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anonymous

David Stockman's Dystopia - 0 views

www.foreignpolicy.com/...david_stockman_s_dystopia

shared by anonymous on 06 Apr 13 - Cached
  • What's more, his perps would have to be held in separate cells, because they're of remarkably different stripes. Milton Friedman is implicated (his sin: advocating managing the money supply), but so is Paul Krugman (and of course his spiritual mentor John Maynard Keynes).  Franklin Roosevelt is on the list of "policy villains," but so is Richard Nixon, who dealt the final blow to the gold standard. Former Reagan economic advisor Art Laffer (Mr. Supply Side) is there, a few names away from Larry Summers (these days, Mr. Demand Side), who served, most recently, as Barack Obama's top economic advisor.
  • So what's the connection? I'll give you a hint: They all advocated economic interventions. They thought they could help boost growth, lower unemployment, raise revenues, stimulate investment, smooth out volatility, and so on. And, as Stockman sees it, the problem is not simply that they all failed miserably. It's that their failure has doomed America.
  • It's easy to poke fun at a rant like this, and most of it is just plain wrong (more on that in a moment). But what's more interesting is to figure out where Stockman is on target.
  • ...10 more annotations...
  • There are, unquestionably, aspects of American capitalism that have been corrupted -- in no small part through money in politics, something Stockman vividly rails against. He's also right that the U.S. economy is seriously underperforming and bad policy is implicated. One of his hobbyhorses, crony capitalism -- a frequent target of the very progressive economist Dean Baker -- is surely holding back growth, skewing the distribution of income and wealth, and steering investment not toward its most productive uses, but to those most favored by the tax code.
  • Unfortunately, those points are not central to his argument.
  • What Stockman is most worked up about is that for almost a century, economic policymakers have ... um ... made policy, and that's led to cheap money, high indebtedness, and econo-moral turpitude.
  • Stockman insists that the market should work out its failures without all these meddlers trying to fix them (there must be "a sweeping divorce of the state and the market economy"); no government investments in industry; central banks shouldn't mess with the money supply, and so on.
    • anonymous
      anonymous on 06 Apr 13
       
      Sigh... standard LP refrain.
  • The reader gets tons of invective against interventionists from FDR to Obama, but never a compelling explanation as to why America would have been better off if we did nothing to lessen the economic pain caused by the Great Depression or the Great Recession by applying Keynesian stimulus. Nor is there any analysis of why mainstream economics is wrong to believe, based on decades of empirical evidence from economies across the globe, that such stimulus, both fiscal and monetary, actually works.
  • Similarly, not only is there absolutely no benefit assigned to any of the Federal Reserve's actions over the years to push back on inflation and joblessness (and no question, they've made mistakes), but Stockman, with apparent ignorance of the historical record, atavistically pines for the gold standard.
  • If you want to get rid of central banks, you'd better come up with some other stabilizing mechanism a whole lot better than gold buggery. And I'm quite certain that would lead you right back to independent central banks.
  • Moreover, sovereign debt is neither bad nor good -- its assessment must be situational. Even a cursory analysis should stress that debt that's paying for inefficient health care is a serious problem. Debt that's financing productivity-enhancing public goods or temporarily offsetting a large demand contraction is a very different story.
  • Stockman never explains how a market failure such as underinvestment in such sectors would be overcome by simply not having the government help directly by subsidizing research and development or backstopping credit to offset the high risk premiums investors would otherwise demand.
  • Instead, we get a "revisionist history of our era," as he puts it, where Keynes and FDR are villains, Herbert Hoover and Calvin Coolidge heroes, gold is king, central bankers are legal counterfeiters, and debt is always evil.
  • anonymous on 06 Apr 13
     
    "Why Reagan's former budget chief is like a crazy person howling in the wind. Let's ignore him."
anonymous

100 years of statism, 100 years of neoliberalism - 0 views

www.themoneyillusion.com/?p=10333

econoics politics cycles trends megatrends

shared by anonymous on 01 Aug 11 - Cached
  • 1.  For nearly 100 years statism was on the advance in the US, and indeed in almost every country.
  • 2.  In the US the period of growth of government started at least as far back as 1887 (the ICC) and continued until 1977, after which deregulation, free trade agreements, and MTR cuts kicked in.  In other countries one saw MTR cuts, deregulation and privatization.
  • 3.  During the statism megatrend, the term ‘reform’ implicitly meant bigger government.  That’s how governments reacted to crises.  During the current (neoliberalism) megatrend, the tern ‘reform’ implicitly means less government.
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  • 4.  In the US this pattern has recently been hidden by health care, which is one aspect of the welfare state that was never completed in the statist era (although it was completed in all other developed countries.)
  • 5.  During the megatrends, there are periods of consolidation, which are falsely viewed as countertrends.  They are not countertrends.  The trend is still intact.  In the US the 1920s and 1950s were falsely viewed as countertrends.  Don’t be fooled, we are only 1/3 of the way through the neoliberalism megatrend.
  • anonymous on 01 Aug 11
     
    "I'd like to argue that to understand what's going on in the world, one needs to understand the megatrends.  Yes, I know that 'megatrend' is a rather disreputable term, associated with crackpots.  But I'm going to use it anyway.  Here's my basic hypothesis:" Thanks to Adam Gurri for the interesting read.
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