Speaker’s Notes for: Concrete Economics @ SXSW!

Speaking 12:30 PM Meeting 10AB Level 3 :: Signing 1:00 PM Bookstore Level 3:

Stephen S. Cohen, J. Bradford DeLong: Concrete Economics: The Hamilton Approach to Economic Growth and Policy] (Allston, MA: Harvard Business Review Press:1422189813) http://amzn.to/22ds5TK

The Book:

• Small book
• Readable book
• Important book (we think)

The Thesis:

• America’s political-economic governance from 1787-1975 or so was extraordinarily successful
• America’s political-economic governance since 1975 or so not so
• What changed?
• America’s political-economic governance took an ideological turn about 1975

Hold It!: Wasn’t America Governed by Political-Economic Ideologies Before 1975?

• No
• There were strong ideologies:
  • Jefferson’s agrarian ideology
  • Madison’s (early) small-government ideology
  • Calhoun’s Herrenvolk ideology
  • Lochnerites–the claim the Constitution imposed Herbert Spencer’s Social Statics
• But they all lost in the great political-economic scrum
  • Hamilton overcame Jefferson
  • Even Madison and certainly Madison’s successors overcame Madison
  • Lincoln overcame Calhoun
  • Teddy and Franklin Roosevelt overcame Herbert Spencer and the Lochnerites

What, Then, Did Govern America from 1787-1975?

• Pragmatism
  • Hamilton’s state-led push for commerce, industry, finance
  • A very heavy governmental role in westward expansion–very bad for the Amerindians, very good for the settlers and the settler economy
  • Lincoln and his successors’ push for the acquisition of capital–farm capital via homesteads, human capital via education, plus corporate capital
  • Teddy Roosevelt’s Progressive curbing of overweening Gilded-Age power
• All of these were ruthlessly pragmatic: looking not at ideology as a guide but at the world, and what seemed likely to work to increase popular wealth

But the New Deal! FDR Was Ideological!

• No
• FDR’s New Deal was the antithesis of ideology
• FDR tried everything
  • Corporatism
  • Keynesianism
  • Agricultural subsidies
  • Antitrust
  • Social insurance
  • Unionism
  • And he reinforced what seemed to work
  • The New Deal policies that survived became an ideology, but they started out as the most ruthless pragmatism
• And Eisenhower:
  • Highways, automobiles, suburbs, massive federal support for technology
  • But also fear of the military-industrial complex and a strong desire neither to break inherited things from the New Deal the worked
  • Eisenhowerism was, as Daniel Bell wrote, an attempt to institutionalize the permanent end of ideology

So What Has Gone Wrong in the Past 40 Years?

• Belief that the inflation and oil shocks of the 1970s demonstrated that Eisenhowerism was tapped out
• And the fault laid to insufficient love of the free market (and excessive big government)
• Hence the big push for:
  • Spending two Pentagons on excess wealth for our overclass in an attempt to give them “incentive”
  • Spending a Pentagon on excess health care administration and excess unnecessary and harmful treatment
  • Deregulation and financialization leading to a Pentagon’s worth of waste in over-financialization
    • Is corporate control better? Is risk-bearing more advanced?
    • Plus two additional Pentagons’ worth of waste in permanent damage from the financial crisis
  • The only rich capital-inflow economy in history
    • A really rich country should be exporting capital
    • And leveraging its innovative, intellectual, and human-capital expertise over ever-growing communities of engineering and entrepreneurial practice
      • To some degree, we have been doing the second
    • But we have been letting “the market” greatly reduce the scale
• From the middle-class perspective, 8 Pentagons worth of waste over the past 40 years–all of them driven by ideology (and interest)

What to Do Next?

• All such books are supposed to end with: MY PLAN
• We refuse: such “my plans” are never convincing
• What we do seek to convince you of is this:
  • The world is a complicated place
  • The world surprises you–and the more bound you are to your ideology, the more you will be surprised
  • Feedback and pragmatism are better than ideological oversimplifications
  • Arguments against policies of the form “this breaks ideological principle X” should have much less purchase than we give them

Today That Principle Leads to a Total Rejection of the Republican Party and All of Its Works

• But that fact is a judgment on the Republican Party as it is currently constituted
• And whatever parties we have in 30 years will be equally vulnerable to ideological viruses–as vulnerable as were jefferson, Madison, Calhoun, the Lochnerites, and more recently the Bushites, Cruzites, Rubites, Gingrichites, and even the Kasichites.
• We need to defeat them and be pragmatic–with Hamilton, the later Madison and company, Lincoln, Teddy and Franklin, and Ike…