Monday, August 7, 2017

Brad DeLong — The New Socialism of Fools

Good read. BDL argues that globalization is not the problem it is taken to be. The solution is not more nationalism and less globalization but rather full employment economic policy that addresses social welfare and economic distributional issues simultaneously. 

The problem is not globalization as much as neoliberal globalization, where the gains go to the top of the town. This results in distributional issues that affect social welfare and create a political reaction.

Now if he would just jump on the MMT bandwagon about effecting a full employment policy using enlightened fiscal policy.

Project Syndicate
The New Socialism of Fools
Brad DeLong | Professor of Economics, UCAL Berkeley


Anonymous said...

Isn't a major reason for the problems of globalization multi-national corporations and the political strength that they wield? Whose tea did the Americans throw into the harbor in the original Tea Party? The British East India Company's tea. It wasn't a multi-national, but it was a corporation with global reach and political power.

Tom Hickey said...

Isn't a major reason for the problems of globalization multi-national corporations and the political strength that they wield?

Right. The biggest issue with neoliberal globalization is the tendency toward transnational corporate totalitarianism.

djrichard said...

We had balanced trade until Nixon took us off the gold-interexchange standard. Does that mean we were foolish up to that point?

Matt Franko said...

We got off the gold because we started losing it to the ROW....

djrichard said...

We threw the baby (balanced trade) out with the bath water (gold as inducement to balanced trade as the equilibrium). Perhaps there's other inducements to balanced trade as the equilibrium? Or would that be foolish?

Matt Franko said...

Just set the exchange rates at parity and don't allow the establishment of foreign claims...

If one nation doesn't like the other nation then don't send them any produce or merchandise in the first place... the hell with them...

Dan Lynch said...

Delong said Globalization, for our purposes, is different. It should be understood as a process in which the world becomes increasingly interconnected through technological advances that drive down transportation and communication costs.

Complete BS.

consumers get more stuff for less.

Yet America's standard of living has declined.

Was there ever a shortage of "stuff" in the first place?

Is there any evidence that having more "stuff," beyond a subsistence level, makes society better off? No. What matters is that you have the same amount of "stuff" as everyone else.

Consumers would also get more stuff for less if we legalized slavery, did away with the minimum wage, child labor laws, OSHA, environmental regulations, etc.. That's essentially what we are doing when we import "stuff" from 3rd world countries that lack those regulations. It is morally wrong.

the shift in US employment from assembly-line manufacturing to construction, services, and caretaking may have had an impact on the overall distribution of income in terms of gender, but not in terms of class.

Wrong. Inequality has gone up big time.

policymakers did not do enough to compensate for this failure with more aggressive social policies ... the key is to produce and maintain full employment, at which point most other problems will melt away.

Because that's not what capitalism does. See Kalecki. Exception being the Bismarks and FDRs who recognize that social policies are necessary for the long term survival of capitalism, but they are just that -- exceptions.

as the Austro-Hungarian economist Karl Polanyi argued, it is the role of government to secure socioeconomic rights

But that's not what capitalism does. A capitalist economy run by capitalists for capitalists is primarily concerned with securing the rights of capitalists. To believe otherwise is wishful thinking.

As a manufacturing worker who has been impacted by free trade and immigration, I am not the least bit impressed by Brad's take on globalism or on economics in general.

The number one economic problem is inequality. Until economists focus on that, instead of "more stuff for less," they cannot be taken seriously. Delong reminds me of the Keynes quote If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.

Tom Hickey said...

The term "economy" is interchangeable with "efficiency" in many contexts. This is largely the way that economists are trained to see it.

The problem is that increasing efficiency in a system often disrupts the status quo of the system, affecting a lot of interests differently.

The solution is not to inhibit efficiency where it can be increased but rather to do so and balance the system. In a society that an economy serves, this would mean balancing social, political and economic interests in the overall interest of harmony and preventing dysfunctionality.

The problem is not globalization but rather the neoliberal variety of it that assumes that "left to itself" spontaneous natural order arises to generate Pareto optimality.

There are two things wrong with this assumption. The first is that there is no good evidence that this is so. Secondly, under neoliberalism the system is not "left to itself to perform naturally" but rather transnational capital is privileged.

The challenge is distributing gains from increased efficiency in order to improve the system overall and ensure that all parts of treated optimally. That is not happening. A whole lot of people are being left out and many are being excluded. This is a recipe for introducing dysfunctionality.

Neil Wilson said...

The main assumption here is assuming other nations or grouping will act in economic self-interest and be 'rational'.

The destruction of Greece should disabuse anyone of that notion. The goal is to maintain political power and whatever ideology the controlling group believes in. Sacrificing lives to that is part of the price.

If you come to rely upon a source of a product then you hand power to that source. So you need diversity of supply, which means you need spare capacity to call upon. Which is then inefficient.

Or you can create a source yourself that you can control because it is within your power sphere.

The problem with economists is that they can't understand the mentality of other ideologues. Only the ones in their groupthink.