Now is a time for economic populist specifics -- let's see if we hear any of that from Obama -- but, even more so, 'radical' economic thinking. One thing that needs to take place is a re-examination of the basic thrust of an at-present failed profession, economics ('the pro-deregulation ideology'), and its result, present-day economic policy. Here's some, from a couple of discussions last year at tpmcafe (and no, imho, the upside-down and 'one-side of a phone conversation' aspects don't compromise the understandability):
Neo-classical engineering would believe that the perfect bridge is one built under gravity-free conditions. Engineers would strive, always and foremost, to persuade policymakers to move the real world closer to that perfect, gravity-free world.
And what's wrong with that?! (snark)
Posted at June 1, 2007 10:07 AM in response to The Methodology or The People
Or we need to accept -- based on the overwhelming predominance of an oligopolistic economic real world -- that everyone will not play fair, and then regulate the resultant oligopolies intelligently.
To "make sure everyone plays fair" should not be the purpose of government. Instead, governments should regulate the economy in order to produce the best economic outcomes based on the values expressed by the people who elect those governments.
For example, economic security is often associated with economies that are predominantly oligopolies/oligopsonies well-regulated to ameliorate some of the counter-productive features of such economic arrangements. If economic security is a high priority for the citizenry, and I think it is, then economic policy should favor less competitively 'cut-throat' economic arrangements in favor of smartly regulated oligopolies/oligopsonies.
Posted at June 1, 2007 9:59 AM in response to The Methodology or The People
... economic theory works well when choices are available to the participants in the marketplace, and breaks down or at least becomes chaotic in either monopolistic or monopsonic conditions.
(By economic theory, I'll assume you mean neo-classical economic theory.) Monopoly and monopsony (and oligopoly and oligopsony) have long been well-studied 'breakdowns' of the simplistic neo-classical system. Since these phenomena are the norm in nearly all markets, any sincere Econ 1A class would make mono/oli 'breakdowns' a major feature of a slightly less-than-basic economic model. This was in fact the case back in the good ol' days of the 1970s.
You know, funny thing about the real world: when we had the ATT monopoly many hundreds of thousands of communications workers had a strong union, job security, good wages and good pensions. That is no longer the case for most similar workers today. Perhaps we need to re-evaluate monopolies and oligopolies, and how they may be good for the economy if they are properly regulated, compared to the entirely predictable alternatives. And perhaps we should admit that real world motivations will naturally and inevitably create oligopolistic and monopolistic industrial arrangements, and that real world economic policy should think about making the best of such arrangements instead of fighting them and doing great economic damage.
Posted at June 1, 2007 9:47 AM in response to The Methodology or The People
I think you missed my point. The perfectly competitive economic model is absurd, and I think we agree it has very little to do with the real world. So it's frustrating to see you arguing with it, even now. I hate to see your fine mind wasted debating with schizophrenics in an insane asylum, but that is apparently what 'mainstream' neoclassical economics forces people in the field to do, endlessly and without making any headway. It will not advance economic thinking for the real world in order to 'argue' with the crazy idea of perfectly competitive markets.
(About 'efficient': one person's efficiency is another person's inefficiency. Perhaps you meant 'economic efficiency'.)
I hope you can see in the crazy but very important context of currently dominant economic thinking how the reality of economic history can be helpful. Of course history is not a research laboratory or a mathematical equation, but it is quite clear on the relative prosperity of the pre-and-post Friedman-ite economics eras. I'll take that, and if I were a policymaker or politician I'd favor the policies that 'seemed' to be working during that prosperous era. (These included, importantly, 'infant industries' strategies, 'incomes' policies, and restricting the export of domestic capital).
As you know, the deregulatory argument when Friedman's economic thinking came to dominate policy has been that deregulation makes the economy more competitive, pushes it toward that 'perfect' econ 1A model. Of course this was not true, deregulation often makes the economy less competitive, and frequently such policies advance and entrench 'natural' monopoly and oligopoly. But it is utterly counterproductive to answer that argument with a search for alternative ways to advance us toward the perfect competition model. I think that is where you may be stuck.
Instead of still attempting unrealistically to advance reality toward a simplistic model of unknown real world effects, why not simply advocate economic policy that has seemed -- using real economic measures of real economies -- to work in the past? And if construction of models and theories is your orientation, then form theory around the facts of post-war history rather than the baby talk of Econ 1A.
Posted at June 1, 2007 9:08 AM in response to It's Different for Lefties and Righties
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