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The mainstream economic theory genuinely believed that handing out central bank securities would work just as well as, say. adjusting a UBI or normal fiscal pol

The mainstream economic theory genuinely believed that handing out central bank securities would work just as well as, say. adjusting a UBI or normal fiscal policy. Yes, it's a suspiciously convenient idiocy --- especially because they also think wealthy households spend less (even if they don't think wealthy bussinesses do something similar) --- so certainly it's not something that can be completely fixed without a fight, but that doesn't mean all trying to "fix the policy-academic consensus" is useless. For example, Republican Jerome Powell is no Pinko, but under his watch the fed has become less closed minded about that "full employment" should look like. This is good, and is precisely because that and the pandemic checks that we are seeing great bottom half wage gains (in real terms too) and increased strikes. So yes, ultimately you can't trick "the man" with new ivory tower shit, but you can at least attack the straw mans and deflections. Maybe the best theory of change is to create new pandemics so they will have to print more checks to defend the system, and eventually, one of those strike waves will be the revolution :D. (Is this conservationism? I don't think so, because it's about the system's response to a bad thing making "working class lives" better not worse.)

xibalba 5y ago
> revolution Revolutions almost always result in prolonged mass violence. Most often of the horrific, needless, and soul shattering kind. A sampling of recent revolutions: the Bolshevik Revolution, the French Revolution, Cambodian civil war/Khmer Rouge takeover, Nazi takeover of Germany, Chinese Communist Revolution, the Cuban Revolution, etc etc. I propose a new heuristic for my fellow HN'ers: if someone pines for revolution, its a very good signal that they are poorly acquainted with history or that they are a sociopath.
- Ericson2314 5y ago
  Should I do a :D and /s? I obviously don't want more pandemics and bloody revolution --- I am sure I will be the one getting guillotined, for one. The best case --- if it works --- is "non-reformist reform" as the European social democracies were planning. Some Marxists think it was doomed to fail because you can't avoid the antagonisms. I think they were merely prudish about printing money (especially Germans), and if drank more Post-Keynsian kool-aid (and let in more immigrants not as an underclass like in America), we would all be Socialist already.
  - whimsicalism 5y ago
    Immigrants are much more of an underclass in Europe than they are in America.
    - Ericson2314 5y ago
      Immigrants mainly just don't exist in Europe to the same degree. They are culturally more shat on there, but materially better off as they get more safety net, and aren't the backbone of the shitty service industry like here. Letting in immigrants while you are trying to reduce working hours is a good idea because a) moral b) you are trying to show off you have the best society, let people vote with their feat c) you still need to make investments so being able to have total working hours go up while per-capita working hours goes down is good. Especially if there is a tech/productivity lag where you don't get fully automated dank shit for a few years after you make labor scarce Letting in immigrants as beneath-the-table workers while trying to lower working hours means you get apartheid not utopia, so yeah, it's bad. The thing that makes America less bad is at least the elite likes to overwork itself for cultural reasons so the rat race is just as stupid but less unfair than it would otherwise be.
      - whimsicalism 5y ago
        Well, is it better to be let in and provided with services (what the US does) or kept out and in an impoverished country?
        Ericson2314 5y ago
        I don't know! :) The best-of-both-worlds is what I want. The first decently country to let in immigrants while reducing working hours is going to crush everyone else with a strong, more technologically- and culturally-advanced society. I am excited to see it happen. (incidentally a very vague materialist take on why the soviet union sucked is it began too underdeveloped, and in the rush to do more work they ended up too military-industrial. A lot of people say "not enough consumption" but you ought to connect it being able to let demand "pull" investment rather than centrally "push" investment. More consumer goods or less working hours are somewhat equivalent once you are (post-)industrialized.)
- whimsicalism 5y ago
  No comment on the GP, but many of the revolutions you are listing marked the end of feudalism and monarchic rule. I think it is difficult to say now that those were necessarily horrific and needless, without considering the horrors experienced daily under feudal/serf systems. Moreover, the selection of revolutions you have put together seems one-sided. It was revolution that gave people in Britain the vote, it was (at least partially) revolution that ended apartheid in South Africa and white minority rule in much of Africa writ large, etc. etc.
  - Ericson2314 5y ago
    The black plague eventually broke feudalism, and if Manchin doesn't completely cuck us Covid-19 might eventually break neoliberalism.
    - whimsicalism 5y ago
      not in eastern europe it didn't :) feudalism was ongoing when the february revolution occurred.
      - Ericson2314 5y ago
        Yes that was not suspicious material. We'll see if there is a revolution in the freed up land of the next world war's peripheral looser, whether they are more appropriately developed.
  - xibalba 5y ago
    > difficult to say now that those were necessarily horrific and needless The Khmer Rouge killed 1.5 to 2 million (or 25%!!!!) of all Cambodians. Pretty tough to argue that the deaths of 25% of any population is anything but needless and horrific, particularly when you learn about Pol Pot's insane and homicidal policies. Imagine if every 4th person you know were dead in the next 5 years because a guy had a plan to... make our lives better by ruining them indefinitely for some distant vision of Utopia. The Nazis are truly astronomical in terms of both death count and evil. They successfully created an actual hell on Earth. Stalin's regime is estimated to have killed 20 MILLION of his own people. I wonder if the murdered would say, "Yeah, but its worth it in the end because no more monarchy!" Mao's derangements are estimated to have resulted in 45 MILLION dead Chinese. That's 45,000,000. Again, I wonder if their surviving loved ones felt better off? Mom was beaten to death for being "a capitalist", but at least we don't have to worry about that darned monarchy anymore! How would you feel if your Mom was beaten to death? How would you feel if your brother or sister were summarily executed based on an accusation? What if you saw your child needlessly starve to death? These aren't just numbers. These are real human lives extinguished for political ends. Etc. Etc. Etc. Your logic is truly deranged. Revolutions are really, really, really bad for everyone, and the vulnerable, weak, and poor are not exempt. Most of them can usually just count on good old fashioned starvation in their near futures as the revolutionaries lurch from one disastrous or insane policy to the next. If they don't starve, there's a good chance the revolution will at some point purify them anyway. So, I'll point you back to my suggested heuristic.
- whakim 5y ago
  There are plenty of examples of economic revolution that were totally bloodless. For example, over a period of 10 years in the early 1900s, Sweden transformed itself from one of the most explicitly censitarian regimes that history has known (people who owned more property literally had their vote counted more times) into one of the most social-democratic regimes in Europe.
- throwaway0a5e 5y ago
  Yugoslavia deserves an honorable mention on your list.
  - Ericson2314 5y ago
    Tito is pretty dope though as these regimes go though. https://en.wikipedia.org/wiki/History_of_computer_hardware_in_Yugoslavia https://en.wikipedia.org/wiki/History_of_computer_hardware_i... is also neat.
throw0101a 5y ago
> The mainstream economic theory genuinely believed that handing out central bank securities would work just as well as, say. adjusting a UBI or normal fiscal policy. [citation needed] "Mainstream economic theory" states, AFAICT, that once the monetary side of things has done what it can, you need to proceed to Step 4, fiscal stimulus: > I would summarize the Keynesian view in terms of four points: > 1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there just isn’t enough spending. Such episodes can happen for a variety of reasons; the question is how to respond. > 2. There are normally forces that tend to push the economy back toward full employment. But they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary period of pain. > 3. It is often possible to drastically shorten this period of pain and greatly reduce the human and financial losses by “printing money”, using the central bank’s power of currency creation to push interest rates down. > 4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close to zero. In that case temporary deficit spending can provide a useful boost. And conversely, fiscal austerity in a depressed economy imposes large economic losses. * http://krugman.blogs.nytimes.com/2015/09/15/keynesianism-explained/ http://krugman.blogs.nytimes.com/2015/09/15/keynesianism-exp... * https://archive.md/O67TO https://archive.md/O67TO Can you provide a link to the "mainstream economic theory" that you are referring to that says otherwise?
- Ericson2314 5y ago
  Krugman is the best-sounding stuff of the mainstream. Since that what you brought up, I would start with https://www.crisesnotes.com/paul-krugman-functional-finance-flip-flop/ https://www.crisesnotes.com/paul-krugman-functional-finance-... . Arguable Krugman is so good about not saying terrible stupid shit, that it might come at at cost of not being internally consistent or acknowledging when his views in fact change. Krugman at least was a "New Keynsian", which is a very complicated confused thing in the way the neoclassical parts and keynesian pieces are mashed together. I mostly subscribe to the Post-Keynesian stuff, which makes a lot more sense to me, and is more embracing of the weird/humanities side of Keynes. https://vebaccount.substack.com/p/the-post-keynesian-worldview-in-five https://vebaccount.substack.com/p/the-post-keynesian-worldvi... is a good primer, and really that person's entire corpus is a gem of really good writing. For something that (at least in the last few years) is much more grounded, try http://jwmason.org/the-slack-wire/ http://jwmason.org/the-slack-wire/. Now you might say that the opposition's views of the mainstream is an unfair place to begin. To that, I say just look at the shit Larry Summers says.
whakim 5y ago
I'm not really sure that "mainstream economic theory" genuinely believes or believed that monetary policy alone is a substitute for fiscal policy (in particular, redistribution via taxation - UBIs, capital endowments, equitable investments in education, etc.). I think instead there's a willingness to handwave away all the thorny details of taxation and outsource decision-making to non-democratic institutions (i.e. central banks) rather than really tackle these sorts of challenges head on.
- Ericson2314 5y ago
  I mean, it's hard to say what the mainstream says, especially cause it's the biggest, and currently in a collapsing concensus more empiricism until the storm passes phase. But I don't think adding more caviets to the bad old stories is going to cut it. People need narratives, and if you say "supply curve up, demand curve down, many astrices" you are biasing a certain simplification when people inevitably need narratives. Really what we need to do is run more big policy experiments at the fed. The more wild policy swings there are, more more politics feels alive, and better are empiracism is. The micro empiracism today is good but barely econ. (It's sort of abstract social science do a tiny thing and then stats.) The macro empiracism is still frequently quite bad, where better data would help but clearer trends from legit experiments would help even more.
  - whakim 5y ago
    > Really what we need to do is run more big policy experiments at the fed. I totally disagree with this. Big social policy involves/requires taxation, and a robust debate around what kind of tax regime we want to have in order to support those social policy objectives. The Fed can't collect taxes, and it doesn't involve robust debate because it's not democratic.
    - Ericson2314 5y ago
      > it doesn't involve robust debate because it's not democratic. Fair. Let me step back a bit, I do agree the undemocratic fed is ultimately bad. But I also wouldn't want to subsume it to congress in today's state, because FTPT, Senate, and supermajorities are not democratic, and ensure no experiments + tiny overtone window of things where are actually. I like democracy, but the problem is democracy in its current US form (parliamentary system is better but EU constitution is fucked and causes similar problems) is best at interpolating the options that have been presented. If the democratizing happens with out expanding the "doing" overtone window, it's like 100% exploitation not exploration, and we are also kinda fucked. It's frustrating because alternative democratic methods would probably be great for experimentation. Highly ideological parliament + independent civil service + sortition for skepticism is an exciting potential brew. > Big social policy involves/requires taxation No it actually doesn't, because "potential output" barely exists and to the extent it does we are nowhere near it. We can print money, and if there is inflation we can fix bottlenecks --- like WTF why isn't the port of Los Angelis twice is big by now with tons of extra rail freight capacity? When there is no obvious benefit, and labor force participation is actually high (vs the headline unemployment rate which is widely acknowledged to be bullshit) then, and only then, do we need to worry about reducing demand across the board with taxes.
dragonwriter 5y ago
> The mainstream economic theory genuinely believed that handing out central bank securities would work just as well as, say. adjusting a UBI or normal fiscal policy. No, it didn’t. Mainstream economic theory (or even the major heterodox theories) has never held that monetary policy is a sufficient substitute for fiscal policy in general, and mainstream economists in the US (of all stripes, though they differ on what fiscal policy should be) are always complaining about Congress not taking what they see to be appropriate fiscal action and leaving the economy to the Fed and monetary policy.
- Ericson2314 5y ago
  The mainstream in the last 10 years is down with more fiscal spending in the form of investment, but that is still supply side. They are not down with "aggregate demand being structurally low, even between recessions". Also the theory has not kept up. A lot of people spout decent ideas and do decent empiracle stuff, but the theory is not reformed and opposed to those conclusions so they just ignore it. Really, the crazy Chicago people to their credit were always more honest about what the mainstream theory actually said. The saltwater people were rather two-faced in making sure they sounded less rediculous but not having an epicycle-free theory underpinning their more reasonable suggestions.

xibalba 5y ago

> revolution Revolutions almost always result in prolonged mass violence. Most often of the horrific, needless, and soul shattering kind. A sampling of recent revolutions: the Bolshevik Revolution, the French Revolution, Cambodian civil war/Khmer Rouge takeover, Nazi takeover of Germany, Chinese Communist Revolution, the Cuban Revolution, etc etc. I propose a new heuristic for my fellow HN'ers: if someone pines for revolution, its a very good signal that they are poorly acquainted with history or that they are a sociopath.

Ericson2314 5y ago
Should I do a :D and /s? I obviously don't want more pandemics and bloody revolution --- I am sure I will be the one getting guillotined, for one. The best case --- if it works --- is "non-reformist reform" as the European social democracies were planning. Some Marxists think it was doomed to fail because you can't avoid the antagonisms. I think they were merely prudish about printing money (especially Germans), and if drank more Post-Keynsian kool-aid (and let in more immigrants not as an underclass like in America), we would all be Socialist already.
- whimsicalism 5y ago
  Immigrants are much more of an underclass in Europe than they are in America.
  - Ericson2314 5y ago
    Immigrants mainly just don't exist in Europe to the same degree. They are culturally more shat on there, but materially better off as they get more safety net, and aren't the backbone of the shitty service industry like here. Letting in immigrants while you are trying to reduce working hours is a good idea because a) moral b) you are trying to show off you have the best society, let people vote with their feat c) you still need to make investments so being able to have total working hours go up while per-capita working hours goes down is good. Especially if there is a tech/productivity lag where you don't get fully automated dank shit for a few years after you make labor scarce Letting in immigrants as beneath-the-table workers while trying to lower working hours means you get apartheid not utopia, so yeah, it's bad. The thing that makes America less bad is at least the elite likes to overwork itself for cultural reasons so the rat race is just as stupid but less unfair than it would otherwise be.
    - whimsicalism 5y ago
      Well, is it better to be let in and provided with services (what the US does) or kept out and in an impoverished country?
      - Ericson2314 5y ago
        I don't know! :) The best-of-both-worlds is what I want. The first decently country to let in immigrants while reducing working hours is going to crush everyone else with a strong, more technologically- and culturally-advanced society. I am excited to see it happen. (incidentally a very vague materialist take on why the soviet union sucked is it began too underdeveloped, and in the rush to do more work they ended up too military-industrial. A lot of people say "not enough consumption" but you ought to connect it being able to let demand "pull" investment rather than centrally "push" investment. More consumer goods or less working hours are somewhat equivalent once you are (post-)industrialized.)
whimsicalism 5y ago
No comment on the GP, but many of the revolutions you are listing marked the end of feudalism and monarchic rule. I think it is difficult to say now that those were necessarily horrific and needless, without considering the horrors experienced daily under feudal/serf systems. Moreover, the selection of revolutions you have put together seems one-sided. It was revolution that gave people in Britain the vote, it was (at least partially) revolution that ended apartheid in South Africa and white minority rule in much of Africa writ large, etc. etc.
- Ericson2314 5y ago
  The black plague eventually broke feudalism, and if Manchin doesn't completely cuck us Covid-19 might eventually break neoliberalism.
  - whimsicalism 5y ago
    not in eastern europe it didn't :) feudalism was ongoing when the february revolution occurred.
    - Ericson2314 5y ago
      Yes that was not suspicious material. We'll see if there is a revolution in the freed up land of the next world war's peripheral looser, whether they are more appropriately developed.
- xibalba 5y ago
  > difficult to say now that those were necessarily horrific and needless The Khmer Rouge killed 1.5 to 2 million (or 25%!!!!) of all Cambodians. Pretty tough to argue that the deaths of 25% of any population is anything but needless and horrific, particularly when you learn about Pol Pot's insane and homicidal policies. Imagine if every 4th person you know were dead in the next 5 years because a guy had a plan to... make our lives better by ruining them indefinitely for some distant vision of Utopia. The Nazis are truly astronomical in terms of both death count and evil. They successfully created an actual hell on Earth. Stalin's regime is estimated to have killed 20 MILLION of his own people. I wonder if the murdered would say, "Yeah, but its worth it in the end because no more monarchy!" Mao's derangements are estimated to have resulted in 45 MILLION dead Chinese. That's 45,000,000. Again, I wonder if their surviving loved ones felt better off? Mom was beaten to death for being "a capitalist", but at least we don't have to worry about that darned monarchy anymore! How would you feel if your Mom was beaten to death? How would you feel if your brother or sister were summarily executed based on an accusation? What if you saw your child needlessly starve to death? These aren't just numbers. These are real human lives extinguished for political ends. Etc. Etc. Etc. Your logic is truly deranged. Revolutions are really, really, really bad for everyone, and the vulnerable, weak, and poor are not exempt. Most of them can usually just count on good old fashioned starvation in their near futures as the revolutionaries lurch from one disastrous or insane policy to the next. If they don't starve, there's a good chance the revolution will at some point purify them anyway. So, I'll point you back to my suggested heuristic.
whakim 5y ago
There are plenty of examples of economic revolution that were totally bloodless. For example, over a period of 10 years in the early 1900s, Sweden transformed itself from one of the most explicitly censitarian regimes that history has known (people who owned more property literally had their vote counted more times) into one of the most social-democratic regimes in Europe.
throwaway0a5e 5y ago
Yugoslavia deserves an honorable mention on your list.
- Ericson2314 5y ago
  Tito is pretty dope though as these regimes go though. https://en.wikipedia.org/wiki/History_of_computer_hardware_in_Yugoslavia https://en.wikipedia.org/wiki/History_of_computer_hardware_i... is also neat.

throw0101a 5y ago

> The mainstream economic theory genuinely believed that handing out central bank securities would work just as well as, say. adjusting a UBI or normal fiscal policy. [citation needed] "Mainstream economic theory" states, AFAICT, that once the monetary side of things has done what it can, you need to proceed to Step 4, fiscal stimulus: > I would summarize the Keynesian view in terms of four points: > 1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there just isn’t enough spending. Such episodes can happen for a variety of reasons; the question is how to respond. > 2. There are normally forces that tend to push the economy back toward full employment. But they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary period of pain. > 3. It is often possible to drastically shorten this period of pain and greatly reduce the human and financial losses by “printing money”, using the central bank’s power of currency creation to push interest rates down. > 4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close to zero. In that case temporary deficit spending can provide a useful boost. And conversely, fiscal austerity in a depressed economy imposes large economic losses. * http://krugman.blogs.nytimes.com/2015/09/15/keynesianism-explained/ http://krugman.blogs.nytimes.com/2015/09/15/keynesianism-exp... * https://archive.md/O67TO https://archive.md/O67TO Can you provide a link to the "mainstream economic theory" that you are referring to that says otherwise?

Ericson2314 5y ago
Krugman is the best-sounding stuff of the mainstream. Since that what you brought up, I would start with https://www.crisesnotes.com/paul-krugman-functional-finance-flip-flop/ https://www.crisesnotes.com/paul-krugman-functional-finance-... . Arguable Krugman is so good about not saying terrible stupid shit, that it might come at at cost of not being internally consistent or acknowledging when his views in fact change. Krugman at least was a "New Keynsian", which is a very complicated confused thing in the way the neoclassical parts and keynesian pieces are mashed together. I mostly subscribe to the Post-Keynesian stuff, which makes a lot more sense to me, and is more embracing of the weird/humanities side of Keynes. https://vebaccount.substack.com/p/the-post-keynesian-worldview-in-five https://vebaccount.substack.com/p/the-post-keynesian-worldvi... is a good primer, and really that person's entire corpus is a gem of really good writing. For something that (at least in the last few years) is much more grounded, try http://jwmason.org/the-slack-wire/ http://jwmason.org/the-slack-wire/. Now you might say that the opposition's views of the mainstream is an unfair place to begin. To that, I say just look at the shit Larry Summers says.

whakim 5y ago

I'm not really sure that "mainstream economic theory" genuinely believes or believed that monetary policy alone is a substitute for fiscal policy (in particular, redistribution via taxation - UBIs, capital endowments, equitable investments in education, etc.). I think instead there's a willingness to handwave away all the thorny details of taxation and outsource decision-making to non-democratic institutions (i.e. central banks) rather than really tackle these sorts of challenges head on.

Ericson2314 5y ago
I mean, it's hard to say what the mainstream says, especially cause it's the biggest, and currently in a collapsing concensus more empiricism until the storm passes phase. But I don't think adding more caviets to the bad old stories is going to cut it. People need narratives, and if you say "supply curve up, demand curve down, many astrices" you are biasing a certain simplification when people inevitably need narratives. Really what we need to do is run more big policy experiments at the fed. The more wild policy swings there are, more more politics feels alive, and better are empiracism is. The micro empiracism today is good but barely econ. (It's sort of abstract social science do a tiny thing and then stats.) The macro empiracism is still frequently quite bad, where better data would help but clearer trends from legit experiments would help even more.
- whakim 5y ago
  > Really what we need to do is run more big policy experiments at the fed. I totally disagree with this. Big social policy involves/requires taxation, and a robust debate around what kind of tax regime we want to have in order to support those social policy objectives. The Fed can't collect taxes, and it doesn't involve robust debate because it's not democratic.
  - Ericson2314 5y ago
    > it doesn't involve robust debate because it's not democratic. Fair. Let me step back a bit, I do agree the undemocratic fed is ultimately bad. But I also wouldn't want to subsume it to congress in today's state, because FTPT, Senate, and supermajorities are not democratic, and ensure no experiments + tiny overtone window of things where are actually. I like democracy, but the problem is democracy in its current US form (parliamentary system is better but EU constitution is fucked and causes similar problems) is best at interpolating the options that have been presented. If the democratizing happens with out expanding the "doing" overtone window, it's like 100% exploitation not exploration, and we are also kinda fucked. It's frustrating because alternative democratic methods would probably be great for experimentation. Highly ideological parliament + independent civil service + sortition for skepticism is an exciting potential brew. > Big social policy involves/requires taxation No it actually doesn't, because "potential output" barely exists and to the extent it does we are nowhere near it. We can print money, and if there is inflation we can fix bottlenecks --- like WTF why isn't the port of Los Angelis twice is big by now with tons of extra rail freight capacity? When there is no obvious benefit, and labor force participation is actually high (vs the headline unemployment rate which is widely acknowledged to be bullshit) then, and only then, do we need to worry about reducing demand across the board with taxes.

dragonwriter 5y ago

> The mainstream economic theory genuinely believed that handing out central bank securities would work just as well as, say. adjusting a UBI or normal fiscal policy. No, it didn’t. Mainstream economic theory (or even the major heterodox theories) has never held that monetary policy is a sufficient substitute for fiscal policy in general, and mainstream economists in the US (of all stripes, though they differ on what fiscal policy should be) are always complaining about Congress not taking what they see to be appropriate fiscal action and leaving the economy to the Fed and monetary policy.

Ericson2314 5y ago
The mainstream in the last 10 years is down with more fiscal spending in the form of investment, but that is still supply side. They are not down with "aggregate demand being structurally low, even between recessions". Also the theory has not kept up. A lot of people spout decent ideas and do decent empiracle stuff, but the theory is not reformed and opposed to those conclusions so they just ignore it. Really, the crazy Chicago people to their credit were always more honest about what the mainstream theory actually said. The saltwater people were rather two-faced in making sure they sounded less rediculous but not having an epicycle-free theory underpinning their more reasonable suggestions.