For Thursday: Josh Bivens, Brad DeLong, Jeff Madrick, Ylan Mui: How Mainstream Economic Thinking Imperils America

1. The “Invisible Hand”
2. Say’s Law
3. Friedman’s Folly: Government’s Limited Social Role
4. Low Inflation Is All That Matters
5. There Are No Bubbles
6. Globalization Is Always Good
7. Economics Is a Science

In Madrick’s Introduction and Reading Along:

• Praised in the Introduction:
  1. John Maynard Keynes
  2. Dani Rodrik
• Criticized in the Introduction:
  1. Adam Smith–no comment necessary…
  2. Olivier Blanchard–the de facto leader of the Sixth International: on the left of the spectrum of policymakers…
  3. Larry Summers–principal advocate of the Keynesian expansionary-fiscal solution to our troubles…
  4. Milton Friedman–when he was alive, the most powerful advocate of unlimited quantitative easing…
  5. Bob Rubin–on his watch big banks were bailed-in during financial crises, not bailed-out…
  6. Ben Bernanke–most left-wing central banker we had (although I will concede his attachment to 2%/year inflation target, and failure to reach it, are huge minuses)…
  7. Robert Lucas–underbriefed and destructive…
• Madrick on Christina Romer:
  1. In a piece she wrote for The New York Times criticizing an increase in the minimum wage, Christina Romer, the former Obama adviser and considered by many to be a political liberal, implicitly made this same oversimplified assumption that workers usually get what they deserve. This is an example of Friedman’s broad influence…
• Romer:
  1. We have better policies available: expand the EITC is better targeted
  2. For the long-run, universal kindergarten and pre-K have more bang for the buck
  3. And these are expansionary fiscal policy–spending money gives a macroeconomic boost as well
  4. But if the choice is for a higher minimum wage or nothing, I’m for a higher minimum wage…
• Of these 8, somewhere between 5 and 7 are to the left of current North Atlantic policymakers–not excluding Obama

PFoJ vs. JPF, Perhaps?

• A little misplaced ire, I think…
  
• But I don’t want to go there…

I Want to Go Here: The Problem, as I See It:

• Economics starts from the presumption that market success is the benchmark
  1. And that market failure is anomalous
  2. It ought to start from the presumption that market construction is difficult
  3. It ought to have a grammar of other forms of organization–command, bureaucracy, charity, cooperative, regulated monopoly, yardsticks, etc.–and where they succeed and where they fail
• We have a great deal of economic life where we know the market will not work well, and these sectors will only grow in relative importance
  1. Pensions
  2. Health-care finance
  3. Education
  4. Infrastructure
  5. Research and development
  6. Information goods more generally
• Policy is far to the right–and not to the smart right–of even where the really existing economics profession, at least the “serious” piece of it in an intellectual sense, is
  1. Why?
  2. How to fix it–books like Jeff’s, of course, but how else?
  3. Two tasks: move the “serious” economics profession, and move policymaking to the “serious” economics profesion–both seem of equal importance and difficulty