Sunday, March 31, 2019

Week-end Wrap - Political Economy - March 30, 2019

Week-end Wrap - Political Economy - March 30, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Strategic Political Economy

[Vox, via Naked Capitalism 3-29-19]
The most puzzling critiques have come not from Republicans, but from the center left, broadly speaking. They urge policies to reduce greenhouse gases that are perfectly commensurate with the GND framework ... but present them as alternatives to the GND framework. (We’ll look at some examples later.) 
The connecting theme, the message, sometimes implicit and sometimes explicit, is this: move more slowly. Accept piecemeal progress rather than a big thing. Don’t push beyond strict carbon policy into social or economic policy.... 
The only way Democrats can hope to pass any legislation — not big legislation, any legislation — is by radically shaking up the status quo balance of powers. That would mean getting rid of the filibuster, possibly granting statehood to Washington, DC, and Puerto Rico, reforming the electoral college and voting laws, and possibly expanding the Supreme Court. 
Every piece of that reform agenda is big, risky, and unlikely to succeed, and at the end of it there would still be an enormous struggle over climate legislation (even getting 51 Democratic senators to be bold is a challenge). If you were in Vegas, you’d bet against any of this happening. 
But let’s be clear: The alternative is not small, sensible, bipartisan steps, as so many pundits and pols are promising. The alternative is nothing. And on climate change, nothing means disaster. Those who would ask us to resign ourselves to disaster should, at the very least, frankly acknowledge the implications. 
Incrementalism only works with willing partners on the other side, and there are none. (Emphasis in original)
This last is exactly what Brad DeLong said in an interview at the end of February: A Clinton-era centrist Democrat explains why it’s time to give democratic socialists a chance:
We were certainly wrong, 100 percent, on the politics. Barack Obama rolls into office with Mitt Romney’s health care policy, with John McCain’s climate policy, with Bill Clinton’s tax policy, and George H.W. Bush’s foreign policy. He’s all these things not because the technocrats in his administration think they’re the best possible policies, but because [White House adviser] David Axelrod and company say they poll well. 
And [Chief of Staff] Rahm Emanuel and company say we’ve got to build bridges to the Republicans. We’ve got to let Republicans amend cap and trade up the wazoo, we’ve got to let Republicans amend the [Affordable Care Act] up the wazoo before it comes up to a final vote, we’ve got to tread very lightly with finance on Dodd-Frank, we have to do a very premature pivot away from recession recovery to “entitlement reform.”
All of these with the idea that you would then collect a broad political coalition behind what is, indeed, Mitt Romney’s health care policy and John McCain’s climate policy and George H.W. Bush’s foreign policy. 
And did George H.W. Bush, did Mitt Romney, did John McCain say a single good word about anything Barack Obama ever did over the course of eight solid years?
No, they fucking did not. No allegiance to truth on anything other than the belief that John Boehner, Paul Ryan, and Mitch McConnell are the leaders of the Republican Party, and since they’ve decided on scorched earth, we’re to back them to the hilt. So the politics were completely wrong, and we saw this starting back in the Clinton administration. 
Today, there’s literally nobody on the right between those frantically accommodating Donald Trump, on the one hand, and us on the other.
Is this the end of the American century?
Adam Tooze [London Review of Books 4-4-19]
By the 1980s the Republican Party was an uneasy coalition between a free-market, pro-business elite and a xenophobic working and lower-middle-class base. This was always a fragile arrangement, held together by rampant nationalism and a suspicion of big government. It was able to govern in large part owing to the willingness of Democratic Party centrists to help with the heavy lifting. The Nafta free-trade agreement between the US, Mexico and Canada was initiated by George H.W. Bush, but carried over the line in 1993 by Bill Clinton, against the opposition of the American labour movement. It was Clinton’s administration that righted the fiscal ship after the deficit excesses of the Reagan era, only for the budget to be blown back into deficit by the wars and tax cuts of the George W. Bush administration....
Re: The Green New Deal: First, Shoot the Economists
CounterPunch 3-29-19 [via Jon Larson]
Not content with having acted as apologists for rapidly accumulating environmental crises, economists are now coming out of the woodwork to give their advice on the limitations of any transition program. In the first, the claim is that ‘we’ can’t afford one. In the second, it is that even if we could afford such a program, it would cause inflation. Both assertions proceed from the premise that Western capitalism is a neutral basis from which to proceed....
The affordability argument is a canard: capitalists have already absconded with the “profits” that make a Green New Deal necessary. These profits are either equal to or greater than the cost of cleaning up the environmental mess they created, or the totality of profits is less than their cost in terms of environmental destruction. In the prior, the Green New Deal is affordable. Capitalists have already proven it is by putting its costs in their own pockets. In the latter, three centuries of capitalist production have been a net loser once environmental costs are considered.

Thursday, March 28, 2019

Economics as Cultural Warfare: The Case of Adam Smith

Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.—John Maynard Keynes

For over a century now, professional economists have taught that the ideas on which the USA economy was built were those of Adam Smith.

I am going to debunk that, and I expect it will cause some people to freak out. For some reason there are many educated people in USA who take it as a personal affront to attack Adam Smith. It's not that hard to understand—they have had "successful" (read: well remunerated) professional careers based on the fundamentals they were "taught" (read: indoctrinated with) in collage. Adam Smith as the Brahma of modern "scientific" economics is one of those fundamentals.  So allow me to begin by presenting what one of the recognized giants of professional economics thought about Adam Smith.

Joseph Schumpeter, one of the most influential economists of the twentieth century, in his last book (which was never finished) History of Economic Analysis (pdf), conceded the importance of Smith's work, while also eviscerating it (pages 171-184). Schumpeter basically damned Smith's actual ideas with faint praise, while acknowledging that Smith obtained enormous influence as a peddler of specific economic doctrines. Much like Milton Friedman and his neoliberal Freedom to Choose of our current national nightmare.

Schumpeter begins his evaluation of Smith by noting that Sir James Steuart's An Inquiry into the Principles of Political Economy (1767) had "more originality and deeper thought than does the Wealth of Nations." So, why do we remember Smith today, and not Steuart? Schumpeter concluded that Steuart "was never much of a success in England," as a result of the elite disfavor Steuart faced for being a Jacobite adherent of restoring the Catholic Stuarts to the throne of the United Kingdom. In fact, Steuart was forced to live in exile from 1745 to 1763.

Schumpeter then noted that Adam Smith's greatest contemporaneous academic achievement was not Wealth of Nations, but A Dissertation on the Origin of Languages, which was appended to the 1767 third edition of the Theory of Moral Sentiments. "Moreover," wrote Schumpeter, "Smith’s philosophy of riches and of economic activity is there and not in the Wealth of Nations.... the Wealth of Nations contained no really novel ideas and... it cannot rank with Newton’s Principia or Darwin’s Origin as an intellectual achievement..."

Schumpeter concluded that Adam Smith's undeniable success in Great Britain was due to English elites' favor for "the policies he advocated—free trade, laissez-faire, colonial policy, and so on." In other words, Adam Smith was crowned with success for being a prominent apologist for the exploitative brutality of the British empire: was Adam Smith’s good fortune that he was thoroughly in sympathy with the humors of his time. He advocated the things that were in the offing, and he made his analysis serve them. Needless to insist on what this meant both for performance and success: where would the Wealth of Nations be without free trade and laissez-faire? Also, the ‘unfeeling’ or ‘slothful’ landlords who reap where they have not sown, the employers whose every meeting issues in conspiracy, the merchants who enjoy themselves and let their clerks and accountants do the work, and the poor laborers who support the rest of society in luxury—these are all important parts of the show. It has been held that A.Smith, far ahead of his time, braved unpopularity by giving expression to his social sympathies. This is not so. His sincerity I do not for a moment call into question. But those views were not unpopular. They were in fashion. 
In fact, as Smith biographer Salim Rushid details, Adam Smith very carefully and deliberately went about currying favor with Scottish and English ruling elites. Rushid writes"
Smith’s involvement in politics was neither marginal nor ineffective. Strange as it may sound, in today’s parlance he would have been called “street-smart.” He was considered a good judge of what would sell.... Despite the radicalism of his personal sympathies, Smith tailored his views and his life to be acceptable to the established order. There is little surprise in finding that this cultivation bore fruit and that Smith’s ideas proved serviceable in the defense of conservatism.
Elsewhere, Rushid writes, that during his time "Adam Smith was not hailed as a new prophet except by some few, but very influential, persons such as Lord Shelburne and William Pitt." Adam Smith was merely a paid apologist for the ruin and misery Great Britain imposed on millions of colonial people in Ireland, Africa, China, India, and elsewhere. As Philippine economic historian Erle Frayne Argonza wrote in September 2008:
To continue on the theme of laissez faire, a doctrine started by the French physiocrats and systematized further by the Scots, let it be known that the principle of ‘free trade’ generated by physiocracy was largely a doctrinal defense of slave trade....  Adam Smith was an ‘intellectual prostitute’ whose services were procured by the British East India Company, precisely for the purpose of crafting in theoretical form the ‘free trade’ doctrine that was to justify, though subtly, the slave trade of that historic juncture. 
Schumpeter also very briefly, and very significantly, noted "that which I cannot help considering relevant, not for his pure economics of course, but all the more for his understanding of human nature—that no woman, excepting his mother, ever played a role in his existence..." In 2012, Katrine Marçal, lead editorial writer for the Swedish newspaper Aftonbladet,  published Who Cooked Adam Smith’s Dinner? (English translation: Pegasus Books, 2016), based on one of the most famous sentences in Wealth of Nations: "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." One reviewer, Ed Walker,  Assistant Attorney General of Tennessee for consumer protection and securities, explained how the question posed by Marçal devastated Adam Smith's economic ideas, and all systems of economics based on them.
But the butcher, the brewer and the baker did not cook for Smith. That job went to his mother, Margaret Douglas, later joined by his cousin, Jane Dauglas. These women took care of Smith’s household until they died. Smith never mentions their labor. 
Marçal explores the impact of Smith’s omission on the study of economics. One thread is the feminist story: much of the crucial work of care is provided through benevolence, not for money, and so is not considered part of the economy or part of the field studied by economists. Marçal points out that when an economist marries his housekeeper, the GDP goes down. 
Smith’s omission makes it possible to make “markets” the center of the study of economics. Eventually theorists dreamed up the silly story of Homo Economicus with his rational calculation of individual advantage as the essential human characteristic. We identify that rationality as masculine as opposed to feminine in the context of male-centered history and culture. In feminist terms, homo economicus is ungendered and dominant; women are the other in every way. 
Instead of this stunted theory, Marçal shows that the economy isn’t just about the production of things for the market. A huge part of the work of any society is care for one another. We care for children, for the aged, the sick, the abandoned, the orphan and the widow, those injured in war and those injured in mind. We care for our planet, our air, our parks and our public spaces, our cities, our lakes and rivers. Much of that care has nothing to do with markets. We do it solely out of benevolence, in direct contradiction to Smith. 
If economists are ignoring the importance of care in the functioning of an economy, what are they doing? They tell us that they study the allocation of scarce resources.... Care for the vulnerable must not involve a scarce resource under this definition, probably because everyone blithely assumes that women will do it for free, and there are plenty of women. Importantly, care isn’t controlled by the demands of efficiency. If the baby cries, what does it even mean to talk about efficiency? We do whatever it takes and for as long as it takes. So taking care of each other is excluded from the study of [Smithian] economics from the outset....
Pick up almost any introductory economics textbook today, and you will find, somewhere near the beginning, a sentence like this: "Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people." (Economics, by Samuelson and Nordhaus, 18th edition, 2005)

But the great contribution of the industrial revolution, was the overcoming of scarcity, including of food, clothing, and shelter. One of the few economists to ignore the Smithian focus on scarcity is Thorstein Veblen, who recognized the essential difference between business—which focused on making profits and accumulating wealth—and industry—which focused on making products and marshaling resources and machine capacity to do so. Business, Veblen observed, most often involves the predatory characteristics of "pecuniary culture": chicanery, deceit, and fraud. By contrast, industry requires both an individual instinct of workmanship, and a high level of social cooperation and collective action. Moreover, Veblen noted, the need for collective cooperation in industry mitigated the predatory characteristics of finance and business inculcated into individuals.

Veblen noted that, rather than scarcity, the major problem faced by modern industrial society was overproduction. In The Engineers and the Price System (B. W. Huebsch, 1921), Veblen wrote:
Without some salutary restraint in the way of sabotage on the productive use of the available industrial plant and workmen it is altogether unlikely that prices could be maintained at a reasonably profitable figure for any appreciable time. A businesslike control of the rate and volume of output is indispensable for keeping up a profitable market and a profitable market is the first and unremitting condition of prosperity in any community whose industry is owned and managed by business men. And the ways and means of this necessary control of the output of industry are always and necessarily something in the nature of sabotage; something in the way of retardation, restriction, withdrawal, unemployment, of plant and workmen, whereby production is kept short of productive capacity. The mechanical industry of the new order is inordinately productive. So the rate and volume of output have to be regulated with a view to what the traffic will bear; that is to say, what will yield the largest net return in terms of price to the business men who manage the country's industrial system. Otherwise there will be overproduction, business depression, and consequent hard times all around. Overproduction means production in excess of what the market will carry off at a sufficiently profitable price. (pp 7-8)
Adam Smith's ideas placed no value on industry, and it is therefore no real surprise that in those countries where Smith's ideas came to dominate—such as USA and United Kingdom in the 1980s—entire national economies were deindustrialized, the working class destroyed, and the financial systems allowed to be reshaped and dominated by waves of dirty money, transforming them into  crimonegnic environments.

Adam Smith was the voice of the British establishment and the newly minted British commercial oligarchy which vehemently opposed the idea that the United States should attempt to be anything other than producers and suppliers of basic agricultural commodities. According to Smith and his fellow apologists for British imperialism, any attempt to foster the growth of manufacturing industries and thus establish America’s economic independence from the powers and princes of Europe, was “unnatural”: a violation of the established order of Nature—and therefore a sinful exercise in economic inefficiency and waste of resources. The foremost manifestation of this "established order" in Smith's political economy was equilibrium—which remains a key concept of mainstream economics today, revealing the profession's refusal to repudiate its heritage of British imperial economic theory.

In Book II, Chapter V of Wealth of Nations, Smith wrote:
It has been the principal cause of the rapid progress of our American colonies towards wealth and greatness that almost their whole capitals have hitherto been employed in agriculture. They have no manufactures [and] The greater part both of the exportation and coasting trade of America is carried on by the capitals of merchants who reside in Great Britain.... Were the Americans, either by combination or by any other sort of violence, to stop the importation of European manufactures, and, by thus giving a monopoly to such of their own countrymen as could manufacture the like goods, divert any considerable part of their capital into this employment, they would retard instead of accelerating the further increase in the value of their annual produce, and would obstruct instead of promoting the progress of their country towards real wealth and greatness.
In other words, the British oligarchs, speaking through Smith, were declaring they could tolerate their former Atlantic colonies achieving political independence, so long as North America remained in economic bondage to Britain. This stratagem of economic warfare was the basis for Lord Sheffield's 1783 Observations on the Commerce of the American States, and was exposed by Thomas Paine in A Supernumerary Crisis II. It was also repudiated by Assistant Secretary of the Treasury Tench Coxe in A brief examination of Lord Sheffield's Observations on the commerce of the United States (M. Carey, 1791). 

The historical record of what was actually taught in USA as political economy in the nineteenth century, shows that Adam Smith was rejected in favor of economic doctrines developed indigenously by Americans, especially in Pennsylvania and the northeast.  In Origins of Academic Economics in the United States (Columbia University Press, 1944), Michael J.L. O’Connor notes that the first American edition of Smith’s Wealth of Nations did not appear until some years after the American Revolution. Jefferson termed it the best book on political economy in 1790, but by 1810 Jefferson was more impressed with the work of the Frenchmen Antoine Destutt de Tracy (who coined the term "ideology") and Jean B. Say.  A third edition of Smith was published in Hartford in 1818. O’Conner observes that 53 years then passed before another edition was published in the United States. (Though O’Conner postulates that what demand there was in the US was met “by the numerous cheap foreign editions.”)

O’Conner found that in the late 1830s and afterwards, the most popular “principal text” used to teach economics in the USA was Elements of Political Economy, by  Francis Wayland, pastor of Boston's First Baptist Church and later president of Brown University. While American publishers ignored Adam Smith entirely, editions of Wayland were published in 1837, 1838 (New York); 1840, 1841, 1843, 1846, 1848, 1849, 1850, 1851, 1852, 1853, 1854,1855, 1856, 1858, 1859, 1860, 1867, 1868, 1869, 1873  (Boston); and 1875 (New York). In 1878, Presbyterian minister Aaron L. Chapin, founder and president of Beloit College (the oldest continuously operated college in Wisconsin) extensively revised Wayland, and this new edition was published in 1878, 1879, 1880, 1882, 1883, 1884, 1885, and 1906. (O’Conner, page 174)

By comparison, O’Conner noted, after the Hartford 1818 edition, another edition of Adam Smith was not published until 1871.

In his article "Francis Wayland's 1830s Textbooks: Evangelical Ethics and Political Economy," (Journal of the History of Economic Thought, 2002), Donald E. Frey wrote, "A comparison of book sales to college enrollments suggests that Wayland's Political Economy served a greater proportion of the market of its day than Paul Samuelson's Economics did between 1948-1980."

In the excellent and highly readable study of Abraham Lincoln’s economic beliefs (Lincoln and the Economics of the American Dream, Memphis State University Press, 1978), Gabor Boritt noted that Lincoln’s Springfield law partner, William Herndon, recalled that Lincoln read Henry C. Carey and Francis Wayland (Elements of Political Economy). No mention was made of Adam Smith. As Boritt observed, “It is remarkable that in 1886 his former partner still remembered Lincoln’s special liking for this by then rather forgotten book.” (p122) 

Simply put, Adam Smith was a factotum for the British oligarchy, and as such, was fundamentally hostile to the United States and its grand experiment in self-government and republicanism. This marks the cultural conflict with the continuing existence of monarchy and oligarchy in Britain. 

In 1834, there was published in Boston a little book entitled Tracts on Sundry Topics of Political Economy, written by Oliver Putnam, a sickly but wealthy merchant of Newburyport, Massachusetts. To preserve his health, Putnam retired in his thirties, but busied himself with an intense study of political economy. Putnam's ideas were informed by his travels throughout the U.S. and Europe, travels he had undertaken in search of a cure for his ailments. The second part of the book is entitled "Observations on Smith's Wealth of Nations," and I venture to assert they were typical of American views of Smith, and British political economy in general, in the mid-1800s. 
In the following remarks, the writer's aim has been briefly to expose the fallacy... of doctrines, which, he conceives, are of tendency injurious to the welfare of his country. Adam Smith has founded a school in political economy... too plausible in the defence and too zealous in the advancement of their favorite theory, not to have gained a host of proselytes. What influence they may obtain abroad, is of little consequence to us; or certain it is, rather, that the more influence they do exert in Europe, the better they will promote the interests of America. But it is time for us to be vigilant and circumspect, when men and men of letters among us, who deservedly possess great credit in the public mind, profess themselves emulous to pin their faith on the infallibility of Adam Smith. When this becomes apparent, it is evidently time to exhibit the proofs of his fallibility, and of the pernicious effects arising from injudicious application of his theories to practice. . . . 
As Americans, also, we are all bound to take exception to his illiberal reflections on the dispute, which led to the revolutionary war, and on our causes of complaint against the mother country.— We have not been sufficiently awake to the mischievous effects of introducing many English writings into our seminaries of education, and of giving credence to their authors on subjects of political economy and politics. —It is a truism to say that our institutions are radically different from the English. Ours are throughout republican, theirs are substantially monarchical. Theirs are the oft-changed remnants of feudal barbarism; ours are a great political invention, which undergoes its first trial in this country.—And yet we have Blackstone and Paley for our text books in politics, who, whatever may be their excellencies on other accounts, are certainly the bigoted advocates, the courtly apologists, of whatever, in the system of the British government, is corrupt in itself, and most adverse to the genius and principles of our own government.
And so also we take Smith as our magnus Apollo in political economy, the basis of whose theory is, that the country gentlemen, that is, the landed aristocracy, of Britain, are the only class for whose benefit government is instituted, laws enacted, or who deserve the regard of the statesman, and that all the other productive classes, the mechanical, the manufacturing, the mercantile, are a set of sharpers, who have been constantly engaged, ever since the Conquest, in a conspiracy to defraud the simple, innocent, and defenceless country gentlemen, and to impoverish and ruin the country. These are strong terms, but they are not stronger than the text warrants. . . Surely it is not for our interest to allow the opinions of our national enemy to acquire a kind of prescriptive authority in the country.—It is not for our interest to place the writings of our national enemy in the hands of our youth, and thus administer, ourselves, poisoned aliment to the lips of the rising generation. 
...Adam Smith... takes pains to ridicule our colonial legislatures as little knots of factious rebels... he sneers at the high minded men, who composed our continental congress, as being upstart shopkeepers and attorneys, animated only with the little pride of becoming provincial dukes and marquises... he stigmatises, with the grossest terms of opprobrium, the master spirits of seventy-six, Washington and Adams, Franklin and Jefferson and their compeers, whose glorious names are and will be the watchword of millions, who shall never dream of the learned Glasgow sage's existence. Americans may not be apprised of these things; but they ought to be, ere they determine to repose implicit reliance upon the opinions of Adam Smith. 
The opinions of Adam Smith on this subject, are introduced here, not for the purpose of refuting them, for they do not deserve so much attention; but only to hold them up to the reprobation and indignation of an insulted people. 
Let it be holden in remembrance then, that, in treating of colonies, he traduces, in good set phrases, the whole American people. 
If not Adam Smith, then whose ideas provided the basis of the new USA economy?

The USA economy was built on the ideas of Alexander Hamilton, the first Secretary of the Treasury. Hamilton had served on Washington's headquarters staff during the Revolutionary War, and the historical evidence indicates that Washington came to consider Hamilton almost like a son. Much of Washington's wartime and presidential correspondence was drafted by Hamilton for Washington's signature. During Washington's presidency, Hamilton acted much like a prime minister, being involved in a number of administration details beyond his duties as Treasury Secretary.  For example, Washington's Farewell Address was largely written by Hamilton. In the 1879 book, The Life of Albert Gallatin, a biography of the fourth, and longest serving Treasury Secretary, Henry Adams wrote:
In governments, as in households, he who holds the purse holds the power. The Treasury is the natural point of control to be occupied by any statesman who aims at organization or reform, and conversely no organization or reform is likely to succeed that does not begin with and is not guided by the Treasury.... The vigor and capacity of Hamilton’s mind are seen at their best not in his organization of the Treasury Department, which was a task within the powers of a moderate intellect... The true ground of Hamilton’s great reputation is to be found in the mass and variety of legislation and organization which characterized the first Administration of Washington, and which were permeated and controlled by Hamilton’s spirit. That this work was not wholly his own is of small consequence. Whoever did it was acting under his leadership, was guided consciously or unconsciously by his influence, was inspired by the activity which centred in his department, and sooner or later the work was subject to his approval. The results—legislative and administrative—were stupendous and can never be repeated. A government is organized once for all, and until that of the United States fairly goes to pieces no man can do more than alter or improve the work accomplished by Hamilton and his party.
Hamilton's design for a national economy is thoroughly explained in the series of reports he submitted to Congress in 1790 and 1791:
In addition, Hamilton wrote a report for President Washington on the Constitutionality of the National Bank, dated February 15, 1791. Taken together these six are the foundational documents of the USA economy. And they largely repudiate the economic ideas of Adam Smith, especially the Report on Manufactures.

In European Origins of the Economic Ideas of Alexander Hamilton (Arno Press, New York, 1977), Robert James Parks argues that the Report on Manufactures
...demonstrates even more conclusively that [Hamilton] was not Smith’s disciple…. Careful analysis of Hamilton’s Report reveals basic conflicts with Smith so deep that Hamilton had to dedicate a major portion of his Report to attacking the validity of Smith’s system for American use…. From the beginning Hamilton disagreed with Smith over the logical course for America to follow in her economic development.
In his Report on Manufactures, Hamilton paraphrased, then refuted, four major arguments Smith made in favor of free trade and laissez faire.  If Hamilton had not succeeded in establishing a new national economy which included an activist role for government, it is likely the United States would never have emerged as a single, unified superpower, but probably would have broken up over a number of issues and crises which threatened the Union—even before the Civil War. It should also be noted that today conservatives and neo-liberals use Hamilton's paraphrasing of Adam Smith, not Hamilton's arguments refuting Smith, to promote the falsehood that the USA economy is based on the ideas of Adam Smith. The fact is that Hamilton paraphrased Smith not to agree with Smith, but to refute him.

First was Smith’s argument that agriculture provided higher returns to capital, because the puny efforts of man are assisted and magnified by the biological power of nature. (Smith, Wealth of Nations, ed. Edwin Cannan, Modern Library, New York, 1937, pp. 345, 639-641.) Hamilton merely pointed out that the art and skill applied by artisans, craftsmen, and workers to manufacturing activities often created much more value than the simple labor of man and nature in agriculture. Moreover, Hamilton pointed out, the aid of nature is widely applied to manufacturing activities through the use of water power. Hamilton also noted that the application of the power of nature to agriculture was seasonal, and occasioned periodic unemployment, while manufacturing remained steady all year round. (Parks, pp 123 ff.)

Second was Smith’s argument that agriculture yields revenue which manufacturing does not, namely, rent. (Wealth of Nations, p 345.) It should be noted here that political economists, in the century after Smith and Hamilton, would greatly refine and change the concept of economic rent. With that proviso, Parks explains that
Smith regarded rent as the surplus remaining from the labor of nature after the returns to man and capital had been deducted. Hamilton’s analysis used Smith’s division of returns into the profits on stock (capital) and rent to attack him. He reclassified land as a form of stock, argued that it earned profits, and held Smith's distinction as merely a verbal one. (Parks, pp 126-127.)
At first glance, you might wonder if this point is significant, or just a splitting of hairs. But arguing that land was as much a malleable "stock" as other factors of production, strikes at the heart of the British Smith-Malthus-Ricardo school which held that land was a fixed and finite resource, which could only be abandoned when its fertility was exhausted. In America's Protectionist Takeoff 1815-1914: The Neglected American School of Political Economy (ISLET, 2010), Michael Hudson includes a fascinating chapter on the origins of the US Department of Agriculture. Pro-slavery Democrats in the 1840s and 1840s resisted the introduction and dissemination of the breakthroughs in agricultural chemistry and soil science made by European scientists Justus von Liebig, Albrecht Thaer, and John Bennet Lawes. The very basis of soil science destroyed the Ricardo-Malthus model of diminishing returns which underlay British free trade doctrine. American System economists instead argued that industrialization—promoted by an activist national government—would create a home market for agricultural products: the "forge and anvil" would take their place next to the "farm and plow," "putting the consumer by the side of the producer" and cutting out the middlemen in the British system who enriched themselves by trading and transporting goods around the British Empire but added nothing of real value.

Hamilton's repudiation of Smith's argument that land was the primary source of wealth was essential for the creation of a new system of economics. This new system made zero-sum economics obsolete. Smith's economics were still shackled to feudal conceptions of wealth and property: a nation's stock of wealth is based on its land and the slaves and serfs who worked it, and whatever mass of precious metals and debentures it had accumulated. Growth of national wealth could only be achieved by 1) seizing other lands and peoples and imposing colonial status on them. or 2) gaining an advantage, usually unfair, over other countries in international trade. Smith wrote: "The colony of a civilized nation, which takes possession, either of a waste country, or of one so thinly inhabited, that the natives easily give place to new settlers, advances more rapidly to wealth and greatness than any other human society." (Wealth of Nations (Oxford, 1976), II, 564)

Under Hamilton's economics, national wealth becomes primarily based on the scientific and technological achievements of a nation's people, and the consequent improvements in their ability to use machinery to increase the productive power of labor. Thus, Hamilton argued that Smith failed to account for the full value of the output of manufacturing:
The Artificer may be regarded as composed of three parts; one by which the provisions for his subsistence and the materials for his work are purchased of the farmer, one by which he supplies himself with manufactured necessaries, and a third which constitutes the profit on the Stock employed. The two last portions seem to have been overlooked in the system [of Smith], which represents manufacturing industry as barren and unproductive.
Not content to just explain how Adam Smith was incorrect to believe agriculture was inherently more productive than manufacturing, Hamilton also observed that the advantages of manufacturing would be squandered under a policy of free trade, since
manufacturing pursuits are susceptible in a greater degree of the application of machinery, than those of Agriculture... all the difference is lost to a community, which, instead of manufacturing for itself, procures the fabrics requisite to its supply from other Countries. The substitution of foreign for domestic manufactures is a transfer to foreign nations of the advantages accruing from the employment of Machinery, in the modes in which it is capable of being employed, with most utility and to the greatest extent.
Third was Smith’s argument for free trade, and its basis in the ideas that 1) nations were “naturally” specialized to produce only certain commodities and goods, and 2) nations would gain more economic benefit by focusing only on what they specialized in, and trading for what they did not. Smith wrote,
To give the monopoly of the home market to the produce of domestic industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or a hurtful regulation.... The industry of the country, therefore, is thus turned away from a more to a less advantageous employment, and the exchangeable value of its annual produce, instead of being increased, according to the intention of the lawgiver, must necessarily be diminished by every such regulation.  (Wealth of Nations, Vol. I, Book IV, Chapter II, 421-422)
Adam Smith believed and argued that America, with its vast and amazingly fertile unsettled lands, should specialize in agriculture and purchase all needed manufactured goods from overseas. Hamilton dismissed this idea as valid only in theory. The plain reality, Hamilton argued, was that the nations of Europe simply did not follow Smith’s theoretical principles of free trade, but continued to apply mercantilist policies of favoring and protecting certain economic interests. Hamilton stated emphatically that given the trade restrictions imposed by European nations, and their lack of reciprocity, it would be suicide, not just folly, for the United States to attempt to practice free trade.

Parks notes that this argument by Hamilton in 1791, is a repeat of the arguments Hamilton put forward his February, 1775 Revolutionary pamphlet, The Farmer Refuted. Parks also notes that within two years (1793), Thomas Jefferson, as Secretary of State, had swung around to a similar position on foreign trade. (Jefferson, Report on the Privileges and Restrictions on the Commerce of the United States in Foreign CountriesDecember 1793.) Jefferson's presidency would later founder on his abandonment of a realistic Hamiltonian approach to foreign trade, and his attempt to bludgeon France and England into a reverse form of reciprocity: trade restrictions, and finally an all-out embargo.

The fourth point Hamilton refuted in the Report on Manufactures, was Smith’s parroting of the physiocratic doctrine that industry should be neither encouraged nor discouraged to seek its most useful and profitable employment. This is based on the idea of a "natural" equilibrium in the economy, Smith's famous "invisible hand."
....every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it... he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. (Wealth of Nations, Vol. I, Book IV, Chapter II, 421)
Hamilton was laying the foundations for building a new nation, and his plan rejected Smith's "natural development" and instead deliberately and consciously promoted the nation's agriculture, science, industry, technology, commerce, and transportation. Hamilton lays out his vision for an active role by the national government in promoting technological and economic progress:
The remaining objections to a particular encouragement of manufactures in the United States now require to be examined. 
One of these turns on the proposition, that Industry, if left to itself, will naturally find its way to the most useful and profitable employment: whence it is inferred, that manufactures without the aid of government will grow up as soon and as fast, as the natural state of things and the interest of the community may require....
Experience teaches, that men are often so much governed by what they are accustomed to see and practice, that the simplest and most obvious improvements, in the [most] ordinary occupations, are adopted with hesitation, reluctance and by slow gradations. The spontaneous transition to new pursuits, in a community long habituated to different ones, may be expected to be attended with proportionably greater difficulty. When former occupations ceased to yield a profit adequate to the subsistence of their followers, or when there was an absolute deficiency of employment in them, owing to the superabundance of hands, changes would ensue; but these changes would be likely to be more tardy than might consist with the interest either of individuals or of the Society. In many cases they would not happen, while a bare support could be ensured by an adherence to ancient courses; though a resort to a more profitable employment might be practicable. To produce the desireable changes, as early as may be expedient, may therefore require the incitement and patronage of government.

The apprehension of failing in new attempts is perhaps a more serious impediment. There are dispositions apt to be attracted by the mere novelty of an undertaking—but these are not always those best calculated to give it success. To this, it is of importance that the confidence of cautious sagacious capitalists both citizens and foreigners, should be excited. And to inspire this description of persons [TW: artificers, inventors, manufacturers, industrialists] with confidence, it is essential, that they should be made to see in any project, which is new, and for that reason alone, if, for no other, precarious, the prospect of such a degree of countenance and support from government, as may be capable of overcoming the obstacles, inseperable from first experiments.
We have here a very important, even, crucial, point: that the free enterprise system under laissez faire is actually not that innovative and entrepreneurial without the support and nurturing of government. 
The left usually misses this crucial point of what Hamilton designed. Rather than the Marxist model of the means of production determining the political superstructure, what actually happens under Hamilton's system is government support for new science and technology creates new means of production. The machine tools and machining techniques developed at the Springfield Armory after the War of 1812, became the basis for the manufacture of interchangeable parts, laying the foundation for industrial mass production. In 1843, Congress directly funded Samuel B. Morris's development opf the telegraph. Just before and during the Civil War, it was Navy research that introduced the science of thermodynamics to steam engine design. In the 1930s, the Bonneville Power Authority and the Tennessee Valley Authority promoted rural electrification. Computers come entirely out of the USA government research during World War Two to create calculating machines for artillery and naval gunfire ballistics, cryptography and code breaking, flight simulation, the physics calculations of the Manhattan Project, and more. All the underlying technologies of today's cell phone and smart phones were originally developed in government research programs. The three major developments in aerodynamics of the post war-period -- the area rule, supercritical wings, and winglets -- were developed by a government scientist named Richard Whitcomb using the wind tunnels at the NASA Langley Research Center.

In his 1973 book, The Foundations of American Economic Freedom: Government and Enterprise in the Age of Washington (University of Minnesota Press, 1973), E. A. J. Johnson writes: the Hamiltonian program, government played a central role; as a consequence, Hamilton's basic doctrines were much more closely related to those of Malachy Postlethwayt and Sir James Steuart than the atomistic theory of Adam Smith. Like Postlethwayt, Hamilton was convinced that national economic vitality demanded planning on the part of businessmen, and like Steuart, he felt certain that such planning could not be systematic and truly purposeful unless it was coordinated by statesmen.
There are a thousand hacking at the branches of evil for one who strikes at the root.”—Henry David Thoreau. 

My intent is to strike at the root. 

Sunday, March 24, 2019

Week-end Wrap - Political Economy - March 23, 2019

Week-end Wrap - Political Economy - March 23, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Economies Adding the Most to Global Growth in 2019
Barry Ritholtz [The Big Picture  3-19-19]

'Full-Time Freelance' Is Just the Industry Standard
[Splinter News 3-14-19]
On Monday, David Tamarkin, the site editor at Epicurious, a Condé Nast food publication, tweeted out a job posting for an editorial assistant. The position, Tamarkin wrote, was “full-time freelance,” meaning the person filling the job would work 40 hours a week and perform the duties of a full-time employee. After two days of online outrage and backlash, including users virtuously snitch-tagging the New York State Department of Labor, Tamarkin tweeted on Wednesday that the position would indeed be eligible for benefits.

Sunday, March 17, 2019

Week-end Wrap - Political Economy - March 16, 2019

Week-end Wrap - Political Economy - March 16, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Strategic Political Economy

How Swedes and Norwegians Broke the Power of the ‘1 Percent’
[Films for Action, via Naked Capitalism 3-14-19]
By 1935, Norway was on the brink. The Conservative-led government was losing legitimacy daily; the 1 percent became increasingly desperate as militancy grew among workers and farmers. A complete overthrow might be just a couple years away, radical workers thought. However, the misery of the poor became more urgent daily, and the Labor Party felt increasing pressure from its members to alleviate their suffering, which it could do only if it took charge of the government in a compromise agreement with the other side. 
This it did. In a compromise that allowed owners to retain the right to own and manage their firms, Labor in 1935 took the reins of government in coalition with the Agrarian Party. They expanded the economy and started public works projects to head toward a policy of full employment that became the keystone of Norwegian economic policy. Labor’s success and the continued militancy of workers enabled steady inroads against the privileges of the 1 percent, to the point that majority ownership of all large firms was taken by the public interest. (There is an entry on this case as well at the Global Nonviolent Action Database.) 
The 1 percent thereby lost its historic power to dominate the economy and society. Not until three decades later could the Conservatives return to a governing coalition, having by then accepted the new rules of the game, including a high degree of public ownership of the means of production, extremely progressive taxation, strong business regulation for the public good and the virtual abolition of poverty. When Conservatives eventually tried a fling with neoliberal policies, the economy generated a bubble and headed for disaster. (Sound familiar?) 
Labor stepped in, seized the three largest banks, fired the top management, left the stockholders without a dime and refused to bail out any of the smaller banks. The well-purged Norwegian financial sector was not one of those countries that lurched into crisis in 2008; carefully regulated and much of it publicly owned, the sector was solid.

The Birth of Predatory Capitalism: How the Free World Took Four Giant Leaps to Self-Destruction
[Medium, via Mike Norman Economics 2-10-19]

Thursday, March 14, 2019

How Joe Biden helped spark the Global Financial Crash of 2007-2008

As a Senator from Delaware, Joe Biden was one of the major promoters of the Bankruptcy Abuse and Consumer Protection Act of 2005 (BACPA).

Written by banks and credit card companies being swamped by rapidly rising rates of personal bankruptcy in the early 2000s, BACPA made it much more difficult for individuals to enter formal bankruptcy.

Not surprisingly, it did not occur to American financial and political elites, like Senator Joe Biden, that simply making it more difficult for individuals to declare bankruptcy did absolutely zilch to solve the economic hard times suffered by people who are bankrupt.

So, what do you think people in financial straits did when they can no longer file for bankruptcy?

Yep, folks, lots of them stopped paying their home mortgages. This was especially noticeable at the time for subprime mortgages.

And what did the problems in subprime mortgages cause?

Well, it blew out these fancy financial derivatives based on mortgage loans, called credit default swaps.

And the collapse of credit default swaps brought down Bear Stearns in March 2008, which was followed in September 2008 by the collapses of Fannie Mae, Freddie Mac, Lehman Brothers, and AIG. And it was all downhill from there for the rest of the world economy.

I know, I know, you probably have never before heard that the 2005 BACPA bankruptcy reform is really what led to the 2007-2008 Global Financial Crisis. So, don’t take my word for it. Lend an ear to the good folks at the Federal Reserve Bank of New York.

Federal Reserve Bank of New York Staff Reports, "Seismic Effects of the Bankruptcy Reform" Staff Report No. 358, November 2008, Revised February 2009:
"We argue that the 2005 bankruptcy abuse reform (BAR) contributed to the surge in subprime foreclosures that followed its passage."
Liberty Street Economics, blog by Federal Reserve Bank of New York, “Insolvency after the 2005 Bankruptcy Reform”:
Taken together, these findings suggest that the 2005 bankruptcy reform was associated with a large and persistent reduction in bankruptcy filings and a rise in insolvency and foreclosures, concentrated primarily among low-income individuals in court districts with the largest increases in filing costs.

Monday, March 11, 2019

I believe these guys will figure out how to make renewables work

If I were to nominate anyone to run an integrated renewables project, it would be Statkraft They have been operating Norway's state-owned hydro-power infrastructure since 1895. That's a serious accumulation of institutional skills. And it looks like they are adding to their skill set with this project.

Statkraft virtual plant integrates renewables, storage and gas in UK

March 5, 2019 Emiliano Bellini

The virtual facility is monitoring approximately 1 GW of combined wind, solar, storage and flexible gas engines in the U.K. and its capacity may double in the summer. The energy managed by the plant is being sold on the British energy market.

Statkraft says its VPP is the first in the U.K. to aggregate power from solar, wind, battery storage and flexible gas generation.

Norwegian hydropower and energy provider Statkraft has announced it has developed what it calls the U.K.’s first virtual power plant (VPP) to integrate renewables, storage and gas.

The company said the facility functions as a conventional power plant, as it would be able to operate within various energy markets. The plant is monitoring around 1 GW of wind and solar power, battery storage and flexible gas engines, with the power output of all the facilities traded on the U.K. energy market by using day ahead, on-the-day and cash-out price forecasts, Statkraft said. The electricity is being sold automatically by algorithms developed by the company which are said to minimize risk to customers while maximizing return by capitalizing on the VPP’s flexibility.

The capacity of the VPP may be doubled by the end of summer, the company added, and the software for the project, which is said to enable controllable loads via a common intelligent control centre, was provided by Germany’s energy & meteo systems.

German forerunner

“We are already successful partners in Germany and believe that this new project is an important step in enabling Statkraft UK to make the most of renewable energy,” said the German company’s managing director, Ulrich Focken.

Statkraft’s virtual plant in Germany connects around 12 GW of wind and solar power. It was launched in 2012 and has more than 100 solar energy generators in its system, along with 1,300 wind farms and numerous hydropower and bioenergy producers.

The Norwegian company is also operating in the PV markets of India, the U.K., the Netherlands and Spain and aims to deploy 2 GW of solar capacity by 2025. more

Sunday, March 10, 2019

Week-end Wrap - Political Economy - March 9, 2019

Week-end Wrap - Political Economy - March 9, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Seattle General Strike: Labor’s Most Spectacular Revolt
[Labor Notes, via Naked Capitalism 3-4-19] 
“On February 6, 1919, Seattle’s workers struck—all of them. In doing so they took control of the city. The strike was in support of 35,000 shipyard workers, then in conflict with the city’s shipyard owners and the federal government’s U.S. Shipping Board, which was still enforcing wartime wage agreements. The strike rendered the authorities virtually powerless. There was indeed no power that could challenge the workers. There were soldiers in the city, and many more at nearby Camp Lewis, not to mention thousands of newly enlisted, armed deputies—but to unleash these on a peaceful city? The regular police were reduced to onlookers; the generals hesitated. Seattle’s Central Labor Council, representing 110 unions affiliated with the American Federation of Labor (AFL), called the strike. The CLC’s Union Record reported 65,000 union members on strike—a general strike, the first and only of its kind in the U.S. Perhaps as many as 100,000 people participated.”
Wow. Imagine crippling the elites, and all anyone had to do is -- just stay home. 

[GoErie, via Naked Capitalism 3-8-19]. 
“Wabtec, which absorbed GE Transportation as a wholly-owned subsidiary on Feb. 25, and the union, which represents about 1,700 employees at the Erie plant [which manufactures railroad locomotives], have agreed to a 90-day deal that’s intended to give the two parties time to negotiate a longer collective bargaining agreement. Signs of the strike — tents, burn barrels, piles of firewood and stacks of strike signs — were quickly cleaned up Thursday morning by union workers who had spent nine days patrolling the vast perimeter of the Lawrence Park locomotive plant…. Wages are high on that list. While Wabtec has agreed to continue paying existing workers at their current pay scale — an average of $35 an hour — the company’s earlier proposal called for paying new employees and those called back to work what “a competitive wage scale” of $16.75 to $25 an hour.”

Disrupting Mainstream Economics

The Failures of Neoliberalism Are Bigger Than Politics
Mike Konczal [Roosevelt Institute, via Mike Norman Economics 3-9-19]
Mike Norman: This is a really good article on how neoliberalism brought about the complete opposite of what they said it would. They said that there maybe a bit more inequality, but overall, most people would become better off as companies would be become more innovative and therefore more profitable.

The second was also a sense that if the government took shackles off of business, they would innovate and grow our way out of social problems. Relaxation of antitrust enforcement would lead to more competition and innovation, as was told. Unions would no longer get in the way of businesses. An unleashed financial sector would fund and lead the entire enterprise. The idea of market power, or concentration, was seen as laughable concepts stacked against the disciplining power of markets themselves.
We saw what happened with the financial sector. But there are two broader things that happened alongside it. First, at the level of individual firms, is that firm dynamism has fallen dramatically. The rate of business startups has fallen. In turn, this has shifted the age curve of businesses further out, with firms over 11-years-old accounting for 70 percent of workers in 2000 but 75 percent of workers in 2014. Labor market dynamism has fallen as well, with workers less likely to quit and move their jobs over the past two decades. 
But what is most telling is the effect on the economy overall. Tobin’s Q is a measure of equity over the book value of a firm. If it is ever over 1, it means that firms are too profitable and they should invest more to bring it down back to 1. Tobin’s Q has doubled to well over 1 and shows no sign of slowing down. More broadly, there are several other puzzles that, taken together, point to extensive market power in the economy. As economist Gauti Eggertsson and others have summarized, there’s been a sustained increase in markups, a decrease in the real rate of interest, falling by roughly half since 1980, even while the measured average return on capital is relatively constant, and a break in the link between profits and investments. Another way to look at it: Corporate profits remain high, even as real interest rates have declined over the past several decades. That profits remain so high in nominal terms even as interest rates decline has brought economists to discuss a “profit share”that has increased at the expense of both capital and labor share. All of these factors together—high markups and profits, low interest rates, weak investment—point to a significant market power problem that impacts the macroeconomy.

Sunday, March 3, 2019

Week-end Wrap - Political Economy - March 2, 2019

Week-end Wrap - Political Economy - March 2, 2019
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Strategic Political Economy

Liberals and the left fail to notice - and celebrate - the intellectual death of conservatism
Tony Wikrent, March 2, 2019 [Real Economics]
Faced with Trump's populist seizure of the Republican Party, establishment conservatives and libertarians are trying to redefine republicanism to exclude anything other than market capitalism. 

....[Republicanism] is an embrace of the noble aspects of humanity to share and cooperate; more to the point, it is a rejection of the selfishness and self-interest that are supposed to be the mainsprings of capitalism....   Lindsey cannot, and most likely never will, recognize, or acknowledge, that republicanism does not specify any particular form of economic organization society should adopt. It certainly does not specify capitalism. In fact, neither does the Constitution or the founders. Find the text of the Constitution and The Federalist Papers online in a searchable format, and try to find the words "capitalism" or "capitalistic" in them. They simply are not there. Why? Because those words do not become fully developed intellectual concepts until the years just before Karl Marx's Capital was published in 1867.... 
Unfortunately, the left's understanding of republicanism is also fatally flawed. Too many on the left do not even know what republicanism or a republic is and should be. This ignorance of republicanism is what leads so many who insist justice and equality shall not be had until any arrangement and institution they deem to be capitalistic is extirpated, to believe that the rapacious drive to empire that characterizes the USA today is the original intent of the founders. They are unable to discern the two hostile schools of political economy that contended for control through all of USA history, and thus have difficulty distinguishing friend from foe, producer class from leisure class. Intellectually, they are incapable of grasping the significance of Lindsey's ideological dead end. 
But it gets worse, much worse, for conservatives and modern libertarians. Unless Lindsey and other doctrinaire propagandists succeed in redefining it on their terms, republicanism demands that the problems of wealth injustices and income inequalities be solved in ways they are going to hate.

Climate Crisis and New Green Deal

This is an emergency, damn it
[Vox, via Naked Capitalism 2-25-19]
”The [Green New Deal] release prompted a great deal of smart, insightful writing, but also a lot of knee-jerk and predictable cant. Conservatives called it socialist. Moderates called it extreme. Pundits called it unrealistic. Wonks scolded it over this or that omission. Political gossip columnists obsessed over missteps in the rollout. What ties the latter reactions together, from my perspective, is that they seem oblivious to the historical moment, like thespians acting out an old, familiar play even as the theater goes up in flames around them…. The house is on fire. But an odd number of Democrats and pundits just seem to be whistling past it, acting out familiar roles and repeating familiar narratives, as though we’re still in an era of normal politics, as though there are still two normal parties and some coherent “center” they are both attempting to capture… Here’s the only way any of this works: You develop a vision of politics that puts ordinary people at the center and gives them a tangible stake in the country’s future, a share in its enormous wealth, and a role to play in its greater purpose. Then organize people around that vision and demand it from elected representatives. If elected representatives don’t push for it, make sure they get primaried or defeated.”
America landed a man on the moon. Climate change calls for the same bold, can-do spirit. 
Representative Sean Patrick Maloney, [USA Today, via Naked Capitalism 2-27-19] 
“I have tried to pass along that same can-do Americanism to my kids. That’s why I am so disappointed by the melodrama surrounding the Green New Deal resolution. Meekness in the face of crisis isn’t what America is all about. My concern isn’t with the bad-faith arguments from Republican climate change deniers…. What worries me more are those who believe in climate change but offer no real solutions. From fretful hand-wringing to derisive sniggering to outright dismissal, folks who say climate change is an existential crisis have also cherry-picked or distorted elements of the Green New Deal to reduce the whole idea to pie-in-the-sky fantasy. This undermines the seriousness of the threat, downplays the scale of an adequate response, and sticks us with an untenable status quo.”

Saturday, March 2, 2019

Liberals and the left fail to notice - and celebrate - the intellectual death of conservatism

Faced with Trump's populist seizure of the Republican Party, establishment conservatives and libertarians are trying to redefine classic republicanism (referring to the ideas on which the USA was established as a republic, not to the Republican Party) to exclude anything other than market capitalism.

The Winter 2019 issue of conservative quarterly National Affairs carries an article, "Republicanism for Republicans," which marks the intellectual grave of American conservatism. It was written by Brink Lindsey, former director of regulatory studies at the radical libertarian Cato Institute and fromer senior editor of Regulation magazine. Lindsey is now drawing his thirty pieces of silver as vice president and director of the Open Society Project at the Niskanen Center. [1]

Lindsey begins by summoning together the bedraggled and disconsolate disciples of "pure" conservatism and libertarianism. Looking over the smoking ruins and salted earth of their conservative paradise laid waste by Trump and his hordes of "ethno-nationalism", Lindsey laments that "What was once your political home, or at least a familiar haunt you visited regularly, has been overrun by people or ideas you find repellent."
We cannot simply wait for Trump to pass from the scene, or for Democrats to win big, and hope that things will then somehow go back to normal. We must face the fact that the Trump presidency is not a freak accident, but rather the culmination of developments that have been corrupting the conservative movement and the Republican Party for many years. To root out this corruption, to build a new center-right that can lift this country up to its noblest aspirations instead of dragging it down to its darkest impulses, we must return to our intellectual foundations and build anew from there.
This is a clear admission that the seven decade rise and ascendancy of modern American conservatism has met its ignoble demise at the hands of a grifting conman and TV huckster. It's over, there is no life left in it, it has flat-lined: the relentless and richly funded climb of conservatism to national power that began with Strom Thurmond's states rights Dixiecrats in 1948, the Austrian School economic shit-fest of Ludwig von Mises and Friedrich von Hayek excreted from the rancid rectum of the Hapsburg empire in 1944 and 1945, and tail-gunner Joe's 1950 discovery of Communist Party membership cards in every desk drawer of the State Department, is finally over.

In a just universe, the fellow travelers of Barry Goldwater, Milton Friedman, William Buckley, David and Charles Koch, Jesse Helms, Lee Atwater, and Karl Rove would pop out of mortal existence and re-emerge in Dante's infernal eighth circle, suffering each healed wound to be ripped anew. But in this world, justice is only bent toward, so we must suffer for some time the continued brain-dead lurching and staggering of conservatism: an ideological zombie still dangerous in its capacity to inflict harm and consume the flesh of the living.

A large part of the problem is that most leftists have never really bothered to understand the ideological thinking of their enemies, preferring to saute themselves in the purity of their own ideological beliefs. So, I was not too surprised that most liberals and leftists failed to notice the intellectual death of their arch-foe.

And, they have forgotten what republicanism is long ago. Actually, they probably never learned. Rather than master the ideas of statecraft developed by the antique city states of Greece and Italy, the Hanseatic League of the southern Baltic, and England in the time of Cromwell, liberals have busied themselves severing ties with the working class, collecting the contributions and currying the favor of the one percent, or at least the professional class. Meanwhile, leftists willingly descended into a mass act of historical amnesia by dismissing the creation of the United States -- supposed to be a republic, but who knows or cares what that means? -- as just another act of oppression committed by privileged white men.