I’m paying close attention to Amazon rankings just now[1], and it’s striking that both the #1 and #2 spots in “Economics-Theory” are held by FA Hayek’s Road to Serfdom. Whatever your view of Hayek’s work in general, this is truly bizarre, and indicative of the kind of disconnection from reality going on on the political right. On the natural interpretation, shared by everyone in mainstream economics from Samuelson to Stigler, this book, which argued that the policies advocated by the British Labour Party in 1944 would lead to a totalitarian dictatorship, was a piece of misprediction comparable to Glassman and Hassett’s Dow 36000. So what is going on in the minds of the buyers? Are they crazy? Do they actually think that Hayek was proven right after all? Is there a defensible interpretation of Hayek that makes sense?
The answers are “Yes”, “Yes” and “No”. The current sales of Hayek’s book are being driven by Glenn Beck, who claims that Britain is indeed a socialist dictatorship of the kind predicted by Hayek (or was, until the recent election), and that Obama is propelling the US along the Road to Serfdom by making medical care marginally more affordable.
Until the right went completely crazy, the most common claim in support of Hayek was that his predictions had somehow been vindicated by Thatcher’s reaction against the welfare state. Leaving aside the fact that Thatcher’s remodelling of the British economy in the image of the City of London looks a lot less appealing today than it did only a few years ago, this totally misses the point of Hayek’s book. If he had wanted to argue that social democratic policies would reduce the rate of economic growth, and to throw in a bit of hyperbole, he could have called it “The Road to Destitution” or something similar. Hayek wanted to make the much stronger claim that the attempt to implement Labor’s policies would necessarily lead to a loss of personal and political freedom.
The most plausible attempt to extract a defensible claim from The Road to Serfdom is to suggest that it applied to policies of comprehensive and centralised economic planning, which might, on an extreme reading, have been imputed to the Labour Party of 1944. Fortunately, on this account, Labour saw the folly of such ideas and did not attempt to implement them. Even on this charitable account, a book warning against hypothetical policies that might have been, but weren’t, adopted in the early postwar period, and aren’t advocated by anybody nowadays, would be of fairly marginal historical interest. But, as Ed McPhail and Andrew Farrant have shown (I’ve linked to a summary since the article seems to be paywalled) this view can’t really be defended.
Depressingly, most of the rest of the “economic theory Top 20” list, including Wealth of Nations, Free to Choose and the writings of Peter Schiff, suggest that the buyers are the same people buying (if perhaps not reading) Hayek. If people actually read Smith, particularly the Moral Sentiments they might gain something, but these purchases look more like an affirmation of tribal identity than an attempt to learn something.
fn1. Zombie Economics briefly made it into the Economics-theory Top 20, but is now slipping out again.
Another meltdown at the Oz
As I’ve mentioned a few times, the Oz is extremely sensitive to blogospheric criticism. In response, its typical MO has been an unsigned editorial, or a piece by a ‘staff writer’, in which unnamed and unlinked (but easily identifiable) bloggers are castigated for their sins. Typically, the piece ends with a flourish of bravado, in which the brave, though anonymous, editorialist, backed only by the multi-billion dollar resources of News Corporation, pledges to carry on in defiance of the powerful, but unnamed, bloggers arrayed against it.
The script has been reversed, however, in the case of Grog’s Gamut, a pseudonymous political blog which made some useful contributions during the election campaign. Apparently acting under the misconception that public servants aren’t allowed to engage in political activity, Oz journalist James Massola took on himself to out the blogger concerned. He works in the film section of what was the Department of Environment, Heritage, Water and the Arts, which suggests that the potential for political activity to compromise his public service role is, shall we say, limited.
There are still some decent journalists working for the Oz, but the paper itself is a sad joke. On the other hand, as Steve Hind observes, the downmarket spiral of the Age and SMH (at least in their online versions) means that there is not much competition.
Conference like its 1999
A long time ago, I read an article whose author had read through all the leading economics journals from the 1930s. The striking finding was that only a tiny proportion of the articles published in those years concerned the Depression and what to do about it. This struck me as a disastrous state of affairs, and has been one factor in pushing me to comment on the important issues of the day, rather than to a narrow specialisation.
But, having attended the Australian Conference of Economists for the last couple of days, I have to say that a future historian of economic thought will be able to rewrite much the same article about the current crisis. Only a handful of papers presented at the conference have dealt with the crisis, even indirectly, and most of those have concluded that we only need marginal adjustments to our current way of doing things.
The opening plenary session, for example, was on inflation targeting and the main message was that, all things considered, inflation targeting worked pretty well in the Global Financial Crisis. Some tweaks might be needed in the future, but then again they might not. This was the same conclusion as at the Reserve Bank 60th Anniversary meeting earlier this year, and I find it pretty hard to believe.
About the best I can say is that, against this background, my Zombie Economics book stands out.
Monday Message Board (on Tuesday)
It’s time (past time in fact), once again, for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpit, please.
Appearances
Sydney readers get a couple of chances to hear me say in person what I write here. I’ll be speaking at the Australian Conference of Economists, at Darling Harbour Dockside, Monday morning on Zombie Economics. Also, the following Sunday at the Festival of Dangerous Ideas at the Opera House.
Sandpit 25/9
A new sandpit, the place for off-topic rants and lengthy one-on-one debates no-one else can really follow, because they missed the crucial contradiction between comment #347 and comment #186. Seriously, that kind of extended comments-thread debate is part of blogging, and I wouldn’t like to lose it. But, so far, confining it to the sandpit seems to be working pretty well.
Weekend reflections
It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. In keeping with my attempts to open up the comments to new contributors , I’d like to redirect discussion, as opposed to substantive new contributions, to the sandpit. As always, civilised discussion and no coarse language please.
The text and the book
I’ve been living with the text of Zombie Economics for a long time and the cover art came out a while back. But now I finally have my hands on a physical copy of the book, and it’s surprising what a difference the real object makes. My immediate reaction was to open it with dread, sure that some terrible error would jump out at me, but that didn’t happen (no doubt the reviewers will find them, but that’s their job).
With that out of the road, I’ve been filled with irrational confidence. “Surely”, I think, “even the most jaded traveller, passing this book on the airport bookstall, will feel impelled to buy it”. No doubt, this optimistic glow won’t survive the arrival of actual sales figures, but I’m enjoying it while it lasts.
Universities and stratification
One of the big themes in the debate over university education has been that we should have a more differentiated system, rather than a ‘one-size fits all’ solution. This view is shared by market-oriented reformers and by some traditionalists, who look back nostalgically to the days when each state had one university, catering to a small elite, while the rest went to tech, or teachers college or (for the majority) the school of hard knocks. In the idealised view, universities would compete with diverse offerings, and the informed market choices of consumers (18-year olds and their parents) would produce an ideal outcome.
In reality, the quasi-market policies that have been dominant for the last couple of decades have reduced diversity on all dimensions except one. Before the reforms that began in the 1980s, the tertiary sector included many different types of institutions (unis, CAES, institutes of technology and TAFE), and the 1970-vintage universities consciously sought to provide an innovative alternative to the long-established sandstones. Now, there are just universities and TAFE. Policies encouraging universities to nominate “flagship” programs produced the unsurprising (but apparently unexpected) result that everyone went for MBAs and no-one for pure mathematics. Responsiveness to consumer demand produced plenty of courses in cinema studies and very few in classics. And so on. There are still some attempts at doing things differently, such as the “Melbourne model”, but overall the pattern is one of identical responses to identical incentives.
On the other hand, the reforms have amplified long-standing inequalities in wealth and status between universities. Despite the rhetoric of competition, the relative rankings of Australian universities were determined more than 100 years ago, when the sandstone universities were established, followed by the precursors of the “Dawkins universities”. The reforms did not shake these rankings, but they widened the gap between the sandstones and the 1970-vintage unis – before the reforms, a university was a university, and status differences were much less important.
Exercise again
I can’t bring myself to post about the latest manoeuvring for numbers in the Parliament, and nothing much is going to happen on policy until that’s all resolved. So, since exercise seems to be one of the topics in which nearly everyone is interested (and there are lots of other blogs devoted to the topic on which *everyone* is interested), I thought I would expand on my last post. That post made it seem as if I’m focused on running, but actually I try for a more diverse portfolio
* Group training, three or four times a week
* Running, 5k or so, twice a week, mostly on treadmill or soft surfaces. I was running further and on hard surfaces but cut back when I started getting knee pain
* Cycling, 20-30km, once or twice a week, plus riding into work intermittently
* Swimming, 500m-1K, two or three times a week
That seems to be enough to keep my muscles a bit sore most of the time, but to avoid obvious injury to my joints. Following some problems a few months ago, I’ve been getting some useful advice from my physiotherapist and a sports podiatrist on how to avoid knee injuries from running.
John Quiggin 