based on the moral sentiments or feelings:
And when I say that the dislike for low rates is visceral, I mean just that. While sadomonetarists may offer what sound like coherent analytical rationales for their policy views, they don’t change their policy views in response to changing conditions — they just invent new rationales. This strongly suggests that what we’re looking at here is a gut feeling rather than a thought-out position.
Since central bankers tend to be isolated from the masses, one technique for changing their moral imaginations would be to immerse them for a semester in a depressed area suffering from the effects of high interest rates and high unemployment. Such field training would engage their emotions every bit as much as their intellects. Short of that, if VSP live in gated communities, read only the WSJ, and converse with other VSP, they have little chance of salting their sentiments with compassion.