Friday, May 8, 2015

Dean Baker...perfect example of why the Progressive movement goes nowhere.

I'm having this crazy Twitter argument with Dean Baker. (See thread below.)

The guy is supposedly a progressive and I know he means well, but this is why the movement goes nowhere. These guys contradict themselves and end up arguing in support of the interests of the other side.

Baker wants to create jobs by boosting exports. Fine. Very admirable, but to do that you have to create demand for those exports. Lots of demand. How do you do that? Typically through currency devaluation or, wage suppression.

There's another way, too, and that is to literally "give" foreigners dollars so they can buy the goods that we produce. That's done by massive amounts of deficit spending targeted to the foreign sector. (Maybe we can rebuild all the infrastructure of the entire foreign sector, using their labor and resources.)

In the first approach, when you devalue your currency or, suppress wages, it's like a tax. You end getting less for more. You lose in real terms. So, yeah, you  might create demand for exports and jobs, however, those jobs leave people with the ability to afford less, not more, at least in the aggregate.

And Baker admits that. He says a weaker dollar is "negative for real wages." (So why is he pushing it?)

In the second approach, where you literally give money to foreigners via deficit spending isn't it jsut a better idea to deficit spend for the benefit of your country's own residents? Isn't it better  if they have the means to consume the fruits of their own labor? I think so.

So what, really, is Baker's plan? Create jobs by boosting exports, by creating demand, by weakening the currency, which is negative for real wages. Did we gain anything? NO.

There  you  have it: a leading figure of the Progressive movement giving really stupid advice. No wonder why the movement goes nowhere. Ironically he's probably against the TPP and other trade deals, yet in essense that's exactly what he's arguing FOR. We'd be outsourcing to cheap labor, but our own CHEAP LABOR. The standard of living of the worker goes down.

The best part of my Twitter discussion with him is when he gets testy and says this:
He's crying now. Like a baby. "No one is listening to me and they're not doiong anything. Whaaaa...whaaaaa." So what does he do? Like all liberal-progressives he proposes inadequate or flawed ideas. Capitulates, basically. Grand bargains. And he ADMITS IT!

Conservatives would never do that.

When you have reasonable sounding people  like Dean Baker advocating for the very same things that big corporate advocates for every day, don't expect a lot of change. The other side must be laughing their asses off..


Ralph Musgrave said...

Game, set and match to Mike Norman. Mind I do have a huge respect for Dean Baker: he is right nine times out of ten.

geerussell said...

"So why is he pushing it?"

I've seen him answer this question in one of his recent posts. He makes assumptions about the political economy that he views as immutable:

1. In principle we could get back to full employment with large government budget deficits, but that is not going to happen for political reasons.

2. Aggressive use of work sharing leading to shorter workweeks can also move us toward full employment, but this is also not something we are likely to see any time soon.

3. Yes, we can do redistribution, but that is a children's story. We don't.

I don't agree with that framing at all, I think those assumptions are defeatist and I don't think achieving balanced trade is less politically difficult than any of the other options.

MRW said...

"There's another way, too, and that is to literally "give" foreigners dollars so they can buy the goods that we produce. That's done by massive amounts of deficit spending targeted to the foreign sector."

Which, of course, is what Keynes suggested to Harry Dexter White after WWII, who rejected it. White sneered at Keynes' suggestion that we give $10 or $12 billion (I forget the amount) to European countries so they could but the goods our 9 million vets would be producing. White claimed that Congress would not approve more than $3 billion. So White created the World Bank and the IMF.

Meantime, in DC, Truman and General Marshall created the Marshall Plan with $15 billion. That saved the day, and created the middle class.

NeilW said...

Dean Baker is another appeaser.

You'd think after getting brick walled in the Eurozone by the incumbents the 'ever so nice' brigade might re-think their strategy.

Does he actually think that other countries are going to sit back and take it as the US steals their demand?

I have no idea why this export, export, export line is so popular when it suffers from the most obvious fallacy of composition of the lot.

Probably because economists spend all their time looking at the 'domestic, government and external sectors' in their crazy models.

Completely forgetting that one person's external sector is a bunch of other's domestic sectors.

Matt Franko said...

Right Neil its their crazy ex post NIA framework to begin with....

Firms run under its not ex post its real time... they also run ex post systems for regulatory compliance and anti-fraud.... but the business unit managers never use ex post systems. ..

Economists like Baker simply do not possess the cognitive abilities to be working in the field they are working. ..

Mike exhibits a cognitive ability to fully understand the systems theory necessary to work in this policy area... while imo Baker does not...

Baker needs more training in systems theory to be able to exhibit competence he doesn't have a complete understanding of the systemic relationships and feedback and ends up in contradiction like most economists right and left... they are not competent. ..

John said...

Dean Baker is probably just being practical. Essentially, just admit defeat. To quote Thatcher, there is no alternative. No one's up for fighting the Wall Street, the giant corporations, Congress and the lobbyists, certainly not Obama. So let's just ask for some scraps.

How far do you think the real alternative will get? A job guarantee, restoring the jobs that have been off-shored, free university education, free health care, huge deficit spending, rebuild America's deteriorating infrastructure, increase the minimum wage to a level that would have kept up with productivity, huge tax cuts for working people. huge tax increases for corporations and the wealthy, restructure the economy away from financialisation, etc, etc.

Since all the above is Bolshevik devil worship, and the US congress is thankfully packed full of Bolshie-slaying anti-Satanists, we can look forward to more of the same.

2008 was a window of opportunity, but it was slammed shut very quickly. The opportunity couldn't be grasped because there was no organised block to push for it. We'll just have to wait for the next crash, but we won't be organised for that either. So-called progressives will rally around someone like Hillary or another Obama. Or George Clooney or some such nonsense!

Anonymous said...

Why we don't get anywhere is kind of obvious:

what is it like to be human?

It is beautiful.

As beautiful as the sunset, as beautiful as the moonrise, as
beautiful as the stars; as beautiful as a tranquil lake in the morning. As beautiful as the falling of the rain on the desert.

The true nature of a human being is not greed. The truest nature of a human being is to be in peace, to seek contentment. The truest nature of a human being is to evolve, to gain knowledge.

The finest achievement of mankind is not long bridges over vast expanses of water. The finest achievement of mankind is not the tallest skyscrapers. The most magnificent achievement of mankind will be peace on earth.

One moment of clarity can destroy a lifetime of confusion … just like that! One little candle can remove a roomful of darkness. This is beautiful. And we, on the face of this earth, have to leverage this law.

And this is what we all have to work on. To become active participants in seeking peace.

[Prem Rawat, speaking at the Municipal Chamber of SaƵ Paulo, April 2013]

Unknown said...

This is a problem across the left, including among Marxists. They think they can defeat conservatism while reaming within a conservative economic narrative. The left has permanently adopted a self-defeating siege mentality.

Dan Lynch said...

I like Dean but he does seem to have made up his mind what the solutions are and doesn't want to hear anything different.

Of course I could say exactly the same about some MMTer's. :-) Or about the UBI crowd. And so forth.

The main obstacle we face today is political, not economic. First we have to seize power. Only then can new economic policies be implemented.

In the meantime it is good to discuss possible economic fixes for our own education and our own sanity, just be aware that it goes nowhere without political power. The argument that "my economic policy is more politically viable than yours" does not hold water in this day and age. NOTHING is politically viable without power. Just my 2 cents. :-)

A said...


coz the alternative is revolution and they haven't worked that one out fully yet.

Tom Hickey said...

In a dialectical approach to history once a Zeitgeist replaces the previous one, it plays out its moment by testing its limits. When its limitless are explores and its boundaries are reached, then reactions produce attempts to replace it based on prevailing challenges and opportunities perceived by different mindsets. This is a period of conflict between the old and new, and among the fresh possibilities.

A Zeitgeist is not actually an ideology but it manifests in ideology, culture, and institutions. The dominant ideology in the West since the 16th century has been liberalism, Liberalism is social (individual freedom), political (representative government, or republicanism that is called "democracy") and economic (capitalism, or rule by the owners of technology and financiers).

There is still a lot of room to explore since the world has gone global. In fact, America takes it as its historical role, even duty, to bring liberalism to the entire world by writing the rules of the game and enforcing them.

This is neither a good or bad think in itself. It is a historical moment that bring advantages and disadvantages since the march of time involves conflicts and tradeoffs, winners and losers. These determine the sub-cylces in the longer cycle.

Marx as sociologist thought that capitalism would have to run its course before being ripe for a shift to socialism, that is, the replacement of the rule of the owners of technology and financiers with ordinary workers that make up the vast bulk of the global population. That view is based on a Hegelian dialectical approach of one moment exploring its limits before yielding to the next moment on the timeline of history.

As political activist, he believe that this process could be forced by revolution. He was wrong in this belief in that no capitalist country has succumbed to a worker revolution but all capitalist countries have been transformed away from the laissez-faire of economic liberalism by political and social liberalism. Marxist revolutions were only successful in pre-capitalist countries. And ultimately they "failed" in the sense that the dominant liberalism forced them to compromise with capitalism.

The world still has a long way to go before it is liberalized socially, politically and economically, and there are many possible paths that his could take, and its manifestation will be different in different places.

What is visible is a movement in the direction of democratic socialism, and there is even a democratic socialist candidate running for president of the US. so the transition is gradually taking place away from classical liberalism, which emphasized the political and economic, toward an integrated liberalism in which social, political and economic liberalism are balanced and harmonized.

Using this scheme it is possible to locate different alternatives along a range, for example, conservative, moderate and radical, right and left, etc.

Jonathan Larson said...

Dean Baker is what we used to call a right-wing Keynesian (early 1970s). So I am not surprised his solutions are especially lame.

Number ONE. There is absolutely NO cure for the USA trade deficit until we get serious about reducing our energy imports (and yes, we are still very much a net energy importer.)

Of course, we could reduce some of the rest of our imports by reclaiming the manufacturing expertise we just gave away in the last 35 years.

But the idea that we can build up our exports assumes we would actually give a damn about what the rest of the world wants and needs. I can count on the fingers of one hand the Americans I have met in life who have any clue that there IS a rest of the world. GM even tried to export cars to Japan with the steering wheel on the wrong side.

The world is awash in excess production capacity. How adding to this problem is something only the Dean Bakers of the world understand.

Kristjan said...

A lot of commentators are diplomatic here, they like Dean Baker. Well, I'll be honest, I don't like him, I don't like these Syriza clowns and Varoufakis either.

Neil wrote: "Dean Baker is another appeaser."

I agree. Useless liberals without ideas or character. They do make a lot of noise.

Dan Lynch said...

You can make the argument, which is what I think Dean was trying to say, that it is more politically viable -- in the sense that it would be more popular -- to reduce unemployment by reducing imports of value-added products than to reduce unemployment by increasing deficit spending. The public dislikes deficit spending and dislikes free trade.

But the "politically viable" argument would only be valid in a real democracy that reflected the will of the people.

In reality the U.S. is an oligarchy and the oligarchs want free trade but don't want full employment, so Dean's proposal is *not* politically viable. MMT's proposals are not politically viable, either.

In general, the "my policy proposal is more politically viable than your policy proposal" is not a convincing argument, no matter who is making it.

Re: whether we should like Dean. I view politics as the art of forming temporary alliances and making backroom deals to get specific things done. Often those alliances will be with people you don't like. They may be your opponents on other issues. Politics is not about ideological purity.

Greg said...

I agree with most of your comment Dan except one part;

" the oligarchs want free trade but don't want full employment"

I don't think they really have a problem with full employment but they have a problem with full employment and a minimum wage. They are all too happy to have everyone fully employed but having to accept a "market" determined wage vs a govt determined wage.

Dan Lynch said...

@Greg, glad somebody agrees with me at least some of the time. :-)

Please consider, if you haven't already, Kalecki's argument that the elites have no intention of allowing full employment in peacetime.

MRW said...

The public dislikes deficit spending

Because the public is stupid and doesn't know what it means.

Greg said...


Thanks for that link to the Kalecki article. That was quite good.

I still think that todays elites are not as homogenous as in decades past. Plenty of very wealthy people, like Elon Musk, Nick Hanaur or Richard Branson are not ones, it seems to me, to have a leaning towards supporting an "armaments economy" as Kalecki described but instead believe in the possibility of a well maintained capitalism. They understand where the maintenance comes from as well....... govt, smart govt.
One could certainly argue that these guys are not really part of the elites, that the bankers and politicians are a separate cabal, but I still believe that the modern world is not as willing to accept the armament economy as even 4 or 5 decades ago.
I think most people have no problem with full employment, in fact they want everyone to "get" a job, but too many still see a govt job as not a "real" job. That is the hill that must be climbed.

BTW Dan, I was looking at your picture which took me to your profile and I noticed you live in Idaho.

I was born in Idaho (Twin Falls) and my mom is from Hailey (she now lives in Boise area) and it appears to me the area you are from is in the middle of nowhere, near the Snake River gorge.

That cant be a place where you find a lot of political fellow travelers I imagine!? You must have a lot of teeth marks in your tongue. ;-)

Dan Lynch said...

@Greg, I searched for Elon Musk at the site, it seems he donates mostly to Republicans and the occasional corporate Democrat.

Hanauer donated to Obama and the DCCC, both corporatists who have increased inequality.

The political climate in my neck of the woods is discouraging, tho in part I blame the Democrats who simply have not offered an attractive alternative. I suspect a progressive populist in the mold of Huey Long could win even in allegedly conservative Idaho, but of course neither corporate party will support a progressive populist, just as they did not support Huey Long.

Greg said...

Never have looked at thanks for that tip.

I still think Musk, regardless of who he has voted for is mostly doing the right thing and isn't anything like the Koch Bros etc. He completely gave away much of his work on electric cars/batteries to the rest of the auto industry and seems genuinely interested in moving us out of the fossil fuel age, which I think is quite at odds with most conservatives.
Hanaur has also been very vocal about recreating a middle class and totally gets that it doesn't happen without an activist policy. Capitalism left alone does not create a middle class, govt policy does. As a venture capitalist he certainly has a lot of corporatist buddies Im sure but he also seems unafraid to go against some of their common wisdom.

But my main point is that Kaleckis point about full employment only being acceptable during wartime might not hold as true today as it did in mid 20th century. We have changed some. However there is no doubt that there are many many powerful people who do think that way. The fight must still be fought.... and won.

Greg said...


I suspect you are right about the political climate in Idaho. Idaho republicans are not like the bible belt republicans here in Ga and I think a true populist could swing some GOP voters here as well. I hear a lot of people complain about bankers and insurance companies and Wall St too. If the Dems would get a spine and stand up to them they could really turn out some voters.

MRW said...

He completely gave away much of his work on electric cars/batteries to the rest of the auto industry and seems genuinely interested in moving us out of the fossil fuel age, which I think is quite at odds with most conservatives.

It has nothing to do with conservatives or liberals. Look at the vehicle registrations through the year 2012:

253,639,390 in 2012 (down from 255,917,660 in 2008). Of which, only 236,000 are electric.

People aren't buying new cars; they don't have jobs. No one is buying expensive electric cars that need to be charged every 100 miles and whose batteries need to be replaced at 000’s of dollars every 10,000 miles.

You're whistling dixie if you think fossil fuels are going away anytime soon.

"The Leaf is by far the world's best-selling plug-in car. Just under 64,000 Leafs have been sold in the U.S. since the battery-electric hatchback went on sale in December 2010. Four years!

Musk stays in business because he gets government handouts: $1.25 billion in tax breaks over the next 20 years from the state of Nevada, more than twice what he asked for.

Greg said...


Thats all true but my point about Musk still stands I think. He knows how important the govt is in getting electric cars affordable.

Yes it will not be tomorrow that we are off fossil fuels but we are moving steadily that way and Musk is helping