More Economics


This is from an essay in Mother Jones by James Galbraith, the son of John Kenneth, and an distinguished economist in his own right:

WHAT IS THE REAL NATURE of American capitalism today? Is it a grand national adventure, as politicians and textbooks aver, in which markets provide the framework for benign competition, from which emerges the greatest good for the greatest number? Or is it the domain of class struggle, even a “global class war,” as the title of Jeff Faux’s new book would have it, in which the “party of Davos” outmaneuvers the remnants of the organized working class?

The doctrines of the “law and economics” movement, now ascendant in our courts, hold that if people are rational, if markets can be “contested,” if memory is good and information adequate, then firms will adhere on their own to norms of honorable conduct. Any public presence in the economy undermines this. Even insurance—whether deposit insurance or Social Security—is perverse, for it encourages irresponsible risktaking. Banks will lend to bad clients, workers will “live for today,” companies will speculate with their pension funds; the movement has even argued that seat belts foster reckless driving. Insurance, in other words, creates a “moral hazard” for which “market discipline” is the cure; all works for the best when thought and planning do not interfere. It’s a strange vision, and if we weren’t governed by people like John Roberts and Sam Alito, who pretend to believe it, it would scarcely be worth our attention.

I thought the essay was a good, brief overview of predation in government and business.

I may be wrong, but I think we need to know how crazy current economic theory is. Robinson makes some snippy remarks about economics in Sixty Days. One of the messages of his book is: our current analysis of reality says we can’t change; there is no alternative to the world as it exists now. But in order to survive, we need to change, and that means we need to see the resources and options we actually have.

We need economic theory and political theory that puts people — and our one home planet — in the center. A theory that ignores people and ants and heritage corn is wrong.

Apology for Economics
I feel apologetic about posting about economics, a topic which bores most people. But it does matter. I wonder if the dismalness of this famous dismal science is a way to repel ordinary people.

We really should know how the wealth of nations is created and distributed.

After I wrote the above, I remembered Bolivia, where important economic issues can bring people into the streets. The new president had to reassert Bolivian national control over the oil and gas industries, because that’s what the masses of indigenous poor people wanted.

My favorite story about the last Bolivian presidential election was the tin miners who had sticks of dynamite taped to their hard hats. They said, “If Evo Morales (the new president) doesn’t do what we want, we’ll throw him out and get someone new.”

What’s important about this remark is – the miners are not looking for a savior. They are looking for an employee.

And when guys with dynamite taped to their hats say this, it sounds truly serious.

I don’t know if Americans can ever emulate the Bolivians. We seem to live in a dream world of video games, TV, radio talk shows, mall shopping, gangsta rap…