An Undergraduate’s Question about Economic Policy

By Thomas Palley

Cross-posted from the author’s blog.  Note: for a primer on neoliberalism, see our two-part article by David Kotz (here). 

I received an e-mail from an undergraduate economics student who was curious about economic policy in Washington, DC. His question says a lot about the current state of affairs. Here it is with my reply.

From: Xxxxxxx Xxxxxxx []
Sent: Saturday, October 1, 2016 10:56 AM
To: mail
Subject: Question from an undergraduate
Dear Dr. Palley,
I am a first-year undergraduate in economics and political theory, and a longtime admirer of your work.
What are your thoughts on how Keynesian/Post-Keynesian ideas are treated in current political discourse?

I was in Washington D.C. recently and I had conversation with a Brookings fellow who told me that he thought Joseph Stiglitz was an “extremist who isn’t taken seriously by anyone who knows their way around the Beltway.”

Does it worry you that ideas which used to be considered “mainstream” (like social democracy) are now increasingly considered “extreme”?
Deeply grateful for your time and attention
Xxxxxxx Xxxxxxx

From: Thomas Palley []
Sent: Saturday, October 1, 2016 3:59 PM
To: ‘Xxxxxxx Xxxxxxx’
Subject: RE: Question from an undergraduate

Dear Xxxxxxx,

Thanks for your e-mail.

I am saddened (but not surprised) to hear Joe Stiglitz described in that way. And yes, I worry that ideas which used to be “mainstream” are now considered “extreme”.

Economics, like all social thought, is a contested space. Neoliberals have an interest in controlling economics since control helps them advance their political and economic project by helping them sell their policy ideas.

Brookings is a core neoliberal institution in Washington DC, so it does not surprise me that a Brookings fellow would describe Stiglitz as an extremist. That is how neoliberals perceive him, and it is also a way they try to discredit him.

In my view they are profoundly wrong. Our challenge is to open space (in the academy and public discourse) for all ideas (including neoliberal ideas) that make passable sense of the economy. After that comes political debate about which ideas we will believe and be guided by. That is the function of politics, and different political parties will be guided by different economic ideas.

Neoliberals try to close down the space of political debate and social possibility by excluding all except neoliberal ideas. The tragedy of the past forty years is they have been succeeding. In the academy there is a neoclassical monopoly, and in politics Labor and Social Democratic parties have been captured by the Trojan horse of the Third Way, creating a neoliberal political monopoly.

Reversing this state of affairs is a massive challenge. The academy is a club that will refuse to include those who disagree, and politics has been significantly captured by the one percent owing to the importance of money in politics. That is a toxic combination: the academy delegitimizes ideas opposed to neoliberalism, while the neoliberal political monopoly blocks alternative ideas getting on to the political table.

This noose has been tightening for years, but the inequality and stagnation that neoliberalism has produced is generating a political backlash from below. That is a hopeful opportunity, but it is also dangerous because backlashes are unpredictable and can go horribly wrong.

Lastly, I am a great fan of the student movement for change in economics. Their case is right. However, I fear the club of academic economists will either belittle the students, ignore them, or deceptively disarm them by appointing milquetoast critical economists who produce “gattopardo” change (i.e. change that keeps things the same).

Best wishes with your studies,
Tom Palley

Tuesday Links: TPP, Corbyn, Sanders, etc.

Off Guardian (embedded above), Tony Benn speech on the aims of Thatcherite policies.  Via Gaius Publius, via Naked Capitalism, where they are calling it Tony Benn’s “Ten-Minute History of Neoliberalism.” I found it moving, especially his remarks about Thatcher’s demonization of the miners, and that he’d concluded that these fights have to be re-fought each generation. (More on miners below.)


Gaius Publius, What Sanders Can Accomplish by Not ActingThe blogger known as Gaius Publius (the blog is “Down With Tyranny”) has had a series of posts in support of Bernie Sanders that have been picked up at Naked Capitalism. I don’t like the fact that Sanders is running as a Democrat, and I’m sympathetic with the argument (made well by Margaret Kimberley of Black Agenda Report in this Counterpunch podcast interview) that Sanders will thereby be acting as a “sheepdog” bringing left-ish Democrats into the fold and eventually to vote for Hillary or whoever the nominee is).  But I liked this post, which suggests that Bernie could get some traction by promising not to do a bunch of things that Obama has done: push for horrible “trade” deals like the TPP; aim for dismantling or privatizing Social Security; extend tax breaks for the rich; etc. etc. And GP asks us to think of all the time activists wouldn’t then have to spend fighting such efforts.  Our columnist Jerry Friedman will have an “Economy in Numbers” piece in our Nov/Dec issue about Sanders’ economic policies.

Social Europe, Jeremy Corbyn’s Speech On The EU ReferendumMore sensible talk from the new Labour Party leader.  Attempts in the UK press to undermine Corbyn reached a low when the Sunday Express had this dire report (via HuffPo Uk): Jeremy Corbyn’s Great Great Grandfather Mismanaged A Victorian Workhouse, Sunday Express Claims.  Bernie Sanders doesn’t have it so bad; here the New York Times annoyed Bernie fans with an online piece about the few times Bernie had been mentioned in the Times before he was a public figure, starting with coming in 15th in a high school running race (1956: Bernie Sanders, Running Hard).  Besides the triviality and condescension, the original version of the article had young Bernie coming in dead last, when in fact he was just the last among those ranked to get their names in the paper; his time was apparently pretty good.

Lambert Strether, Naked Capitalism, TPP: It’s Not a Deal, It’s Not a Trade Deal, and It’s Not a Done DealHat-tip TM.  I hope he’s right that this can be turned back; he is definitely right that the done-ness of the deal has been wildly over-reported. See also: Joseph Stiglitz and Adam Hersh, The Trans-Pacific Free-Trade Charade;  Robert Reich video, The Problem with TPP Explained in Two Minutes; and our own John Miller’s piece from our July/August issue, The Trans-Pacific Partnership: Corporate Power Unbound.

Bitch Media, Four Things the Government Should Defund Instead of Planned Parenthood. Including “crisis pregnancy centers,” which get funding in at least eleven states.

Washington Post, How Elizabeth Warren picked a fight with Brookings — and won;  Reuters, Brookings fellow resigns after Senator Warren accuses him of conflicts:  Warren criticized a Brookings affiliate, Robert Litan, for writing a white paper against the Labor Dept.’s proposed fiduciary rule, which would require personal investment advisors to act in their clients’ interests; the guy hadn’t disclosed the finance industry funding he’d gotten for the study. As reported a while back at Naked Capitalism (Congressional Black Caucus Still Trying to Hurt Their Constituents By Killing the Labor Department Fiduciary Rule) and in Mother Jones (The Congressional Black Caucus and the Financial Lobby: BFFs), members of the Congressional Black Caucus have been opposing the fiduciary rule, for some reason. I guess for campaign money, but it’s still pretty shocking. Their argument is that less-well-off Black people will have less access to financial advice if the rule goes through–but why should they want advice that is compromised?

The Independent (Ireland): Imagine this: Sweden moves towards a standard 6-hour working day and The Independent (UK): Sweden introduces six-hour workday.  This supposedly makes workers more efficient (but whatever reason they need to give themselves…).  Hat-tip D&S reader Katharine R.

Center for Public Integrity, Johns Hopkins terminates black lung program: This was a unit of the Johns Hopkins Hospital that, in collusion with coal companies, repeatedly failed to diagnose miners with black lung disease, preventing them from getting disability.  Appears to be a result of an expose by the Center for Public Integrity and ABC News, Breathless and Burdened. Will heads roll?

Too Much online, The Real Secrets to Grand Fortune: Sam Pizzigati interviews Sam Wilkin, author of Wealth Secrets of the One Percent: A Modern Manual to Getting Marvelously, Obscenely Rich, which ingeniously parodies get-rich self-help books as a way of explaining how, via monopoly and intellectual property protection (among other tricks) the super-rich really got their wealth.  I ordered the book.