Explaining the persistence of zombie ideas

As Paul Krugman notes in a piece where my book, Zombie Economics gets a nice plug

Free-market fundamentalists have been wrong about everything — yet they now dominate the political scene more thoroughly than ever.

Why have the zombie ideas that caused the global financial crisis been so rapidly re-animated.

I think there are quite a few different things going on here. I’ll talk about some, and maybe add some more as the post develops

On the US right (and among its Australian offshoots) there’s a familiar pattern of argument by talking point, with the objective being to score a win for the team, rather than to establish truth. The right wing retreat from reality has been going on for a while, but it really got into full swing with the Iraq War (remember Good News from Iraq?), and totally lost contact with the real universe over climate change. So, swallowing and regurgitating the suggestion that an obscure piece of anti-redlining legislation (the Community Reinvestment Act) forced the great Wall Street Investment bank to buy trillions of dollars of dodgy derivatives is (as you might say) a piece of cake.

Then there is the general pattern of thinking summed up by the catchphrase “no pain no gain”. That’s bad advice in sports training, in medicine (where it gave rise to such disasters as leeches and cupping) and it’s just as bad as a guide to economic policy. Sometimes, it’s true, the policies needed to fix an economic problem involve a fair amount of pain. But that doesn’t mean that painful policies are generally helpful.

Finally, for the moment, there’s the obvious class interest of the financial sector in directing the rage of the Tea Partiers and similar away from them and their rapidly regenerating bonuses.

39 thoughts on “Explaining the persistence of zombie ideas

  1. I don’t think any of those [inequality, anti-democratic plutocracy, economic unsustainability and ecological destruction] are a problem in Australia or the US.

    There is strong evidence that you are wrong . Here are 15 facts that contradict your assumption. Media consolidation in both countries is a challenge to democracies, especially given

    the United States Supreme Court has allowed corporations the ability to finance candidates in future elections with unlimited funds

    Similarly, given the ecological footprint of both nations, and the dramatic rise in extinction rates, there is strong evidence you are wrong on this point.

    And given dependence of both nations on an abundance of cheap oil combined with the passing of peak conventional oil , there is strong evidence that our economy is not sustainable and need rapid restructuring.

    Then we could start on climate change.

  2. Yes Fran, that’s what I don’t understand either,
    re “Ending a practice which is wastful and pernicious may entail no pain at all”.
    From 2007 on everything the political centre in power has been done, usually in the face of public objections and common sense, has been “Zombie”. Obama offshore, the likes of Bligh, Costa, Kenneally and co, back home.
    The paradigm for the new age is best articulated through the pithy Rowson Guardian cartoons satirising the vile new Cameron government in Britain, feral inheritors of the centre’s weakness and scavengers of the resulting carcass.

  3. Pr Q deletes @ #10

    That’s enough from you on GSEs/CRA from you, thanks, Jack. Anything more will be deleted. Please, no further responses to Jack on this.

    Fine and fair enough. I have let my bee buzz in this bonnet enough for now.

    But can I make a constructive suggestion? That someone somewhere sets up a blog debate on this critical topic where proponents of these alternative views go head-to-head.

    Krugman and Rajan have already had a crack at it but obviously the ideological counterparties are not satisfied.

    Maybe those “someones” should be Pr Q and (if I may be so bold) me and maybe that “someplace” should be here. But in any case the problem is still unresolved, as indicated by the alternative REP report on the GFC.

    If you want to slay the zombies you must attack their citadel.

  4. Jeepers Creepers @ #29 said:

    Jack, this and this earlier by Mark Thoma contradict your argument.

    The blogmaster has prohibited any further debate on this issue on this thread, by me and my disputants. No doubt someone, somewhere, sometime will put the various disputants into one forum for a last-man standing cage match.

    May the best blogger win.

  5. @Rationalist

    Re Government debts (particularly in the US)

    Here is the first target for any fiscal changes if you are worried about government debt (when they are closing schools and not paying their bills, teachers wages and cant put fuel in policemans cars – something needs to happen differently). These millionaires say so themselves. We have been living a class war according to Warren Buffet and he states “my class started it. I am a conscientious objector.”


    They dont mind sharing the pain.

  6. #32 – in the Murdoch press you would be silenced by never having your comments published. There is plenty of opportunity Jack to start your own blog and argue the case there. Those in control of the blog have the absolute right to decide what is debated.

    The Zombie economics ideas appear to have life because those in power – including the media are seemingly only interested in the short term and the individual. Therefore if an individual can make hay while the sun shines then it doesn’t matter to that individual if when it rains others have to pay excessive amounts for hay as the individual will be wealthy. It is not their concern, if as a result many animals die and there is a resultant food shortage; after all they will still be able to buy food even at high prices.

    This is where the cult of the individual and the capitalist idea of choice comes unstuck. Socialism as an idea is portrayed as an evil and yet at least presents an idea that the good of all may involve pain for some for the greater good. Unfortunately that pain is likely to be felt by those making the decision, their friends or families and there is a definite lack of altuism as Dick Smith has pointed out this week. Long term it may result in worse outcomes but these are unknown. For instance, there are many historians who argue that the outcomes of WW1 directly contributed to WW2.

    In a place like Australia where people are required to attend a polling station the impacts of wealth are felt through media manipulation of information and the like. However where voting is voluntary the rich and powerful are far more likely to vote and their views therefore are far stronger in setting the policy.

    The number of times a point of view is put forward becomes critical to belief. If a powerful press puts forward views which lack evidence but are strong on belief then it is likely that people who don’t understand will take those beliefs as fact rather than look at the evidence – especially if their literacy and education levels are low.

  7. Jack

    I know your opportunity to comment further on this subject is limited however when assigning blame for the conditions leading to the GFC I think you need to consider the necessary conditions for the housing boom.

    In my opinion the existence of the GSEs and their implied guarantee was not a necessary condition whereas ultra-easy monetary policy was. So I Would lay the blame for the boom and bust cycle squarely at the feet of the Fed (with dishonorable mentions to a number of foreign central banks). The distortionary effects of the GSEs played very much a supporting role.


    I know it is your blog and you have every right to set the rules however putting a brake on Jack’s ability to respond to others’ comments really does limit debate. While I don’t agree with him I find Jack’s comments quite reasonable.

  8. John

    I’m quite happy to debate Jack on another thread. As I’m sure other commenters are.

    I think Krugman is wrong however in absolving the Fed and Co from fuelling the credit boom.

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