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I believe it's not really "rethink" as if we had once figured it out correctly in the past already. We are still actually thinking it for the first time, specia
by caiobegotti 6y ago
I believe it's not really "rethink" as if we had once figured it out correctly in the past already. We are still actually thinking it for the first time, specially if you consider economists and policy makers were yet looking for "something new" (mentioned in the article) in macroeconomics during the last, what, 50 years? It's all pretty new, which suggests to me that it is all in a pretty extremist and radicalized state: it doesn't have to be 100% trickle down reaganomics or 100% state interventionism exclusively. I'm very confident a major crisis like this one will make key people finally realize that a mix of free global markets + welfare states focused on reducing inequality + democratic institutions will be the answer to many macroeconomics problems. Very few countries have realized this, the rest of the world meanwhile will keep shouting at each other doubling down on stupid policies not based in good examples and will keep blaming keynesianism or whatever neoliberal approach they can't understand.
- thewarrior 6y agoThere are powerful forces whose giant profits would be threatened by such a consensus. It’s hard to say if it will actually happen.
- Retric 6y agoA great deal of political thought and practice is centered around promoting personal benefit. While it might look dumb for someone promoting free markets to also support farm subsidies etc, the spoken justifications have little to do with the actual decision making process. Convincing people who don’t benefit from your policies to still support them is simply how the game is won.
- nickff 6y agoFarm subsidies are wildly popular with voters, both in farm states and non-farm states, and there is not much advertising/public lobbying for them. They are an example of a voter-driven policy, not a special interest group's successful lobby.[1] [1] https://en.wikipedia.org/wiki/The_Myth_of_the_Rational_Voter https://en.wikipedia.org/wiki/The_Myth_of_the_Rational_Voter
- Retric 6y agoI think you missed my point. Convincing people who don’t benefit from your policies to still support them is simply how the game is won. In the US farmers don’t need to expend significant political capital maintaining farm subsidies. It still comes up from time to time, but nowhere near as much as you would think given the economic and heath costs of such policies.
- nickff 6y agoMy point was that in the case of farm subsidies, it doesn't take any convincing; the people believe these are necessary to maintain an adequate supply of food, and they also happen to think supporting farmers is a good cause. As a rule-of-thumb, the bills that everyone signs/votes for very publicly (with ceremonies and such) are actually vote-winners, steel tarriffs are another good example. Voters hold many mercantilist and nationalist beliefs (on both sides of the aisle), and policies largely reflect these, not some propaganda-driven special interests.
- Retric 6y agoNow sure, but farm subsidies was a battle fought before you where born. In 1800 such a large percentage of the population was farming that the idea of farm subsidies would have come off as silly. Going back further the idea of say landed nobility in Europe and not the US is such an old fight it became a cultural institution.
- nickff 6y agoWell, the corn laws (of the UK) were a form of farm subsidy (actually a tariff against imports), enacted in about 1815, and repealed in 1846 in the face of opposition from factory workers. The market for agricultural goods has seen increasing subsidy/barriers to trade since the First World War, the sharpest change likely being during the Great Depression.
- Retric 6y ago
- voisin 6y ago> I'm very confident a major crisis like this one will make key people finally realize that a mix of free global markets + welfare states focused on reducing inequality + democratic institutions will be the answer to many macroeconomics problems. Like the Scandinavian countries, which also have the highest reported rates of happiness in the world. Why, at the government level, do we not look at best practices worldwide?
- SaltyLemonZest 6y agoIt's hard to identify which practices are responsible for which outcomes. Suppose you wanted to combine the high happiness rate of Denmark with the low crime rate of Japan; how would you figure out which are the policies you need to accomplish that?
- caiobegotti 6y agoWe can surely agree that cheap wide good education has to be one of the policies necessary for that, yet it's quite ignored even in some rich countries.
- voisin 6y agoI agree. There are many practices common to countries reporting high levels of happiness that Americans (And certainly other western nations) ignore seemingly on principle.
- jmaygarden 6y agoHow should the United States address this issue given that it is usually in the top 5 with spending on public education per student every year?
- take_a_breath 6y agoWe would have to analyze the actual distribution of that spend. When this is done, we see wealthier places have higher spending per capita because public schools in the US are funded primarily by property taxes.
- ericmcer 6y agoThey have already tried your strategy. Economists thought free global markets would lead to liberalization in other governments. That has proved to be utterly untrue with China and as a result they have become the worlds manufacturing hub, while becoming more and more totalitarian. Production wise, an economy that is not concerned with democratic institutions or reducing inequality will outperform one that is. With that in mind, globalization is basically a race to the bottom human rights wise.
- claudeganon 6y agoI’m not sure how much economists believed this as they were materially incentivized to parrot this logic. Most of economics is just laundering the interests of the ruling class with spurious math and heuristics that are unmoored from political and social realities.
- nickff 6y agoYour first point is correct, but your second point is not. Bruce Bueno de Mesquita demonstrated this in "The Logic of Political Survival", and others have come to similar findings. Briefly, rising incomes under a non-democratic regime lead to a local maximum of growth, as totalitarianism is inextricably linked with economically inefficient institutions. As an autocrat, your top priority is to compensate those who keep you in power, which requires wealth extraction from the productive; this disincentivises efficient production. Unfortunately, nothing about rising wealth will necessarily lead to regime liberalization. "Reducing inequality" is very different from democracy, and would probably lead to reduced economic efficiency, as it necessarily reduces the incentives for efficient production.
- paulpauper 6y agoThe US is going down the route of mixed socialism--more stimulus and bailout programs, plus private ownership and massive wealth creation. You have tens of millions of Americans getting a soft form of UBI, which benefits privately massive companies such as Walmart and Amazon. it is a form of the government picking winners and losers, the losers being small and medium-sized businesses and the winners being these huge big box and tech companies.
- chillacy 6y agoI've always thought that in the absence of regulation, pure market forces will always favor power conglomerating into few large entities just due to efficiency at scale. Is the absence of enforced regulation (anti-trust, different tax treatments) still the same as actively picking winners and losers?
- eli_gottlieb 6y ago>free global markets + welfare states focused on reducing inequality + democratic institutions The first of these is incompatible with the latter two.