Monday, November 30, 2009

Bad Policy, Bad Politics

Galbraith vs. Galbraith

Richard Parker, John Kenneth Galbraith: His life, his politics, his economics p. 532-3: "In virtually every respect, from Galbraith's point of view, Humphrey-Hawkins represented the worst of liberal remedies... (Leon Keyserling was among the bill's most vocal proponents, because, as Galbraith quipped, it was 'all Keyserling and no Keynes.')... To Galbraith, Humphrey-Hawkins was a mistake from the start, not only bad policy but bad politics."

Jamie Galbraith, introducing Bruce Bartlett: "Bruce was a resolute supply-sider, having drafted the Kemp-Roth tax cuts. I was a resolute Keynesian, who had helped draft the Humphrey-Hawkins Full Employment Act. His specialty was taxation, mine was monetary policy. We were both twenty-nine years old."

Keyserling vs. Keynes

Casebeer: "In your view was [the Black thirty-hour bill] a misguided approach to recovery?"
Keyserling: Yes, because I didn’t believe in sharing unemployment instead of creating jobs. The thirty-hour bill was an attempt to share unemployment by having a lot of people unemployed ten hours per week instead of a smaller number of people unemployed full time. My opposition to the shortened workweek has gone much further. When I was working closely with Walter Reuther many years later, when he was one of the main financial supporters of the Conference on Economic Progress, the labor movement started developing support for a shorter workweek, and Reuther asked me to help him oppose it. He said he just didn’t believe that the solution to the unemployment problem was shortening the workweek. He said we ought to have a shortening of the workweek only when we came to prefer more leisure rather than more work, and when we were productive enough to justify that, and our production needs were more fully met. But as an employment measure, he opposed it. Later, when we had so many recessions and so much unemployment, the labor pressure for a shorter workweek became so insistent even within the ClO, and later within the AFL-CIO, that Reuther stopped actively opposing it because it was futile, but he never actively supported it.
Keynes
"...the full employment policy by means of investment is only one particular application of an intellectual theorem. You can produce the result just as well by consuming more or working less. Personally I regard the investment policy as first aid. In U.S. it almost certainly will not do the trick. Less work is the ultimate solution (a 35 hour week in U.S. would do the trick now)."
"As the third phase comes into sight... say 10-15years after the end of the war, when investment demand is so far saturated that it cannot be brought up to the indicated level of savings without embarking upon wasteful and unnecessary enterprises... It becomes necessary to encourage wise consumption and discourage saving, --and to absorb some part of the unwanted surplus by increasing leisure, more holidays (which are a wonderfully good way of getting rid of money) and shorter hours."


17 comments:

JW Mason said...

Interesting. What's the source of the Keynes quote?

Walker said...

JW

First Keynes quote is from 1943 Treasury Dept. memorandum, "The Long Term Problem of Full Employment". Second quote from a 1945 letter to T.S. Eliot. See Skilesky.

Anonymous said...

Rosser,

YOu are funnier than Emily Litella...

"Who the heck is Afghany Stan?"

Anonymous said...

Oops, wrong post...

Anonymous said...

Interesting comment by Steve Keens in his latest blog post:

"Change in economics will have to come from the rebels, and from outsiders taking over a discipline that economists themselves have failed."

Walker said...

Steve Keen's Debtwatch

"Unfortunately, it will take a sustained period of failures by conventional policy before unconventional policies, like deliberate debt reduction, will gain political traction. Implementing them will require both a dramatic change of mindset and probably also a widespread changing of the political guard.

"It will also require the breaking of the hegemony of neoclassical economics over economic thinking, but I doubt that the academic profession, or economists in Central Banks and Treasuries, are up to the task of changing their spots. Change in economics will have to come from the rebels, and from outsiders taking over a discipline that economists themselves have failed."

There's an implication in the above that I don't subscribe to. Neoclassical economics is no more responsible for failed conventional policies than is rap music or abstract expressionist painting. NC economics is a diversion.

Anonymous said...

Ahhh! See I was focused on the assertion that the field cannot reform itself - which I understood as a whole, not simply the NC part.

But, you are correct on this.

TheTrucker said...

Walker said...

"Neoclassical economics is no more responsible for failed conventional policies than is rap music or abstract expressionist painting. NC economics is a diversion."

It seems to me that such a statement cannot hold up to scrutiny. What other form of economic thought has informed policy since 1980? It was in 1980 that Hayekian horse manure was embraced by the neonutters and became the NEW politically acceptable neoclassical supply side, trickle down, commandments from on high.

Walker said...

"What other form of economic thought has informed policy since 1980?"

Growthmanship.

Brenda Rosser said...

Skidelski on Keynes: " the mass unemployment of the interwar years was not just the result of a random collapse of confidence, but the precursor of what can happen to rich societies that fail to make adequate preparations for the good life which wealth makes possible."

Something always niggles at me when I read about the promise of the 'good life' from all this 'productivity' ('wealth') of big industry.

We are told that the conversion of people from land labourers and farmers to skilled spectators of electronic circuses/office monkeys was a result of increasing 'productivity' of industry.

The trouble is that the industrial paradigm turned out to be extremely counterproductive.

In 2001 it was reported that world resources said to be declining at ~2% annually and population increasing at 1.4% the per capita wealth is decreasing at 3.4%.
http://www.icm.csic.es/scimar/download.php/Cd/c3901b83244e3d335d8ed3bca1009a52/IdArt/218

We're past peak oil. http://www.theoildrum.com/node/5979

2000s energy crisis
From Wikipedia, on 22nd November 2009
http://en.wikipedia.org/wiki/2000s_energy_crisis

Still Waters, The Global Fish Crisis. April 2007. National Geographic
http://ngm.nationalgeographic.com/2007/04/global-fisheries-crisis/montaigne-text

The H1N1 pandemic flu virus is growing more lethal and Obama has declared a national pandemic emergency in late October (just like the Ukrainian President did)
http://www.naturalnews.com/027330_fema_pandemic_H1N1.html
[H1N1 growing more lethal: http://peepingintodarkness.com/?p=1921]

etc, etc.

Keynes' hoped-for prospect of a 'good life' never will materialise. I'm not at all sure that more time away from paid work witll automatically result in human labour that attempts to address our crisis....without FORCE.

FORCES will prevail. But they won't be of our choosing.

Brenda Rosser said...

The other niggling thing is that all this negative productivity was happening when Keynes was alive.

Keynes witnessed the First world War, the awful peace settlement that followed. He must have been aware of the impoverishment of people in the colonies as the British Empire (and others) raped and pillaged. Our stolen future was visible on the horizon back then, for anybody who was looking.

1930s:
The bulk of social services in black countries went to whites. Altogether [in Nigeria] the 4,000 Europeans in the country in the 1930s had 12 modern hospitals, while the African population of at least 40 million had 52 hospitals.

British artist Eric Gill gives a series of lectures on the unhelpful (even ‘vicious’) aim of commercial profit.

The dustbowl The overplowing of the US Great Plains.

Textbook publisher McGraw-Hill a key player in the US National Association of Manufacturers (NAM) campaign to embed defamatory truisms of economics in the college curriculums. ‘American Way’ propaganda.

The Tuskegee Experiment. The US Government monitored the effects of syphilis and performed experiments on sufferers of the disease without their knowledge or consent. They were not told they had Syphilis.

President Franklin Roosevelt says that a financial element in the larger centres has owned the US government since the days of Andrew Jackson.

1933 – US Rep Louis T McFadden introduced House Resolution No. 158, Articles of Impeachment for the Secretary of the Treasury, two assistant Secretaries of the Treasury, the Board of Governors of the Federal Reserve, and the officers and directors of its twelve regional banks. He accused the US Fed of deliberately causing the Depression. McFadden died suddenly on October 3, 1936, of a “dose” of “intestinal flue” after attending a banquet in New York City

Peak oil is scary said...

What would Americans do with the extra time off? How does one convince workaholic Americans to embrace this philosophy?

Anonymous said...

"Keynes' hoped-for prospect of a 'good life' never will materialise. I'm not at all sure that more time away from paid work witll automatically result in human labour that attempts to address our crisis....without FORCE."

Brenda,

You speak as though mankind has an option in this. "More time away from paid work" is not a lifestyle choice, it is an economic necessity which cannot be reversed.

As Peter suggested in his paper, once China adopted an export-led development strategy, the existing order became untenable. The growth paradigm began to collapse on itself.

If working time is not reduced proactively, an economic catastrophe of unimaginable scale will emerge.

Brenda Rosser said...

Anonymous, who is 'Peter'?

Decreasing paid work does appear to be an economic necessity. Certainly within the current unsustainable paradigm/order. (although there are pockets of jobs in the service sector where this may not apply).

The 'work' done by machines needs to be factored in here. What is the ratio of machine/human work?

Anonymous said...

Peter Dorman- see his posting of last week on a speech to the ASSA on the financial crisis. Also see Brenner: "Economics of Global Turbulence"

Brenda Rosser said...

Anonymous wrote: "You speak as though mankind has an option in this. "More time away from paid work" is not a lifestyle choice, it is an economic necessity which cannot be reversed.... If working time is not reduced proactively, an economic catastrophe of unimaginable scale will emerge."

I've finished reading Peter's paper and have yet to find a statement that declares that (paid) working time must be reduced proactively.

Actually, our situation calls for the creation of local currencies and the development of new productive infrastructure that uses 'biogeochemical circularity' as its guiding principle. (World without end). (See: William Catton's article)

That is, our productive systems need to move away from drawdown of non-renewable resources and lifestyles.

An ecological catastrophe is the ULTIMATE economic failure.

Brenda Rosser said...

Correction: delete 'our situation' to the predicament I see in my place and time.

Voluntary reduction of paid working time seems appropriate in many instances. In other contexts it could be a disastrous strategy.