Hackery or heresy

Henry Farrell’s recent post on the irrelevance of conservative intellectuals reminded me of this one from 2013, which concluded

Conservative reform of the Republican party is a project that has already failed. The only question is whether the remaining participants will choose hackery or heresy.

Overwhelmingly, the choice has been hackery (or, a little more honorably, silence).

The case for hackery is put most clearly by Henry Olsen. Starting from the evident fact that most Republican voters are white nationalists who don’t care about small government, Olsen considers the options available to small government conservatives. He rapidly dismisses the ideas of challenging Trump or forming a third party, and concludes that the only option is to capitulate. Strikingly, the option of withdrawing from party politics, and arguing for small government positions as an independent critic isn’t even considered.

As Paul Krugman has observed recently, conservative economists (at least, those who comment publicly). are a striking example for the choice of hackery over heresy. Krugman, along with Brad DeLong, has been particularly critical of a group of economists (Robert Barro, Michael Boskin, John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence Lindsey, Harvey Rosen, George Shultz and John. Taylor) who’ve made dishonest arguments in favor of corporate tax cuts.

Recently, an overlapping group (Boskin, John Cochrane, Cogan, Shultz and Taylor) have taken the hackery a significant step further.

At first sight, it’s yet another piece of doom-mongering about the impending debt crisis. What’s striking is the extent to which the piece has been adjusted to fit the Republican party’s new found lack of concern about deficits, while supporting the party’s continued attack on “entitlements”. Perhaps unsurprisingly, they make excuses for the corporate tax cut they’ve been pushing all along, even though it’s now clearly unfunded.

Rather more startling is the claim that the US government to cut entitlements in order to “restore our depleted national defense budget”. These alleged deficit warriors don’t mention the big increase in defense spending that was just passed by the Congress, with overwhelming support from Republicans. Nor do they mention one of the notable outcomes of this largesse, namely that the Pentagon has abandoned any attempt to pursue the program of closing military bases it regards as unnecessary. That’s one of many examples of waste in the defense budget.

There was a time when free-market economists like Milton Friedman saw defense spending as the exemplar of the rent-seeking “iron triangle” (interest groups, bureaucrats and politicians) ensuring that public expenditure is always wasteful. I Don’t suppose that Boskin and the rest have looked at the evidence and concluded that Friedman was wrong. Rather they’ve correctly calculated that heresy on defense spending would see them cast into the outer darkness of irrelevance.

The problem is that there’s no room for heresy of any kind. Moreover, as the fate of Republicans foolish enough to oppose Trump in 2016 has shown, heresy can be retrospective. Boskin and the rest would have been better off using their 750 words to say “Trump is right*”, 250 times over.

The last decade or so has been pretty devastating for the idea of economics as a science or profession. As I argued in my book Zombie Economics, ideas that have been utterly refuted by the evidence of the Global Financial Crisis shamble on in an undead form. The hackery I’ve described here isn’t being produced by marginal figures like Larry Kudlow but by some of the leading lights of the “discipline”. In the end, all their expertise turns out to be nothing more than a fig-leaf for service to financial capitalism. As with evangelicals, libertarians and the Republican base as a whole, the last few years have shown that the most lurid leftwing caricatures of free-market economists have turned out to be understatements.

22 thoughts on “Hackery or heresy

  1. I found the documentary “America’s Crumbling Infra-Structure” quite interesting. It’s also worth looking at the American Society of Infrastructure Engineers “2017 Infrastructure Report Card”. They give the USA’s overall infrastructure a cumulative GPA of D+. On current spending numbers, the USA will fall about $1.5 trillion of what it should spend on infrastructure, including upgrades, by 2025. This will cost the economy about $4 trillion in lost GDP.

    It’s hardly the time to give rich-list and corporate tax cuts and boost military spending. The USA’s true deficit is its wisdom and knowledge deficit. This deficit is structurally inbuilt into a system where plutocratic and corporate money, advertising and lobbying completely control the elected representatives in Washington. The USA will crumble to the point that a change led from the bottom up must occur. The elites have lost all connection with the people and with reality.

    The interesting and frightening thing is that this predicament has occurred just before resource limits and bioservices limits manifest as limiting factors. Again, this seems to be a systemically induced. Denial and protection of status quo power and privilege seems to be greatest just before collapse and revolution. This seems to be the historical pattern.

  2. Me thinks that is because most ‘conservative’ economists in yank land see themselves as Republicans first and conservatives last.

    I would have thought any economist whether he/she is Keynesian or classical would see reducing the budget deficit as of paramount importance given the present circumstances.

  3. @may

    The private solution would be more direct. Rather than shipping them all that way and spending huge amounts of money waiting for them to die, it’d be down the corridor and into the rotating knives. With a bit of spending on PR the operator would look no worse than the US meat packing industry (which, admittedly, kills more people than our refugee one does).

  4. @I am and will always be Not Trampis

    The budget deficit is not of paramount importance. The USA’s infrastructure deficit along with its real education deficit, real health deficit, real welfare deficit and real social deficit are the items of paramount importance. Real deficits are what counts. By “real deficits”, I mean deficits in real things based on measurable metrics involving materials, energy and information as objective and verifiable knowledge.

    The budget deficit on the other hand is abstract not real. Money is an abstract unit of account. It’s only reality is in its customary use in market exchanges and its formalisation in axiomatic accounting systems. Because of financial flows and current accounting rules including national accounts and social expectations, government deficits do have to be managed within bounds. However, these bounds are wider than deficit hawks allow especially under conditions of capacity under-utilisation, unemployment and very low inflation.

    The USA would do well to address its real deficits and stretch the abstract budget deficit as far as possible in the program of addressing real deficits.

    Footnote.

    Money is a measure of relative exchange values at points in time but it is a poor measure of objective values (after going through the filter of human subjective valuation). Objective value is not difficult to define, at least on a case by case basis. To take an extreme example, tobacco still has a subjective value (to those who desire to smoke it or chew it) and thus it has a positive market value. But tobacco’s objective health value to humans is negative. The impacts on human health and on the environment (soil erosion etc.) are about the only objective values which can be found re tobacco growing and use and they are both clearly negative. Growing tobacco is also a real opportunity cost. Something more useful could be done with the land even if that land was left for nature corridors and reserves.

    From many more examples, which could be advanced, we can see that money is a very poor measure of provably objective values which would assist human (and environmental) well-being. Thus, using an abstract deficit number to tell us to stop doing objective things like addressing a dangerous and debilitating infrastructure deficit is entirely illogical. Fiat money can be printed (electronically these days) up until certain system limits relating to capacity-underutilisation, unemployment, inflation, real resources and some other limiting factors. Ultimately, only real resources can limit what we do. The limits we impose on ourselves before real limits (other than sensible precautionary principle limits regarding environmental impacts) are all ideological limits.

  5. @Moz of Yarramulla
    Or conscript them. Twenty years in an Australian version of a Foreign Legion and they automatically get Australian citizenship. Of course Australia would have to find wars to deploy them…….

  6. What surprise? After watching Van Onselen and Caroline Overington on the Drum last night I am surprised that people can still believe that rightists can tell the truth about anything.

  7. @I am and will always be Not Trampis

    Most economists are wrong. Did you read the start of J.Q.’s last paragraph?

    “The last decade or so has been pretty devastating for the idea of economics as a science or profession. As I argued in my book Zombie Economics, ideas that have been utterly refuted by the evidence of the Global Financial Crisis shamble on in an undead form.”

    Current orthodox (neoliberal) economics, its assumptions and prescriptions, was devastated by the GFC. It’s simply that these economists don’t realise that they and their ideas are intellectually dead. They shamble on in undead form. Or to change the metaphor, their intellectual activities since the GFC have been the dance of dead cats bouncing.

    Deficit hawk thinking is one of those “ideas that have been utterly refuted by the evidence of the Global Financial Crisis.”

  8. As Keynes said in 1936 you worry about a deficit when times are good not when they are tough.

    Just exactly which state do you think the USA is in now.

    Deficits do matter. The Keynesians and Classicals are on a unity ticket on this in the USA ( or here for that matter)

  9. @Ikonoclast I think you are blaming economists for a nations’ economic woes.

    It’s not often, maybe even less so, that governments follow economic advice so why blame the economists?

  10. @I am and will always be Not Trampis

    “Just exactly which state do you think the USA is in now?”

    I think the USA is in a bad state economically. Its manufacturing is in decline and moving to places like China. Its infrastructure gets a D+ grade from its own engineers. The middle class is shrinking. Wages are at their lowest in real terms for about 25 years.

    “About 15 million children in the United States – 21% of all children – live in families with incomes below the federal poverty threshold, a measurement that has been shown to underestimate the needs of families. Research shows that, on average, families need an income of about twice that level to cover basic expenses.” – National Center for Children in Poverty.

    The USA is in a mess, albeit it is declining from a high base. Significant holdover wealth remains, especially in the hands of the elites who are concentrating most remaining wealth into the hands of a very few.

    Times are bad in the USA. Hence it is time to tax the rich and to run big deficits as well.

  11. @rog

    Yes, I blame the classical and neoliberal economists for their role in the large mess which is late stage capitalism.

  12. Correction, more specifically I blame neoclassical economists. More generally, I blame orthodox economists. But as my wording, “their role”, implies, there are others who have played a role. The advertising gurus, spin doctors, propagandists and lobbyists from the days of Edward Bernays until today also deserve blame.

  13. @Ikonoclast
    Your comments simply mean a CHANGE in spending not an INCREASE in spending. The state of the US economy means at this stage of the business cycle the deficit should be a lot less. You would get more growth for a start! Crowding out anyone?>

  14. most economists of any persuasion would disagree with you.

    Trampis. You say “economists would disagree with you” and presumably you share this disagreement: what, exactly, is it that you believe you are disagreeing with?

  15. That is not an argument about reducing the deficit that is an argument about changing the direction of spending of which I agree.

  16. I am and will always be Not Trampis:
    The budget deficit does not matter when the economy is okay.
    Keynes would have begged to differ

    No, he wouldn’t have. Such mischaracterizations of Keynes’s position are very common, coming from some unlikely sources like Bill Mitchell and Jan Kregel. To quote Keynes, “take care of the employment & the budget will take care of itself.” Keynes’s overall position can only be summarized, not exhaustively described using brief quotes, but that is pretty much his core position. Spend, don’t care about deficit spending according to the principles of sound finance, and just worry about the results – employment, inflation, not some deficit or debt statistic – which is meaningful, which does matter – everything does – but very little. Debts and deficits take care of themselves if you focus on the real economy. How anyone can glance at the General Theory or many of his other works and come to any different conclusion is beyond me.

    Deficits do matter. The Keynesians and Classicals are on a unity ticket on this in the USA. Unfortunately, probably right. Just another way that today’s “Keynesians” are closer to the people Keynes argued with than to Keynes, the great apostle of deficit spending.

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