$57,077.60, Surging by the Minute (Jo Comerford)

Tom Engelhart’s last post of the year over at TomDispatch, is In Nightmares Begin Responsibilities: Why War Will Take No Holiday in 2010. It’s a great one! Here’s a tidbit:

In Afghanistan, here’s what we know. The president is surging at least 30,000 troops into that country, reportedly accompanied by a surge of up to 56,000 private contractors, and an extra crew of civilian employees of the U.S. government as well. What initially was announced as a six-month surge is now expected to last 11-12 months (if things “line up perfectly,” according to the general in charge). That means the surge itself will probably still be underway next November. Fittingly, then, the Obama administration has made it clear that it won’t even consider beginning what Secretary of Defense Robert Gates has called a “thorough review of how we’re doing” in Afghanistan until December 2010, a process that, based on the last set of presidential deliberations, could last months. Put another way, war in the present escalated form is simply what’s on the books for 2010. Period.

Moreover, U.S. Ambassador Karl Eikenberry recently assured Afghans that July 2011, the date the president mentioned for beginning a withdrawal of American forces, is not “a deadline” of any sort. According to Thomas Day of the McClatchy newspapers, he insisted, in fact, “that a strong American military presence will remain in Afghanistan long after July 2011.”

Read the full post.

And from a few days ago at TomDispatch, an excellent account of the cost of the surge in Afghanistan, by Jo Comerford. Here’s Tom’s introduction:

A remarkable “lesson” in the economics of surging in Afghanistan, the costs of the president’s escalation as you’ve never seen them before: Jo Comerford, “$57,077.60, Surging by the Minute” http://www.tomdispatch.com/archive/175179/

Were you curious as to just what it will cost American taxpayers per minute to get those 30,000-plus extra surge troops dispatched by President Obama into Afghanistan? The answer, writes Jo Comerford, TomDispatch regular and executive director of the National Priorities Project is: $57,077.60 — based on the (low-ball) figure of $30 billion overall that the president offered in his West Point speech.

Want to know what that $30 billion could do on the domestic front? “According to a recent report issued by the Political Economy Research Institute, that sum could generate a whopping 537,810 construction jobs, 541,080 positions in healthcare, fund 742,740 teachers or employ 831,390 mass transit workers.”

Or what if the president only sent in 29,900 troops? For the cost of that extra 100, the amount of money — $100 million — the State Department has allocated to assist refugees and returnees from Afghanistan through its Bureau of Population, Refugees and Migration could be doubled.

As Comerford points out, however, in this unique little “lesson” in the economics and politics of Afghan War Costs 101, that $30 billion is just a drop in the bucket when it comes to what may turn out to be a trillion dollar war in Afghanistan. (Right now, in fact, the combined cost of the Iraq and Afghan Wars is approaching the trillion dollar mark.)

She concludes: “At just under one-third of the 2010 U.S. federal budget, $1 trillion essentially defies per-hour-per-soldier calculations. It dwarfs all other nations’ military spending, let alone their spending on war. It makes a mockery of food stamps and schools. To make sense of this cost, we need to leave civilian life behind entirely and turn to another war. We have to reach back to the Vietnam War, which in today’s dollars cost $709.9 billion — or $300 billion less than the total cost of the two wars we’re still fighting, with no end in sight, or even $300 billion less than the long war we may yet fight in Afghanistan.”

This is a unique piece that makes a different sense of the war in Afghanistan. Don’t miss it.

Read Jo Comerford’s post at TomDispatch.

Krugman vs. Hudson on Samuelson

I was alerted by this post on Naked Capitalism to a back-and-forth between Paul Krugman and Michael Hudson on Paul Samuelson.

It started when, on Dec. 14th, the day after Samuelson died, Counterpunch re-published a paper by Michael Hudson from back in 1970, shortly after Samuelson was awarded the recently-established Nobel Prize in Economics. Here’s a tidbit:

This is only the second year in which the Economics prize has been awarded, and the first time it has been granted to a single individual—Paul Samuelson—described in the words of a jubilant New York Times editorial as “the world’s greatest pure economic theorist.” And yet the body of doctrine that Samuelson espouses is one of the major reasons why economics students enrolled in the nation’s colleges have been declining in number. For they are, I am glad to say, appalled at the irrelevant nature of the discipline as it is now taught, impatient with its inability to describe the problems which plague the world in which they live, and increasingly resentful of its explaining away the most apparent problems which first attracted them to the subject.

The trouble with the Nobel Award is not so much its choice of man (although I shall have more to say later as to the implications of the choice of Samuelson), but its designation of economics as a scientific field worthy of receiving a Nobel prize at all. In the prize committee’s words, Mr. Samuelson received the award for the “scientific work through which he has developed static and dynamic economic theory and actively contributed to raising the level of analysis in economic science. . . .”

What is the nature of this science? Can it be “scientific” to promulgate theories that do not describe economic reality as it unfolds in its historical context, and which lead to economic imbalance when applied? Is economics really an applied science at all? Of course it is implemented in practice, but with a noteworthy lack of success in recent years on the part of all the major economic schools, from the post-Keynesians to the monetarists.

In Mr. Samuelson’s case, for example, the trade policy that follows from his theoretical doctrines is laissez faire. That this doctrine has been adopted by most of the western world is obvious. That it has benefited the developed nations is also apparent. However, its usefulness to less developed countries is doubtful, for underlying it is a permanent justification of the status quo: let things alone and everything will (tend to) come to “equilibrium.” Unfortunately, this concept of equilibrium is probably the most perverse idea plaguing economics today, and it is just this concept that Mr. Samuelson has done so much to popularize. For it is all too often overlooked that when someone falls fiat on his face he is “in equilibrium” just as much as when he is standing upright. Poverty as well as wealth represents an equilibrium position. Everything that exists represents, however fleetingly, some equilibrium—that is, some balance or product—of forces.

Krugman responded to Hudson on his NYT blog. (As one commenter (“attempter”) on Naked Capitalism pointed out, Krugman doesn’t even mention Hudson by name: “Krugman couldn’t even bring himself to write Hudson’s name, but just linked to the anonymous post. (Of course K is always very respectful of anyone properly ensconsed in the Establishment, even where he disagrees with them.) Quite the contrast with his protests over how he and others who were correct on Iraq remain marginalized on that subject.”) Here is all of Krugman’s post:

A number of people are linking to this reprinted critique of the work of the late Paul Samuelson. I could point out that the critique thoroughly misunderstands what Samuelson was saying about international trade, factor prices, and all that. But there is, I think, an interesting point to be made if we start from this complaint:
Can it be “scientific” to promulgate theories that do not describe economic reality as it unfolds in its historical context, and which lead to economic imbalance when applied?

Actually, there was a time when many people thought that institutional economics, which was very much focused on historical context, the complexity of human behavior, and all that, would be the wave of the future. So why didn’t that happen? Why did the model-builders, led by Samuelson, take over instead?

The answer, in a word, was the Great Depression.

Faced with the Depression, institutional economics turned out to have very little to offer, except to say that it was a complex phenomenon with deep historical roots, and surely there was no easy answer. Meanwhile, model-oriented economists turned quickly to Keynes—who was very much a builder of little models. And what they said was, “This is a failure of effective demand. You can cure it by pushing this button.” The fiscal expansion of World War II, although not intended as a Keynesian policy, proved them right.

So Samuelson-type economics didn’t win because of its power to cloud men’s minds. It won because in the greatest economic crisis in history, it had something useful to say.

In the decades that followed, economists themselves forgot this history; today’s equation-mongers, for the most part, have no idea how much they owe to the Keynesian revolution. But in terms of shaping economics, it was the Depression that did it.

L. Randall Wray of the University of Missouri at Kansas City (where Hudson teaches, along with lots of other great heterodox economists, responded on behalf of Hudson at the UMKC econ blog. Wray says that Krugman’s claim that “Samuelson-type economics” won the day because it had something useful to say in response to the Depression is “bizarre, to say the least,” and he gives six reasons for thinking so. Here are the first four:

First, Roosevelt’s New Deal was in place before Keynes published his General Theory, and it was mostly formulated by the American institutional economists that Krugman claims to have been clueless. (There certainly were clueless economists—those following the neoclassical approach, traced to English “political economy”.)

Second, it was Alvin Hansen, not Paul Samuelson, who brought Keynesian ideas to America. And Hansen retained the more radical ideas (such as the tendency to stagnation) that Samuelson dropped. Further, Hansen was—surprise, surprise—working within the institutionalist tradition (as documented by in a book by Perry Mehrling).

Third, many other institutionalists also adopted Keynesian ideas in their work—before Samuelson’s simplistic mathematization swamped the discipline. For example, Dudley Dillard—a well-known institutionalist—wrote the first accessible interpretation of Keynes in 1948; Kenneth Boulding’s 1950 Reconstruction of Economics served as the basis for four editions of his Principles book—on which a generation of American economists was trained (again, before Samuelson’s text took over). It is in almost every respect superior to Samuelson’s text. I encourage Professor Krugman to take a look.

Fourth, Hyman Minsky (who first trained with institutionalists at the University of Chicago—before it became a bastion of monetarist thought) took Samuelson’s overly simplistic multiplier-accelerator approach and extended it with institutional ceilings and floors. He quickly grew tired of the constraints placed on theory by Samuelsonian mathematics and moved on to develop his Financial Instability Hypothesis (which Krugman has a
dmitted he finds interesting, even if he does not fully comprehend it). I ask you, how many analysts have turned to Samuelson’s work to try to understand the current crisis—versus the number of times Minsky’s work has been invoked?

Read the rest of the post.

And last but not least, here’s Michael Hudson’s response to Krugman, also at the UMKC econ blog.