Tag: Dialogue

Must-Read: Fred Clark: That Time I Was the Evil Opposite of Neoliberalism

Posted on by Brad DeLong

Must-Read: Fred Clark: That Time I Was the Evil Opposite of Neoliberalism: “Bill Clinton was a Neoliberal. No, no, no…

…Bill Clinton was a betrayal of Neoliberalism. Or neither. Or both. For some the ‘Neo’ just meant ‘I’m a liberal who wants our agenda to carry more states than Mondale and Dukakis’… a semantic way of avoiding the negative associations the right had worked so hard to affix to the word liberal…. For others, the term ‘Neo-liberal’ was a way of avoiding the ethical and economic baggage of their own anti-liberal legacy…. The word was contested, with competing meanings by competing claimants for ownership of it. Neoliberalism was large, it encompassed multitudes. And it still does, which is why George Monbiot can write this: ‘Neoliberalism: The ideology at the root of all our problems.’ That’s a fascinating, but muddling essay. He sometimes focuses the meaning of this word, ‘Neoliberalism,’ to mean basically what we used to call laissez-faire capitalism–unfettered free markets, Voodoo economics, the 1980s writ large, etc. But he also uses the term to refer to something more vast and expansive. That headline is really his definition of ‘Neoliberalism’–it is the word he uses to refer to ‘the ideology at the root of all our problems,’ a general name for Everything Bad. The vague generality of that fuzzes up the diagnostic usefulness of Monbiot’s essay. It’s like a doctor saying, ‘You’re unwell.’ That may be true enough, but it’s not particularly helpful.

Back in the ’90s, ownership of the term ‘Neoliberal’ was in many ways a tug of war between proponents of laissez-faire capitalism and, well, just plain liberals. Liberals embraced the term as a way of avoiding the negative connotations of being called liberals. And laissez-faire capitalists sought to claim the term as a way of avoiding the negative connotations of admitting that they were laissez-faire capitalists. My sense is the LFCs probably won that battle. (That’s bad news for many of the liberals who tried to claim the term ‘Neoliberal’ in the late 20th century, because they’re now stuck with a label retroactively defined by their primary opponents and critics.)… Now… the word is contested in pretty much the opposite way…. It used to be laissez-faire capitalist ‘Neoliberals’ attacking liberals because, in their view, anything short of pure free-market ideology was indistinguishable from a ‘statist model.’ Now those same liberals are accused of being ‘Neoliberals’ by those who say that anything short of statist models is indistinguishable from laissez-faire capitalism. Neither of those accusations strikes me as helpful.

And but so, my point here actually is this: You should read the 1977 original edition of Rich Christians in an Age of Hunger and not the later editions in which the publisher sought to appease that book’s “Neoliberal” critics by revising the policy discussions in its final section.

And also too: Share your cookies.

Today’s Economic History: John Maynard Keynes (1919): “I personally despair of results from anything except violent and ruthless truth-telling…”

Posted on by Brad DeLong

Today’s Economic History: John Maynard Keynes (1919): To Jan Smuts: “Ruthless Truth-Telling”: “My book [The Economic Consequences of the Peace] is completed and will be issued in a fortnight’s time…

…I am now so saturated with it that I am quite unable to make any judgement on its contents. But the general condition of Europe at this moment seems to demand some attempt at an éclairecissement of the situation created by the Treaty [of Versailles ending World War I], even more than when I first sat down to write. We are faced not only by the isolation policy of the U.S., but also by a very similar tendency in this country. There is a growing an intelligible disposition to withdraw (like America), so far as we can, from the complexity, the expense, and the unintelligibility of the European problems: and particularly as regards financial assistance, the Treasury is inclined, partly as a result of our own financial difficulties and partly because of the hopelessness of doing anything effective in the absence of American help, to let Europe stew. Also anti-German feeling here is, still, stronger than I should have expected.  But perhaps most alarming is the lethargy of the European people themselves. They seem to have no plan; they take hardly any steps to help themselves; and even their appeals appear half-hearted. It looks as though we were in for a slow steady deterioration of the general conditions of human life, rather than for any sudden upheaval or catastrophe. But one can’t tell.

Anyhow, attempts to humour or placate Americans or anyone else seem quite futile, and I personally despair of results from anything except violent and ruthless truth-telling–that will work in the end, even if slowly…

Must-read: Peter Dorman: “Issues with Econ 101 at Three Levels”

Posted on by Brad DeLong

Must-Read: Peter Dorman: Issues with Econ 101 at Three Levels: “The debate about what’s right/wrong with introductory economics…

…which has raged intermittently since the financial crisis, is back again…. There are three aspects to what people like or don’t like (often the latter) with Econ 101. The first is pedagogy… lectures vs workshops and projects… marching through models and exploring applications and empirical debates… behind it all, whether the main purpose is to induce students to accept particular economic doctrines or to cultivate critical thinking…. The second is the intellectual content… the gap between standard 101 content and the current trajectory of the discipline is arguably wider than it has been in generations. The third is the state of economics itself…. If Econ 101 takes a narrow, unrealistic line on utility and human decision-making, it could just mean that the limitations of that view are more obvious at that level than they are higher up…. These three dimensions overlap and influence one another…

Must-read: Shane Ferro: “Thoughts on Business Insider”

Posted on by Brad DeLong

Must-Read: Shane Ferro may think that she is not so good at the game of being a twenty-first century journalist working in internet advertising-supported media. But she is very good as a trusted information intermediary and synthesist. In an ideal world, I think she would be one of two-hundred and fifty people I follow who would spend one week a year doing ten posts a day and the rest of the year doing from between five posts a week down to one a month…

Shane Ferro: Thoughts on Business Insider: “Tanzina Vega went on a tweetstorm this morning about the state of journalism…

…based on some thoughts about… why so many people have left Business Insider…. I used to work at Business Insider. I quit after 10 months. The first three months were great…. During the second three months the pressure to get more traffic and write a higher number of posts per day ramped up. The last four months, I remember mostly tense meetings about how I wasn’t hitting my goals–five posts per day and one million unique visitors per month. I remember riding the elevator downstairs in the afternoons, hoping that no one would see me crying until I hit the front door and made a left from Fifth Avenue onto 21st Street. I cried a lot while pacing back and forth on 21st street in the summer of 2015…. I never came close to hitting my goals, despite the fact that I became something of a hot take machine….

As Tanzina says in her tweetstorm, it takes quite a bit of thought to come up with a coherent opinion. I don’t have five opinions per day. I have maybe one…. The pro-labor rights econ nerd in me has at times been really angry with BI for how much content they try to squeeze out of writers. But the truth is I knew what I was getting into when I joined…. I wanted to learn how to be Joe Weisenthal. I expected it to be hard, but to ultimately give me another tool in my journalist toolbox…. My problem is my brain doesn’t work the way that it needs to work in order to succeed in that kind of environment. I either spend five seconds on a subject — I read, I think of one thought, I tweet it, and I move on — or I spend somewhere between five hours and five days really thinking through something. I am either intensely focused or completely unfocused. To succeed at BI, you have to be good at the middle ground, where you can read something, spend 30 minutes putting together a summary, maybe add another thought or two, hit publish, and then be immediately ready to start again….

BI is the extreme version of what every news organization now expects of its journalists: fast copy with a broad appeal that’s turned in without much need for editing…. I did not do well at BI…. It ended up being a good thing. It sped up the time it took me to realize that I am bad at the click game, and that means I probably don’t want to be a journalist forever. I spent the last year and a half giving a lot of thought to what’s next (and omfg I am so excited about it!).

Whose are the ruling macroeconomic ideas?

Posted on by Brad DeLong

It is now six years since Olivier Blanchard called for “outlining the contours of a new macroeconomic policy framework”. Yet what is that framework? Where is it? Who outlines it? And what processes will give it political traction?

Looking back to 2010:

Olivier Blanchard et al. (2010): Rethinking Macro Policy: “The global crisis forced economic policymakers…

…to react in ways not anticipated by the pre-crisis consensus…. Here the IMF’s chief economist and colleagues (i) review the main elements of the pre-crisis consensus, (ii) identify the elements which turned out to be wrong, and (iii) take a tentative first pass at outlining the contours of a new macroeconomic policy framework…

You can argue that the elements of such a framework are there. But they are disassembled, lying on the ground, disconnected. And as far as political traction, they are next to nowhere.

I am ending my invited lectures these days with this:

It is traditional to close lectures like this with Keynes’s “madmen in authority” quote:

Is the fulfilment of these ideas a visionary hope? Have they insufficient roots in the motives which govern the evolution of political society? Are the interests which they will thwart stronger and more obvious than those which they will serve?

I do not attempt an answer in this place…. But if the ideas are correct… it would be a mistake, I predict, to dispute their potency over a period of time…. The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas….

There are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.

Yet when I look around, I see lots of ideas with a potency that is extremely great but with influence that is nowheresville.

The ruling ideas are not those of “academic scribblers”. They are, rather, much simpler. At the moment I count five:

  1. The bankers have us by the plums…: Thus it is important to cosset, coddle, and enrich our bankers, because only if they are confident will the engine of financial intermediation that is the only thing that can create a booming full-employment economy run smoothly.

  2. Debt is bad (except when it is used to fund tax cuts for “job creators”)…: Hence it is important to cut Social Security and make sure that not an extra drop is spent on public infrastructure.

  3. Today’s extremely low interest rates must be unnatural…: Hence they need to be reversed and monetary policy “normalized” as quickly as normalization can be accomplished without renewed recession.

  4. Only pain can drive reform…: Hence boosting employment and restoring fast growth would be bad as it would impeded the essential process of actually undertaking the badly-needed “structural reforms”.

  5. We couldn’t have done any better…: The most urgent economic problems of the North Atlantic aren’t the standard ones of too-little “money” (of various kinds) chasing a normal amount of goods, but are complicated and irresolvable.

If the ruling ideas were those of Bagehot, Kindleberger, Keynes, Friedman–even a Hayek–we could do something, although in the last case it would take a lot of intellectual ingenuity to make a silk purse out of that particular sow’s ear. But the ruling ideas are barely ideas–they are, rather slogans. The bipartisan technocratic policy center of politicians who listen to arguments about what policies might actually work is gone–or at least paralyzed. And too many key levers of power are held by a right–in Germany, in Britain, and in the U.S.–that appears profoundly uninterested in argument abut policy effectiveness, if not uninterested in policy effectiveness itself.

Must-read: Olivier Blanchard: “Rethinking Macro Policy”

Posted on by Brad DeLong

Must-Read: It is now six years since Olivier Blanchard called for “outlining the contours of a new macroeconomic policy framework”. Yet what is that framework? Where is it? Who outlines it? And what processes will give it political traction?

Olivier Blanchard et al. (2010): Rethinking Macro Policy: “The global crisis forced economic policymakers…

…to react in ways not anticipated by the pre-crisis consensus…. Here the IMF’s chief economist and colleagues (i) review the main elements of the pre-crisis consensus, (ii) identify the elements which turned out to be wrong, and (iii) take a tentative first pass at outlining the contours of a new macroeconomic policy framework.

Must-read: Benjamin Mitra-Kahn: “Keynes passed away 70 years ago today–his copyright follows”

Posted on by Brad DeLong

Must-Read: Benjamin Mitra-Kahn: Keynes passed away 70 years ago today–his copyright follows: “The most frustrating (or magical) thing about doing archival research…

…is the need to first identify and then physically inspect every box of unknown letters. But what if… we could… move the history of economics scholarship from dusty rooms around the world to the web…. The Carnegie Mellon University digitisation of Herbert Simon’s papers shows it can be done though. Building an on-line Keynes archive would be a sizeable task, but not impossible. Including Keynes’ published, unpublished (possible through Rod O’Donnell’s INET project) and uncategorised work could be a real boon to scholars and people interested in Keynes…. I think there are a number of institutions out there with a real interest in Keynes’s work, meaning this could be done…

Must-read: Noah Smith: “Policy Recommendations and Wishful Thinking”

Posted on by Brad DeLong

Must-Read: I must say I am getting more than a whiff of the disastrous trope that “it is the duty of an organic intellectual to support the Movement” here.

The technocratic view is that there will be a bunch of competing ideological views and material interests pulling and hauling, and that by always wading in and joining the tug-of-war side that has the better policy idea at the moment in the issue under dispute one will get better governance and higher societal well-being. The opposite view is: There is a Movement, the Movement is good because the Movement is supported by the class whose interest is the general interest and by Correct Ideological Thought, and all progressives must support the movement.

That is a disastrous pattern of thought. I am 100% with Noah Smith here:

Noah Smith: Policy Recommendations and Wishful Thinking: “There was a bit of a blow-up earlier this year over Gerald Friedman’s analysis of Bernie Sanders’ economic plans…

…To me, it seemed that the coup-de-grace was delivered by Justin Wolfers…. Friedman admits he made a mistake and then says that his conclusion was right anyway, because we can go find some alternative assumptions that make his original conclusion hold. To me this is transparently assuming the conclusion. That’s a big no-no, and while a lot of macroeconomists probably do this, it looks really bad to admit to it! (I’m also starting to realize that ‘Joan Robinson’ is a sort of an invincible rhetorical refuge for lefty macro types, the way ‘Friedrich Hayek’ is for righty macro types.)….

The fracas quieted down, but now it’s back. Friedman and allies are no longer saying that their analysis is ‘just standard economics’, since they had to switch to non-standard economics to make the conclusions come out the way they wanted. The line now is that Krugman, the Romers, et al. are just a bunch of pessimists, who are unintentionally playing into the hands of conservatives…. Krugman was not happy about this, and blogger ProGrowthLiberal was pretty mad:

The claim that economists like Christina and David Romer bought into the New Classical revolution is both absurd and dishonest…[W]e critics do admit we are below full employment and we have been calling for fiscal stimulus. On this score, the latest from J.W. Mason is even more dishonest than the latest from Gerald Friedman. Guys–you do not win a debate by lying about the other side’s position….

I don’t like what Friedman and Mason are doing. I think economists have a duty to look at the facts as objectively as they can, regardless of their emotions and desires. You shouldn’t prefer Model B over Model A just because one leads to ‘hope’ and the other to ‘hopelessness’…. Friedman and Mason seem to be arguing that our belief about the facts should be driven, at least in part, by our desire to avoid a feeling of powerlessness. They also seem to be saying that if the facts seem to support conservative policies, even a tiny bit, we should reinterpret the facts. I don’t like this approach. It seems anti-rationalist to me, and I think that if wonks behave this way, they’ll end up recommending lots of bad policies.

Cf. Henry Farrell’s 2011 attack on Matt Yglesias:

Henry Farrell (2011): The Limits of Left Neo-Liberalism: “[Doug Henwood is] wrong in the particulars…

…But… Doug is onto something significant…. Left neo-liberalism in the US… have always lacked a good theory of politics… tend[s] to favor a combination of market mechanisms and technocratic solutions to solve social problems. But… politics… requires strong collective actors…. I see Doug and others as arguing that successful political change requires large scale organized collective action, and that this in turn requires the correction of major power imbalances (e.g. between labor and capital). They’re also arguing that neo-liberal policies at best tend not to help correct these imbalances, and they seem to me to have a pretty good case…. It’s hard for me to see how left-leaning neo-liberalism can generate any self-sustaining politics. I’m sure that critics can point to political blind spots among lefties (e.g. the difficulties in figuring out what is a necessary compromise, and what is a blatant sell-out), but these don’t seem to me to be potentially crippling, in the way that the absence of a neo-liberal theory of politics (who are the organized interest groups and collective actors who will push consistently for technocratic efficiency?) is…

People should say that policies are good if they tend to do good things–to make people freer and richer. People should not say that policies are good if they tend to build the Movement, for there is neither Correct Ideological Thought nor a universal class whose interests are identical to the general interest. And people should, especially, not misrepresent what policies are likely to do in the interest of building the Movement.

And where the Movement is good, the policies that advance it will also be the policies that make technocratic sense…