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The Gender Backed Dollar

by Frank Schnittger Sat Aug 3rd, 2013 at 03:34:12 PM EST

I've long been an admirer of Paul Krugman's blogging style never mind his skills as an economist. I suspect it's his writing skills as much as his economic expertise which makes him just about the most influential US political and economic commentator this side of Rush Limbaugh; but he has really excelled himself with his latest piece: The She-Devil of Constitution Avenue

I've spent five years and more watching the inflationphobes, who weren't particularly sensible to begin with, descend into shrill unholy madness. They could have reacted to the failure of their predictions -- the continued absence of the runaway inflation they insisted was just around the corner -- by stepping back and reconsidering both their model and their recommendations. But no. At best, we see a proliferation of new reasons to raise interest rates in a depressed economy, with nary an acknowledgment that previous predictions were dead wrong. At worst, we see conspiracy theories -- we actually have double-digit inflation, but the BLS is spiriting the evidence away in its black helicopters and burying it in Area 51.


So at this point I thought I'd seen everything. But no: the prospect that Janet Yellen, a monetary dove, might become the next Fed chair has driven the right into a frenzy of -- well, words fail me. Jonathan Chait has the goods: the New York Sun ran an editorial titled The Female Dollar, warning about a "gender-backed currency". I kid you not.

And the Wall Street Journal thinks this was such a great analysis that it quotes the phrase, and argues at some length -- or, actually, asserts, since if there's a rational argument there I can't find it -- that the only possible reason people might want Yellen to succeed Bernanke is that she's not just a monetary dove but a woman.

And they have a point. After all, what possible non-gender case is there for Yellen? That is, aside from the fact that she's been a highly successful team player at the Fed, has a distinguished record as a research economist on the very issues she would have to deal with as chair, and, according to a recent assessment, has the best forecasting track record of 14 top Fed policymakers. Whose assessment? Um, the Wall Street Journal's.

front-paged by afew


As usual, words don't really fail Paul. And it's not as if he has a particular axe to grind for Yellen. Larry Summers, Yellen's chief rival for the position, was actually a classmate of Krugman's at Harvard. Nobel Prize-Winner Paul Krugman: I'm A 'Loner'

The New York profile's author, Benjamin Wallace-Wells, instead, contrasts Krugman with his bombastic former classmate at Harvard graduate school: Larry Summers, ex-director of Obama's National Economic Council.

"Let's put it this way," Krugman says when describing the difference between the two. "When things go crazy, my instinct is to go radical on policy, and Larry's is to be a little more cautious." Summers, in return, took aim at Krugman as "the guy in the bleachers who always demands the fake kick, the triple-reverse, the long bomb, or the big trade," without ever getting in the game.

It's not as if Summers has a distinguished track record when he has gotten "into the game":
Why Larry Summers Should Not Be Permitted to Run Anything More Important than a Dog Pound « naked capitalism

The big problem with Summers is not his record on deregulation (although that's bad enough) or his foot-in-mouth remarks about women in math, or for suggesting that African countries would make for good toxic waste dumps. No, it's his appalling record the one time he was in a leadership position, as president of Harvard. Summers was unquestionably the worst leader in Harvard's history.

Summers, unduly impressed with his own economic credentials, overruled two successive presidents of Harvard Management Corporation (the in-house fund management operation chock full of well qualified and paid money managers that invest the Harvard endowment). Not content to let the pros have all the fun, Summers insisted on gambling with the university's operating funds, which are the monies that come in every year (tuition and board payments, government grants, the payments out of the endowment allotted to the annual budget). His risk-taking left the University with over $2 billion in losses and unwind costs and forced wide-spread budget cuts, even down to getting rid of hot breakfasts.

Not content to almost bankrupt Harvard, Summers had other problematic associations whilst President of Harvard:

Why Larry Summers Should Not Be Permitted to Run Anything More Important than a Dog Pound « naked capitalism

Summers' second big problem is the scandal that led to his ouster at Harvard, which was NOT the "women suck at elite math and sciences" remarks. The university has conveniently let that be assumed to be the proximate cause.

In fact, it was Summers' long-standing relationship with and protection of Andrei Schleifer, a Harvard economics professor, who was at the heart of a corruption scandal where he used his influential role on a Harvard contract advising on Russian privatization to enrich himself and his wife, his chief lieutenant Jonathan Hay, and other cronies. The US government sued Harvard for breach of contract and Shleifer and Hay for fraud and won.

As Chief Economist of the World Bank, Summers confirmed his climate change denial inclinations:

Lawrence Summers - Wikipedia, the free encyclopedia

As Chief Economist, Summers stated in a 1991 interview: "There are no... limits to the carrying capacity of the earth that are likely to bind any time in the foreseeable future. There isn't a risk of an apocalypse due to global warming or anything else. The idea that we should put limits on growth because of some natural limit, is a profound error and one that, were it ever to prove influential, would have staggering social costs."

Neither does Summers seem to be an enthusiastic supporter of Obamacare and government intervention in general:

Lawrence Summers - Wikipedia, the free encyclopedia

On September 21, 2010, the White House announced that Summers would step down from his position on the NEC at the end of the year, to return to Harvard University.[69] In a speech to the Economic Policy Institute upon leaving his post, Summers "warn[ed] against the creeping cost of government" and "approvingly quot[ed] Daniel Patrick Moynihan's argument that increased government involvement in the health care sector is a risky idea."

---Snip---


Upon the death of libertarian economist Milton Friedman, Summers wrote an Op-Ed in The New York Times entitled "The Great Liberator" arguing that "any honest Democrat will admit that we are now all Friedmanites."

This does not appear to be an admission that Krugman is prepared to make:
The She-Devil of Constitution Avenue

I've been saying for a long time that we aren't having a rational argument over economic policy, that the inflationista position is driven by politics and psychology rather than anything the other side would recognize as analysis. But this really proves it beyond a shadow of a doubt; if you really want to understand what's going on here, the Austrian you need to read isn't Friedrich Hayek or Ludwig von Mises, it's Sigmund Freud.

So will we have a Yellen backed dollar? I would be amazed if Obama appointed an ideological opponent of equality, climate change, public health care, financial regulation and good governance. Summers also sought to limit the size of Obama's stimulus plan - a plan generally now seen as having been insufficiently ambitious to overcome the depression following the financial crisis. Why would Obama want to appoint a serial failure when he has a perfectly capable candidate on offer. The very fact that Yellen's opponents are forced to us her gender as a reason against her appointment shows how bankrupt their economic arguments really are.

Display:
Why would Obama want to appoint a serial failure when he has a perfectly capable candidate on offer.

Because Obama is Wall St's whore, and he will 'reach across the aisle' to present Summers as a compromise who is 'good for America.'

Summers is the perfect capitalo-soviet apparatchik. Like most apparatchik's he's a noisy idiot whose main talent is self-confidence in the face of chronic incompetence.

Someone like Yellen might have an interest in getting the job done competently, which isn't part of the deal.

Obama might yet redeem himself. But given his record, I won't be holding my breath.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Jul 31st, 2013 at 02:26:31 PM EST
We'll see. In the early days of his presidency Obama seemed very beholden to ex-Clinton appointees who had been part of Clinton's relatively successful management of the economy. Obama, as a lawyer probably wasn't very well versed in the niceties of the neo-Keynesian vs. Friedmanite schools of economics and was interested in appointing pragmatic people who had had some "success" in the past.  He has none of those excuses now.

However it is by no means clear than Summers even has the support of Wall street. The vast majority of people who have declared their position support Yellen.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 31st, 2013 at 08:17:26 PM EST
[ Parent ]
Only two academics, including De Long, disappointingly, the head of the National Association of Realtors and a journalist from the FT support Summers from your list. If the money people behind the Tea Party are neutral and if the Tea Party plays it usual destructive role on any Obama nominee the seven Democratic Senators who have come out in support of Yellen might be able to get enough votes to kill the nomination. The Tea Party base despises Wall Street.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Aug 1st, 2013 at 01:03:19 AM EST
[ Parent ]
While not disagreeing with TBG's characterization of Obama.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Aug 1st, 2013 at 01:05:39 AM EST
[ Parent ]
It's an interesting list - largely a collection of rich Wall St major players nobodies, with a few more famous names.

There's no one from GS, and my guess is they get the casting vote.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Aug 1st, 2013 at 08:41:37 AM EST
[ Parent ]
There's only four actual economists on that list (Blinder, Cowen, DeLong, and Johnson).

I'm throwing out Cowen, because I've seen his argument for Summers.  It was entirely political and utterly incoherent.  Politics isn't irrelevant to the Fed, obviously, but the argument needs to be on the economics first and foremost.

I'm also throwing out DeLong, because he owes his entire career (academic and bureaucratic) to Summers, and he's clearly out to lunch on why people hate Summers.  Reading DeLong's responses to Krugman and others has been a sad experience.  I don't fault him for sticking up for his friend (I'd probably do the same), but he's basically spent all his time knocking down straw men.

Blinder and Johnson support Yellen.  2-0.

And anybody who cares what Lawrence Yun thinks about anything needs to be smacked.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sat Aug 3rd, 2013 at 09:20:15 AM EST
[ Parent ]
Lawrence Yun is obviously praying for a new real estate bubble.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Aug 3rd, 2013 at 10:19:28 AM EST
[ Parent ]
Sorry, Obama knew damned good and well what he was doing.  He brought in folks like Volcker and then promptly put them out to pasture so he could put the Wall Street Whores in charge.
by rifek on Sun Aug 4th, 2013 at 12:41:41 AM EST
[ Parent ]
Despite flaws, Summers is the best candidate for Fed chair | Nicholas Wapshott

The two-horse race to replace Ben Bernanke as the Fed chairman appears to have come down to gender. In a letter to the president, about a third of Senate Democrats have made clear they would like Bernanke's deputy Janet Yellen to replace him, primarily -- though they do not openly say it -- because she is a woman.

The White House, it seems, would prefer Larry Summers, Bill Clinton's Treasury Secretary who was also director of Barack Obama's National Economic Council. Summers is a distinguished economist, a former chief economist of the World Bank and briefly, until he was subsumed by controversy, president of Harvard University. (Summers writes a monthly column for Reuters.)

It is true there are not enough women in top positions. It is true, too, that Janet Yellen is a distinguished economist with considerable reserve bank experience. But her gender should not in itself be enough qualification for her to be awarded with one of the most important jobs in the nation.

The Fed chairmanship has always been a powerful position, but when there is gridlock in government thanks to the Republican majority in the House deciding to pass no new measures whatever -- Speaker Boehner defines his job as repealer-in-chief, not legislator-in-chief -- the Federal Reserve is the sole provider of economic policy. For that pivotal post we need the best person for the job.

Op-ed by:

Nicholas Wapshott is the former New York bureau chief of The Times of London. Previously, he was editor of the Saturday Times of London, and founding editor of The Times Magazine. He is a regular broadcaster on MSNBC, PBS, and FOX News. He is the author of "Ronald Reagan and Margaret Thatcher: A Political Marriage" (2007). His "Keynes Hayek: The Clash That Defined Modern Economics" was published by W.W.Norton in October.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Aug 1st, 2013 at 01:52:28 AM EST
Nicholas Wapshott would like Summers to replace Bernanke, primarily -- though he does not openly say it -- because he is a man. But Yellen is the actually qualified candidate and has made correct predicitions in the past, and it is on those grounds rather than on trumped up charges about race and gender that she should be judged.

Look, I can also write what passes for argument in Reuter columns! Mine even makes sense.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Thu Aug 1st, 2013 at 03:09:16 AM EST
[ Parent ]
Yellen/Summers and the Twilight of the VSPs - NYTimes.com

Anyway, it's also clear that Summers made some pretty big mistakes in his campaign. Neil Irwin points to his silence on monetary policy, which was supposed to be cagey but ended up looking slippery; John Cassidy points to his failure to offer any kind of mea culpa for past errors, which arguably was about preserving gravitas but ends up making him seem unreformed.

But why did Summers make these errors? In part because he is a whip-smart academic, the terror of the seminar room, who likes to play political operator -- and as a political operator, he's a great academic. But there is, I'd argue, a larger issue: Summers did not recognize the extent to which the political world has changed. He's been carefully cultivating an image as a Very Serious Person, in a world where VSPness has gone from a source of cachet to being a liability on both right and left.

As usual his whole blog is worth a read...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Aug 1st, 2013 at 05:31:25 AM EST
I feared he would go the other way out of respect for Samuelson and the old school tie.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Aug 1st, 2013 at 10:15:08 AM EST
[ Parent ]
I wouldn't be so sure that Samuelson would endorse Summers.

You'd expect the same of Solow, but he's stayed neutral.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sat Aug 3rd, 2013 at 09:25:15 AM EST
[ Parent ]
Solow has gone off the reservation in his old age, though. Telling people that they are taking silly toy models way too seriously, and stuff like that.

Samuelson, on the other hand, was always a political operator first and a scientist a distant second.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Aug 3rd, 2013 at 09:51:48 AM EST
[ Parent ]
True.  Solow did his share of politicking, but it always seemed to take a back seat to economics as far as his interests went.

Solow was way ahead of most mainstreamers in calling bullshit on DSGE and the Lucas-Prescott program.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sat Aug 3rd, 2013 at 10:08:16 AM EST
[ Parent ]
He was the lead witness in 2009 Congressional hearings that offered a platform for alternative views about the economy and economics.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Aug 3rd, 2013 at 10:36:19 AM EST
[ Parent ]
The fact that macroeconomics has gotten to the point that Robert Solow can be considered heterodox shows just how fucked-up things got.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Sat Aug 3rd, 2013 at 11:07:30 AM EST
[ Parent ]
The thing is that the Solow model makes absolutely excellent sense, and the only thing that marks it as a neoclassical model is the substitution of "saving" where "investment" should be. And it's always tested using the rate of investment anyway, because we have data on that, as opposed to the rate of saving which is quite difficult to measure precisely.

So yeah I think Solow is quite justified in thinking that of himself as a scientist in contrast to the quacks and charlatans infesting the profession.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Aug 3rd, 2013 at 01:51:20 PM EST
[ Parent ]
Some of that is a difference in eras of economics.  Solow comes from an intellectual framework -- and sort of a period -- in which there was greater emphasis on getting good answers, as opposed to the political horseshit that has characterized economics for the last 40 years or so.

One could perhaps draw a distinction between Solow and Samuelson there.  Not that I blame Samuelson for people like Lucas and Prescott (Lucas and Prescott ultimately own it), but he played a role in laying the foundation for those types.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sat Aug 3rd, 2013 at 02:17:50 PM EST
[ Parent ]
Well, Samuelson is on record admitting that he deliberately excluded whole ranges of policy space from his modeling, not because those policies were more difficult to model (though they are), or because they were practically infeasible. But because he thought that politicians, when given these policy options, would make "wrong" decisions (i.e. ones he did not agree with).

That, ultimately, is the fence in modern macroeconomics which distinguishes mullahs from scientists. And once you're on the wrong side of it, the difference down to von Mises and Greenspan is merely one of degree, not of kind.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Aug 3rd, 2013 at 02:40:51 PM EST
[ Parent ]
Samuelson is also on record as describing how a Canadian Keynesian economist who published a well received textbook in 1946 subsequently was the victim of a coordinated conservative smear that linked him and his views to, gasp, SOCIALISM. The spectacle caused Samuelson to be very careful not to be vulnerable to such an attack. He did not say so but, likely, this effort to avoid attack by conservatives substantially drove him into their arms. Samuelson knew on which side his bread was buttered.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Aug 3rd, 2013 at 03:49:40 PM EST
[ Parent ]
Samuelson knew on which side his bread tenure and pension was buttered.

FIFY

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sat Aug 3rd, 2013 at 07:34:50 PM EST
[ Parent ]
Solow is also undoubtedly angry with a lot of people due to the fact that much of Real Business Cycle theory is just the Solow model with some very stupid representative agents -- or brilliant, I suppose (since they live forever, take years-long vacations, and can anticipate everything perfectly) -- bolted on.  Anything they can't explain is the Solow Residual and hence business cycles are all about technology shocks.

Which Solow clearly thinks is completely idiotic.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Aug 4th, 2013 at 09:02:14 AM EST
[ Parent ]
Is 'the Solow Residual' a term of art amongst the RBC advocates?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 4th, 2013 at 01:52:58 PM EST
[ Parent ]
The Solow residual is a term of art among a class of utility theoretic economic growth models. Technological progress is everything in productivity growth you can't account for after you have found all the factors correlated with productivity growth and have estimated their contribution.

Its an admission that utility theoretic growth modelling can't explain the most important long term factor in economic growth.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Aug 5th, 2013 at 10:35:27 PM EST
[ Parent ]
What Bruce said.  The term pre-dates RBC.  The Solow growth model has been around since the '50s, whereas RBC came around in the '80s.

RBC theorists just tend to be wedded to it.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue Aug 6th, 2013 at 07:36:35 AM EST
[ Parent ]
Of course RBC assumptions about inherent limitations of the market to clear at certain times, about which nothing can be done, blows up if we take account of debt to GDP, as does Steve Keen, and take measures to deal with those implications in light of MMT and three sector national accounting.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 4th, 2013 at 02:02:07 PM EST
[ Parent ]
RBC makes no assumptions about the inability of the market to clear.  Markets always clear in RBC models.  RBC models have instantaneous price adjustment, perfect competition, etc.

To get markets that don't clear, you have to add (usually nominal) rigidities and imperfect competition, at which point your model becomes New Keynesian rather than RBC.

(NK models perform a lot better at forecasting, but a lot better than "fucking terrible" is still not good.  Put it this way: Last I read, internal Federal Reserve forecasts were still putting both to shame.)

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue Aug 6th, 2013 at 07:46:43 AM EST
[ Parent ]
RBC is essentially an update of Voltaire's Dr. Pangloss.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 4th, 2013 at 02:06:14 PM EST
[ Parent ]
... easiest way to close an anticipatory model. That presumes that an anticipatory model that is a closed system accurately reflects the way that the economy works ...

... even though quite clearly it does not.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Aug 5th, 2013 at 10:37:25 PM EST
[ Parent ]
Even if he somehow misses the point that Summers' "out of the box thinking" has almost always been spectacularly wrong headed.

Why Obama should pick Summers to lead the Fed - FT.com

Five candidates are way above the rest: former Treasury Secretary Lawrence Summers; current Fed vice-chair Janet Yellen; former Fed vice-chair Alan Blinder; former Council of Economic Advisors chair Christina Romer; and former National Economic Council chair Laura Tyson. These are the Fabulous Five. Choosing any of them would make me happy. Choosing anybody else would be an unforced error.

If times were normal, my first choice among the Fab Five would be obvious: Ms Yellen. Back in 1994, the Clinton administration pulled Ms Yellen out of the academy and on to the Fed. She was a brilliant choice, with a profound understanding of economics and a proven record as a consensus-builder. She is often the most insightful person in the room, but does not feel the need to constantly prove herself such - and she has a 15-year record of success in Washington.

But these are not normal times. In normal times, the "short run" in which the economy remains below its normal relative level of activity is a year or so. It has been five years since we saw normality, and few would lay long odds that we will escape without a lost full decade.

In normal times the Fed's senior policy makers are economic priests following a settled gospel of technocratic economic management. But right now, as John Maynard Keynes said in a similar crisis in the 1920s: "no one has a gospel". Therefore, Keynes said then, "the next move [must be] with the head . . ." And the Fed, over the next four years, is the best place to do the thinking that must be done to recover and rebuild.

And this is why my preference is for Mr Summers. He is the most creative thinker around. If I prepare for four hours for a one-hour discussion with Mr Summers, it takes him 15 minutes to get up to speed, for the next 30 minutes I am holding my own, and for the last 15 he is coming up with insights that I would have missed had I spent 12 hours thinking the issue through. Unless things start getting better faster, in a year or two it will be clear that the Fed's current policy consensus is past its sell-by date. And in that case a lot of outside-the-box thinking will be called for.



Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Aug 1st, 2013 at 11:26:32 AM EST
Economists Behaving Badly, Redux
Where does this mistrust come from? Well, let me give you an example: Jackson Hole, 2005, a conference dedicated to celebrating the record of, ahem, Alan Greenspan. Raghuram Rajan had presented a paper warning that the risks of financial instability were much higher than most people were acknowledging. (I think Rajan has been wrong on many issues since then, but that was certainly a prophetic paper). And the response, in general, took the form of ridicule.

The principal discussant was Don Kohn (pdf), who was (barely) polite but completely wrong-headed, celebrating financial innovations such as "the growing ease of housing equity extraction":

Leading off on the rest of the discussion (pdf) was Larry Summers, who wasn't polite, dismissing Rajan for being "slightly Luddite" in questioning the value of financial innovation, which he compared (in a really bad analogy) to technological progress in transportation.



Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Aug 1st, 2013 at 11:35:36 AM EST
Upon the death of libertarian economist Milton Friedman, Summers wrote an Op-Ed in The New York Times entitled "The Great Liberator" arguing that "any honest Democrat will admit that we are now all Friedmanites."

(bangs head on desk)

Okay.  What does Summers mean by "Friedmanite"?

Historically, Friedmanite has been a synonym for Monetarist.  If that's what he means, he's a solid two generations behind the times.  Nobody's been a Friedmanite in that sense for 30 years, since Volcker abandoned monetarism at the Fed and shifted to raising and lowering interest rates -- an idea which is very much not monetarist and pre-dates Friedman's work by about 40 years.

Hell, Friedman wasn't even a Friedmanite by that definition once the unworkability of monetarism became apparent.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sat Aug 3rd, 2013 at 08:57:19 AM EST
It pays to have some real economists on the staff... :-)

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Aug 3rd, 2013 at 11:27:07 AM EST
[ Parent ]
Friedmanite = doctrinaire deregulator and general believer in dismantling the state.
by Metatone (metatone [a|t] gmail (dot) com) on Sat Aug 3rd, 2013 at 06:36:14 PM EST
[ Parent ]
Withering away of the State is standard Marxist Doctrine:

The society which organizes production anew on the basis of free and equal association of the producers (= a Free Market) will put the whole state machinery where it will then belong-into the museum of antiquities, next to the spinning wheel and the bronze ax.

:-)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sat Aug 3rd, 2013 at 07:32:28 PM EST
[ Parent ]
Well, I think updated doctrine is, as currently applied, quite happy with a state stripped of all functions not useful for the further aggrandizement of those who have captured the state. Certainly it does not need social welfare, 'National Defense' is a crucial tool of wealth extraction abroad and at home justice has come to see the importance of protecting people in proportion to their wealth. Nitzan and Bichler in Capital as Power saw the essence of the capitalist state as being able to creatively reorder the society to suit the current needs of capitalist production.

The current dominant capitalists find it much more profitable to do production in low wage countries and use the flow and the monetary system to extract wealth from the flow and by stripping the assets of the citizens of the formerly dominant states. That seems exactly what they have done in the USA - with Clinton and Obama showing how useful Democrats can be in the process. Off-shoring all consumer manufacturing combined with the Greenspan real estate bubble, during which time US homeowners were encouraged to pull wealth out of their homes via refinancing and use that money to compensate for stagnant and falling wages, has been a highly effective mechanism for generating claims over most of the nation's wealth. And the captive government is there to insure that those claims, regardless of how bogus, are enforced. And what cannot be stolen will have high economic rents imposed to the benefit of the dominant wealth holders.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 4th, 2013 at 12:43:25 AM EST
[ Parent ]
... "make the case" for Larry at Agent Orange ... but noticed that strangely the article was not linked to.

That inspired me to read the article. Yup, the supposedly proudly progressive analysis of the challenge of economic inequality turned a blind eye to the role of the Finance Sector and instead laid it at the feet of tech change and globalization (implicitly a force of nature rather than consequence of deliberate policy actions).

I wrote it up at Voices on the Square: Summers: Economic Inequality a Problem, but not the Fed Chair's Responsibility

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Aug 3rd, 2013 at 11:09:22 PM EST
You have to be a) a complete idiot or, b) an intellectual whore not to see that the Republican Party and its allied media organs are the storm troops in a cultural and economic war against anyone who is not white, male, Christian, and upper-class.
by rifek on Sun Aug 4th, 2013 at 12:45:50 AM EST


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