Partying like it’s 1848
from Peter Radford
This is not a time to dwell on the inconsistencies and even contradictions of the recent uprising of populism in the western world. Treat it as a fact. It just is. For there can be no mistaking the trend: people, large numbers of people, in a large swathe of Europe and America really are unhappy with their lot in life. Really unhappy. Fully 52% of Republican supporters of Donald Trump tell pollsters that they are angry with the way the country is going. Not just unhappy or disappointed, but angry. Anger leads to really bad political decision making. It is not a constituent of reasoned argument. It leads too quickly to rash thought and even to hatred.
One theme that emerges from this populist moment is the identification of immigration as a source of concern. No, not just concern, but of deep unease. People in both the UK and the US can be heard demanding that they “get their country back”. Leaders in both nations have lamentably failed to identify the importance of immigration as a lightening rod for malaise. Nor have they reacted with anything sensible as policy.
Here in America the reason most often given for the failure to deal with immigration is the gridlock in Washington. It is impossible to begin a conversation about immigration policy because the pre-existing political positions are so well laid out and well established that any talk leads immediately to a conformation of gridlock. So stasis abounds and people get more and more impatient.
The same goes for economic policy. This is what interests me most of course. The failure of economics is breath-taking.
The failure of politicians to implement anything resembling sound economic policy even more so. I think the two go hand in hand. After all we cannot blame politicians for bad policy of the economics profession itself is still utterly incapable of updating itself to take into account its terrible pre-crisis performance. Worse, the constant infighting and name calling within economics has produced the same gridlock we lament in Washington: nothing can change because people’s reputations are at stake.
Economics is well known for the hubris of its leading lights. They are not exactly shrinking violets. It takes a certain kind of arrogance to announce to the world that the profession has sufficient knowledge that the business cycle is defeated. It takes an even more peculiar sort of arrogance to say such a thing and then make no adjustment when the business cycle rages on after you have said it.
I have, rather naively as it turns out, always thought that academics were a group we could rely on to change their minds in the face of evidence. If there was one part of society we could turn to for fact-based discussion it was supposed to be academia. Apparently not. Facts be damned. The neo-religious zeal with which the Chicago School defends its evidently rotten ideas is wondrous to watch. And every time those folks mount such a defense they erode both their personal integrity and that of the profession as a whole. No wonder the fringes of economics teem with apostasy, the high churches are both wrong and too proud to yield.
I am tired of the argument. I have invested too much of my own time in trying to create a space for economics to engage in debate about its own failings. Perhaps I am being too hasty, but I do not detect enough effort to construct a better product. Yes there are all sorts of attempts being made, but the great redoubt remains unchanged. The textbooks remain full of error. The old ideas are simply being re-processed. And society is being short-changed.
Ultimately, I think, it will be the relevance of economics that is diminished.
Professional economics rose in status considerably post-war. It attained a status for professionalism and competence that in retrospect its core ideas were not capable of sustaining. Those ideas were industrial in origin. Its basic structures were derivatives of crises decades ago. Even its great score-keeping ability and its measurement of the center of its attention have become steadily less relevant to the world it seeks to interpret. GDP is a moribund concept and needs an overhaul, but a profession as divided as economics cannot undertake the task. It is too busy fighting the 1930’s wars over and over again.
Speaking of which:
One of the greatest disappointments of this populist moment is the absolutely awful response from the left in politics. I read time and time again that either Brexit or Trump signifies a “crisis in capitalism”. People on the left have been twittering on about a crisis in capitalism since Marx made it fashionable to do so. Leftists have become akin to those religious sects who repeatedly predict the apocalypse and who never change their minds when their predictions repeatedly fail. Instead of re-inventing a left of center narrative – one with a certain amount of flexibility perhaps – they wander off and yammer on about technicalities, the treachery of less-than-pure colleagues, or the apparent grip on history that the right wingers must have. After all, uncle Karl was surely right.
Well maybe in 1848. Not now. The world has moved on.
And so it goes: both sides in economics, and even the Keynesian middle, seem stuck in a time warp. Yet the march of technology, the change in demographics, the rising interconnection of societies around the world, the change in the nature and methods of business, and the need to re-evisage the nature and impact of growth have all failed to cause a radical re-interpretation of the discipline’s core ideas. They are simply assumed to be timeless and to have undiminished application no matter what happens to the economy.
The last great book on economics was by Keynes. There have been critiques aplenty since, some powerful others not so much, but no one has taken the time to sit down and re-write the core from a deep understanding of the changed world. The flood of formalized work over the past few decades has simply papered over the ever decreasing tightness of the connection between the core ideas and the economy itself. The discipline has become more and more self-referential; its advances more and more arcanely technical rather than interpretative; and its center more and more hallowed rather than open to challenge.
In many ways the entire effort smacks of the 1848 spirit. It attacks with zealous accuracy problems that are, whilst never entirely gone, less and less those we face today. It fails to update its thinking at the same pace that the economy is changing. It lives in the tenured, protected, sedate world of an academia that itself is looking less and less a model for future education. It resists change with a prodigious willpower.
Will the future care?
I don’t know.
But I do know it isn’t 1848. And I do now that the people of the western world need help if they are to avoid this populist moment engulfing the great liberty and prosperity that economics was once proud to have contributed to.