Saturday, January 11, 2020

The point of economics

"The point of economics as a discipline is to create a language and methodology for governing that hides political assumptions from the public." -- Matt Stoller

Monday, January 06, 2020

Why neoliberalism is untenable

Let's take the neoliberals at their word: neoliberalism is about using markets to achieve maximum productivity and (maybe) some social democratic ends, while using the power of government to regulate markets and provide what markets cannot. As stated, this idea cannot work because markets contradict government. Neoliberalism calls for freedom and regulation, distribution and centrality, elitism and egalitarianism. At best, neoliberalism simply handwaves over these inherent contradictions; at worst, it is just a cover for libertarianism.

Economists understand that markets have inherent problems that stem from the individualistic competitive nature of markets. First, sellers, both firms selling goods and services and households selling their labor power, have a powerful market incentive to create and maintain monopolies, which economists understand are inefficient. Second, absent the police, it is always easier and cheaper to "cheat" rather than "play fair", and again, the individualistic nature of markets embeds an incentive to cheat. Third, a market economy concentrates and refines the class struggle between rentiers (bourgeoisie) and workers (proletariat), always to the detriment of workers. When markets are used everywhere possible, market competition becomes a life-and-death struggle for everyone, bourgeoisie and proletariat; when everyone's life is on the line, the incentive to monopolize, to cheat, to oppress and enslave others, overwhelms any sense of social or civic value.

Opposing these market incentives, the neoliberals vaguely wave their hands and say, "The government will regulate these markets, break up monopolies, punish cheaters, and protect the proletariat from slavery." But how? Whatever neoliberals think they're trying to do to corral markets for social democratic ends does not seem to be working. Yes, neoliberals can say, with perhaps some deserved pride, that a global markets-in-everything economy has doubled the income of the desperately poor, from \$2 per day to \$4. But it's not enough, and helping the desperately poor shouldn't be mutually exclusive with creating a decent society for working people.

There are, I think, two reasons for this. First, government regulation of a market economy is both as practically difficult and ideologically illiberal as a centrally planned communist economy. Neoliberal economists, like central planners and literally everyone else, are never as smart as they think they. And, fundamentally, any government regulation entails coercing individuals for the sake of the collective. Second, people with political power decide government regulation, and a market economy gives political power to those who can successfully accumulate wealth. Why would such people give up their own power? For the sake of abstract "liberal" principles and altruistic public spirit? Grow the fuck up and re-read Machiavelli.

Libertarians understand these tensions, and, while they dissemble (because why not fool people if fooling them is profitable), they understand that libertarianism is just liberalism without the fuzzy-headed sentimentality. The race may not always be to the swift, nor the battle always to the strong, but it often enough is. If we are going to compete, it makes no sense to punish the winners nor reward the losers.

Do neoliberals understand these tensions? Are they merely better than libertarians as dissimulation? Or are they merely more naive? I don't think it even matters. Liberals — classical and neo- — are either fellow travelers or useful idiots for the right. They are not part of the left.

Friday, January 03, 2020

Neoliberalism and libertarianism

Noah Smith and Brad DeLong want to distinguish neoliberalism from libertarianism. Smith, as always, comes off as a pompous douchebag, capable of only the most superficial analysis; DeLong thinks a little more deeply and identifies the core problem with neoliberalism, that neoliberalism is just libertarianism with good intentions. And that's not enough, not enough to distinguish neoliberals from libertarians, and not enough to earn neoliberalism a place on the left.

Smith points to DeLong's defense of neoliberalism, summarizing it as an ideology policy program that "protects markets as the basic engine of production [emphasis added]" with a welfare state (somehow) added "on top" of these markets.

DeLong expands Smith's summary, citing John Stuart Mill's and Adam Smith's deep and probably sincere concern with the poor. It's telling, perhaps, that DeLong chooses not to cite anyone in the twentieth century.

In contrast, DeLong argues that libertarianism holds that a market society embodies justice whatever distribution of income exists, whatever poverty people might suffer. DeLong asserts that libertarians hold that today, "poverty is probably your own fault", either your own moral fault or your "bad genes". DeLong fails to cite any sources (bad), but his understanding broadly matches my own: libertarians are reluctant to put their ideology so baldly, but the "I've got mine, Jack, so fuck off, loser" subtext is pretty clear to anyone who looks with any degree of critical thought at libertarianism.

But good intentions is not enough to distinguish neoliberalism from libertarianism. There are, of course, always fine distinctions within any school of thought or policy practice. There are Rothbard anarcho-capitalists, Nozick minarchists, Randians, etc., all of whom could be called libertarians, an all of whom fall on the "right", broadly defined. These fine distinctions are relevant to scholars and political scientists, but for practical leftist political purposes, they're all just slightly different flavors of asshole, and we can leave the fine distinctions to academics.

DeLong admits that neoliberals do not behave very differently from libertarians. There might be a few differences of degree — neoliberals wring their hands most piteously when Trump cuts food stamps (but heaven forbid they should actually, you know, fight back) — but hand-wringing aside, neoliberals are difficult to distinguish from libertarians. I cannot argue the point better than DeLong. DeLong asserts that "'neoliberalism' has gotten itself tied up . . . with using markets for social democratic ends whenever that is appropriate," (an assertion I find dubious), he admits that "neoliberalism" has also
approv[ed] of whatever distribution of income and wealth that market then produces. Neoliberals in power have been—sometimes—willing to soak the rich by raising taxes on them and using the revenues to spend on infrastructure or to strengthen the "safety net" [Do we have to go back to, er, Nixon for that? -LRH], but they have been unwilling to even whisper about raising taxes on the upper middle class. And neoliberals in and out of power have spoken only in whispers about policies that need to be taken to generate a societally-acceptable market distribution of income.
Let me add that the neoliberals, at least since Clinton, have done nothing at all to give power to workers, to households, to the bottom 80% of the income distribution. They have destroyed unions, rolled back workers' rights, homeowners' rights, consumers' rights, immigrants' right. They have overseen the mass incarceration and judicial murder of black people. The neoliberal Obama administration gave millions to the libertarian bank owners while allowing millions of working-class Americans to lose their jobs, their pensions, their homes. At best the neoliberals have ensured that the bosses who squeeze every drop of blood from the workers are a little more diverse.

I have nothing but contempt for Noah Smith. DeLong at least has the decency to entertain the idea that the neoliberals have not been as successful as he might have hoped. (We know they just failed miserably, but DeLong isn't going to risk tenure at Berkeley to say that out loud.) But neither of them are on the left, and when world they and their ilk is drowning in its own shit, I won't shed a tear when some psychopath eats them both.

The essence of geek

[T]he true sign of a geek is a delight in sharing a thing. It’s the major difference between a geek and a hipster, you know: When a hipster sees someone else grooving on the thing they love, their reaction is to say “Oh, crap, now the wrong people like the thing I love.” When a geek sees someone else grooving on the thing they love, their reaction is to say “ZOMG YOU LOVE WHAT I LOVE COME WITH ME AND LET US LOVE IT TOGETHER.”

-- John Scalzi, King of the Geeks

Tuesday, October 29, 2019

Good criticism of MMT

The TD Bank Financial Group, authors of Modern Monetary Theory: A Primer, make some fairly serious mistakes in their criticism of MMT. Still, given the deluge of misinformation about MMT, it looks to be written in the best faith we can hope for. With all good luck, I will devote some attention to a more detailed examination of the report in my copious free time.

Monday, October 14, 2019

Happy (belated) Columbus Day!

Spreading the gospel

Osita Nwanevu has a great article about MMT in The New Republic: Spreading the Gospel of Modern Monetary Theory

I had to sigh a bit reading the closing line, "Those speaking up in defense of the assumptions MMT assails would do well to consider that the hearts and minds of the public are rarely won on technicalities." The author is most certainly correct. Still, the technicalities do matter, at least to me, and the assumptions that MMT assails are actually incorrect and are indefensible not only on political grounds but also on technical grounds.