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Reasons for despair: first they laugh at you ...

by Colman Mon Apr 6th, 2009 at 03:45:09 AM EST

... they they fight you, and then you win, according to Gandhi. He missed a step: going batshit insane. Perhaps that's part of the "fighting you" bit.

Brad de Long describes a conference where some of the leading lights of the economic right wander even further out of our universe into a more comforting fantasy world. (Which is an ability to be envied right now).

The point of the conference was to attack the historical effectiveness of the New Deal in order to defend the ideology of the low-tax, no-government right from the current unpleasant attack of reality - by claiming that the post-1929 recovery didn't happen until 1939 (a mere drop in unemployment from 23% to 11% isn't a recovery, for instance). The coverage of the conference was, of course, in classic, unbiased "he said, she said" style.

I tend to believe that these people are driven to this sort of crazy talk both by true belief and the defence of their social standing and financial well-being. The current circumstances makes rational defence of their position so difficult that they need to start discounting huge swathes of evidence in order to repel the barbarians.

None of this would matter, of course, if this sort of "thinking" was accorded the respect it deserves. Unfortunately, those in power - politicians, businessmen, the media and voters - have been used to listening to this ideology and continue to do so.

Just this weekend the leader of the main opposition party in Ireland promised to " Return the public finances to stability by 2012 without increasing the standard and current top rates of income tax;" which, while leaving himself wiggle room on various other parameters that would result in people paying more tax, plays straight into the narrative that higher taxes would be a bad thing. The Sunday Independent calls for slashing public spending, selling off more of the family silver, privatisation "in order to drive down prices", and no rises in taxes.

Apparently the way out of disaster is to keep doing what we've been doing. What was it Einstein said about that?


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New budget tomorrow. Apparently, among other things, there's going to be more emphasis on PPP projects for funding infrastructure. I do despair.
by Colman (colman at eurotrib.com) on Mon Apr 6th, 2009 at 03:47:26 AM EST
the cosy ET consensus?

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Mon Apr 6th, 2009 at 05:26:13 AM EST
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by Lupin on Mon Apr 6th, 2009 at 05:04:11 AM EST
From the comments at Brad DeLong's place:

Grasping Reality with Both Hands: An Open Letter to Patricia Cohen of the New York Times

Personally, Brad, we both know that there's only one direction whence intellectually responsible criticism of the Geithner plan -- the Obama plan -- comes, and that's from Paul Krugman, James Galbraith, and others making substantially similar points. However, they don't count as serious commenters about whom I can write a story for my employer: they're well known to be attacking the plan from the left, not from the right, and they're all DFHs too -- not one of them supported the Iraqi war.

My problem is that I need to write articles about GOP opposition to this plan, and after the shambles that become of the GOP "alternative" budget, I can't very well go to congressional Republicans to get my story. On the other hand, on the far right economic wing of the GOP there are organized groups trying to expand the Overton window by casting FDR as the cause, not the cure, of the Great Depression. Since they're sufficiently well funded to hold a "conference" intended solely to persuade callow and impressionable reporters and pundits to include their agit-prop in future articles.

Clearly, these criticisms of the Geithner plan are serious, since some of the people at the conference are well known to be GOP operatives. So, I could persuade by bosses that this was a legitimate story, and I could achieve my goal of a front-page story. Of course, I wrote the article so that anyone who already knows that this CFR conference was full of mountebanks and charlatans would understand that I thought so, too. But, if I came out and said it -- or if I even allowed enough facts into the article so more than a small minority of readers would understand the truth -- my employers wouldn't have published the article.

I'm sure you know all this already -- only people as naive as Paul Krugman don't understand how the business works.

Posted by: Patricia Cohen (NOT!) | April 05, 2009 at 07:37 AM

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Apr 6th, 2009 at 05:13:39 AM EST
The comments thread gives us a sense of the scope of the problem, especially with regard to journalism, such as it is.  I particularly liked the comment that urged purging the economics departments of their lying, hack economists.  And few of these folks even seem to have a glimpse of the polemical origins of Neo-Classical Economics.  It is good at least for them to start to deal with some of the more obvious consequences.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 6th, 2009 at 05:57:28 PM EST
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... they they fight you, and then you win, according to Gandhi. He missed a step: going batshit insane. Perhaps that's part of the "fighting you" bit.

They are updating the method, as the ending is still wrong.

by das monde on Mon Apr 6th, 2009 at 07:30:24 AM EST
There's really nothing I can think of to add to this diary.

I guess I see the emergence of Amity Schlaes as pretty much the bellwether of insanity. Agitprop at it's finest. What's fascinating is that the rich really feel that they would be better off returning us to the 1920s. As such it's clear that their motivation is not so much "money" (which they are not short of even now) but "power."

by Metatone (metatone [a|t] gmail (dot) com) on Mon Apr 6th, 2009 at 07:58:20 AM EST
As such it's clear that their motivation is not so much "money" (which they are not short of even now) but "power."

It's difficult to estimate the motives of a group one doesn't belong to and is not close enough to observe. It would be worth trying to dig into motives, though. Money alone doesn't explain it, since it comes with the socio-economic situation (situation re information flows, influence via networks, etc). I'd suggest, though, that holding on to position and privilege is central.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Apr 6th, 2009 at 08:10:34 AM EST
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Defining whose motives you're talking about would be a start.
by Colman (colman at eurotrib.com) on Mon Apr 6th, 2009 at 08:22:08 AM EST
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"the rich" (see metatone).
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Apr 6th, 2009 at 09:27:33 AM EST
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I thought we already had a rerun of the "roaring 20s" in the "naughties".

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Mon Apr 6th, 2009 at 08:42:58 AM EST
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Apparently taxes were too high, so it's time to try again.
by Metatone (metatone [a|t] gmail (dot) com) on Mon Apr 6th, 2009 at 09:19:50 AM EST
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What have the rich got to do with it? Are most of the people who truly believe this crap rich (for what value of rich?). Do most rich people (top 10%? top 1%? Top 0.1%? Top 0.0001%?) believe this stuff? Do they support it? Do they vote for it? Would it suffice if they did? Is it even in their mid-term interest?

That there exists rich people who do believe and/or support  it neither means that "the rich" support it nor that it is in their interest to support it.

by Colman (colman at eurotrib.com) on Mon Apr 6th, 2009 at 09:41:03 AM EST
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What does "bat-shit insanity" have to do with it?
by Metatone (metatone [a|t] gmail (dot) com) on Mon Apr 6th, 2009 at 09:55:42 AM EST
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Well, I'd characterise you as a little bit crazy once you start editing out large chunks of history to support your point of view.
by Colman (colman at eurotrib.com) on Mon Apr 6th, 2009 at 09:57:16 AM EST
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That's a pretty astounding accusation. Perhaps we need to write a full thesis now before venturing to comment on one of your threads. Plus the obligatory thick skin.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Apr 6th, 2009 at 10:41:53 AM EST
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Um, when Metatone starts editing history to suit his biases  I may consider him crazy. I'm guessing he's not about to, however.
by Colman (colman at eurotrib.com) on Mon Apr 6th, 2009 at 10:46:24 AM EST
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Though my grammar was a bit messed up there.
by Colman (colman at eurotrib.com) on Mon Apr 6th, 2009 at 10:48:47 AM EST
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Ah, and I misunderstood it. It's not that I don't agree that we need to define who we're talking about, but I'm not sure I see the point in doing it to maniacal socio-economic precision. And, though you may see this as an element of the cosy consensus, I think we have considerably discussed here the role of neoliberal economic theorists (and politicians inspired by them) in defending the interests of an old and new-money plutocracy that has been skimming off the economic cream for two or three decades now.

Of course, it may be that the plutocrat group functions in all innocence, under some kind of Rawlsian veil of ignorance, and isn't even aware that intellectual and political foot soldiers are out there fighting for them on the marches of their empire. (Well, you see what I mean.) That would be exactly the kind of thing it would be interesting to discuss and try to understand.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Apr 6th, 2009 at 11:11:18 AM EST
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I think I'd be much happier with "plutocrats" than "the rich" - at least then you're characterising by affiliation with an idea and/or practice. The fact is that a lot of the people who are in favour of plutocracy aren't rich enough to count and a lot of people who are rich enough to count don't like it much.

The problem then becomes trying to divine to what extent people really believe that the invisible hand will make everything right - and remember some of the bizarre religious and supernatural things otherwise intelligent and educated people are capable of believing in - and to what extent they pretend to for their own benefit.  Or to what extent they believe that people get what they deserve - there's some very convenient religions knocking about to justify that one as well, as I understand it.

by Colman (colman at eurotrib.com) on Mon Apr 6th, 2009 at 11:29:55 AM EST
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Yes, there's a distinction between at least some of those who are in favour of plutocracy, and those who are wealthy enough to be considered plutocrats. Those in favour are, on the one hand, quite probably a fair number of the plutocrats themselves; then their "foot soldiers", the economists/historians, the politicians, the pundits, fiction-makers, experts, journalists, who are not in the same wealth group but are rewarded for their aid; and finally all the (unrewarded) plain folk who accept that society works better when there's a small group of exceedingly rich people et the top.

As for those who are part of the plutocrat group, their beliefs may show infinite variety, as also the extent to which they believe out of convenience or with the utmost sincerity, as you say. One thing I would expect, though, is that in almost all cases the beliefs held would not get in the way of the individual/family/group's continuing hold on position and privilege.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Apr 6th, 2009 at 12:13:51 PM EST
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Who do you mean by "the rich"?
by Colman (colman at eurotrib.com) on Mon Apr 6th, 2009 at 09:58:53 AM EST
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What have the rich got to do with it? Are most of the people who truly believe this crap rich...
I have seen articles claiming that a substantial portion of the multi-millionaires, (>$40 mil) do not support such views.  These would include men such as Warren Buffet, Bill Gates Sr. & Jr.  The percentage of those with a net worth > $1 mil < $20 mil with ultra conservative views is considerably higher.

According to How Rich Is Too Rich by Inhaber & Carroll, (HT to Bruce McF) the point where the Too Rich become too rich is where the line in a distribution, plotted as a log normal cumulative frequency distribution has the "kink" and begins to rise faster than the portion to the left on the graph.  This is what Pareto was describing in Pareto's Law, although he would have vigorously disagreed that anyone was ever too rich.

And part of the problem is that so many supporters of these views are "aspirational" in their support and in fact do not currently and may never personally benefit from the positions they espouse.  I personally know and/or am related to many such people.  So it is not helpful to lump "the rich" together as one group.  Not least because crucial support for change from the current system is found among the very rich, who can clearly see the unsustainability of the current regime.

   

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 6th, 2009 at 06:44:33 PM EST
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