The last gasp of (US) neoliberalism

If one looks closely, the bill failed not because of objections to TPP, but because pork barrel was not salted. Everyone figures they can squeeze a bit more for themselves if they hold up B.O. and shake him down. The Arctic just opened up to oil exploration by Sally Jewell, Obama’s woman for the job, handpicked by Exxon Mobil and cleaned through the grace of being foisted on REI by it’s bankers. Think it’s bad to have an oil spill in the gulf? Wait till black oil gets spilled under an ice sheet. What one sees is with Obama rhetoric is obfuscation on the goals, but they have not changed.

“Looks like Obama’s going to follow the Clinton model, and set up a foundation [WaPo]. Here’s the site. With [gag] the Obama “O” trade dress. In Chicago, naturally. The patterns of corruption seem to follow partisan culture: Republicans seem to have no problem giving fealty to a squillionaire, while Democrats set up complex systems of obfuscation under the cover of public purpose. But it all comes to the same thing in the end, as Hillary’s privatization and subsequent destruction of her email at State proves.

[OBAMA:] I’ll go back to doing the kinds of work that I was doing before — just trying to find ways to help people, help young people get educations, help people get jobs, help bring businesses into neighborhoods that don’t have enough businesses.

Translating, servicing Chicago’s real estate interests any way he can, through gentrification, especially. And no doubt Rahm has plenty of privatization deals teed up, and the Obamas will get their cut. Then of course there’s Michelle’s Senate seat. These grifters will be with us a long time, sadly.”

http://www.nakedcapitalism.com/2015/05/200pm-water-cooler-51215.html

Outside of trade and banking, Warren’s policy is pretty much neo-liberal, and she’s pretty much the hero of the day, at least she makes the sheeple and press feel more at home than Sen. Bernie Sanders.

“the (still secret) Trans-Pacific Partnership”

I’m curious if there are any interesting attempts to argue for the secrecy aspect.

Unfortunately, 4 is right about the secret status of the agreement and about HRC’s move to the left. True, she lacks any moral compass and is every bit a centrist as O, but John seems to be firing a bit two quickly. The unions are HRC’s most reliable vote, along with Dem women. It is quite unclear how she’ll fare among Hispanics and black voters given the range of opposition in the Republican ranks. At the moment, she faces no serious rival, but these are early days. Should Ben Carson or Rubio make enough of hit to win a spot on the Republican ticket, the Dem coalition may take a major hit. Siding with the AFL-CIO on this issue, even if the bill eventually gets driven through makes sense, although I’m sure Warren will claim she drove HRC to take the stand. I’ll take Yves Smith over Krugman any day. I disagree with John’s fundamental premise that neo-liberalism is dead. It’s alive and well in the UK, Australia, Canada, and large swaths of the US.

I don’t think so. The key piece of neoliberalism (to accept that term) was distance from organized labor – shared by even the more progressive Southern Dems (when they existed) and those coming from the New Left. See the (original) NDC, in which Bill Clinton was a leading light. What has happened now is that the inequality issue has been framed as tied to the decline of (industrial) unionism, leaving people like Hillary C. in a difficult position.

Meanwhile, anti-unionism has re-emerged as a salient GOP theme – witness Scott Walker.

The role of the financial sector is epiphenomenal, to my mind, with regard to the underlying dynamic.

One would imagine, from the comments, that the Senate vote was bad news. It wasn’t. I’ll take any vote from anybody to slow or reject TPP, and I’ll even put up with a couple barrels of pork (not including ocean drilling) to kill it completely. We on the left have a tough time with transient good news.

JG

I’d take Krugman over Yves Smith, who is overrated, any day. Hillary came out against TPP, not that she wouldn’t turn around and support it again as President.

As for JQ’s thesis, it’s an open question. I’m waiting to see what Yellen will do. One crucial element for neoliberalism is stagnant wages and the fact that it doesn’t deliver. Demand management policy was such that the trade deficit combined with insufficient government spending and monetary policy to maintain loose labor markets. The Fed would prevent workers from gaining bargaining power by raising rates prematurely. Also, there was anti-union policy and rhetoric such as the relentless drumbeat against teachers.

@ 2 Warren blocks TPP and creates the Consumer Protection Agency and you and Naked Capitalism call her neoliberal?

I think you are overstating the significance of this vote. I don’t see neoliberalism going anywhere. Part of the problem is that you have misidentified the core tenet of neoliberalism, which is that free markets are better for TFP growth. Whether that is true or not, I don’t see much political support in the US for an alternative view. People still take business leaders seriously, even if they have believe in an abstract sense that the 1% or 0.1% are taking more than their share.

I meant to say, a big step forward thanks to a Democratic Governor and Assembly.

I find the OP rather baffling and out of character. The whole point of sites like CT and the people who gravitate to them is to look past the epiphenomena of daily politics and focus, as much as possible, on the underlying tectonic forces. There is a lot of noise in politics, and it helps to not get distracted.

I agree with JQ’s characterization of Thatcherian neoliberalism, but the fact that its origins were in the political center rather than the right in the US does not particularly change the analysis, in my opinion. It is still about market liberalism as an independent objective, separate from liberalism in other spheres. There are all sorts of neoliberals in the US. Some are civil libertarians, some not. Some are social liberals, some not. Some incline toward foreign policy hawkishness, some dovishness.

Before sending out invitations to dance on the grave of neoliberalism, it would help to have an understanding of why it became a dominant political force by the late 1970s, at least in the English-speaking world. (It was ascendent, if not dominant, in France by the mid-80s; I don’t know about other countries.) Are the factors that favored it now in eclipse? We can disagree about this, but the historical/structural perspective is what it’s all about, isn’t it? If I want a better forecast of the next Senate roll call, there are other places on the web with this expertise.

To say that neoliberalism is collapsing because of its intellectual shortcomings is to suggest that its intellectual merits were responsible for its rise. My view is that bad ideas that are convenient for the people that matter tend to outlive their purely intellectual justifications, often for a very long time.

kidneystones @4 – “It is quite unclear how she’ll fare among Hispanics and black voters given the range of opposition in the Republican ranks.”

It is unclear, really ? Hope springs eternal with trolls I suppose.

>except as this coincides with the desires of conservatives and reactionaries to maintain a social order where they can do as they have always done.

Are you incapable of thinking your ideological opponents are well motivated? Or do you just enjoy assuming they’re evil so much that you aren’t willing to not do it?

> (the only major business sector that was prepared to back Democrats, or at least to bankroll suitable candidates from either party).

Really now? That’s news to a whole lot of people on this list. Most industries give liberally to both sides, for obvious reasons.

> cuts in “entitlement” spending,

Then why has entitlement spending continuously increased, both in terms of share of GDP and inflation adjusted dollars? Why did Reagan, Clinton, and Bush the younger all expand entitlement programs or make them more generous?

>education reformers like Michelle Rhee

Well TIL that the political right is a force in DC city politics. I had no idea!

The effects of the neoliberal wave have been greatly exaggerated. For every high profile victory (welfare reform probably being the largest in the US) they won there were 100 battles they lost (Social Security Disability exploding in size since welfare reform). Every year, more regulations are written, benefits increased according to COLAs, eligibility criteria are more loosely interpreted, etc. The state expands relentlessly unless it is actively resisted, and neoliberals cannot be everywhere, much less win everywhere. John, you are right that neoliberalism is doomed. But it isn’t doomed because of the financial crisis or school reform, it’s doomed for the same reason it always was, it’s playing a rigged game.

Neoliberalism in the US sense has nothing in common with Thatcherism except markets. Agree with Bruce W. that Delong is a current exemplar. The UK equivalent is somewhere in the SDP/New Labour zone – “of the left” but accepting of markets and disillusioned with actually-existing organized labor.

Pretty much anything by Brad DeLong is a pretty good representation of left neoliberalism

… and DeLong says that ending teacher tenure is one of three most important things the we can do to boost long-term growth. Contra JQ, I’d say that left neoliberalism is alive and well. It’s just that the program for eliminating non-market claims on society has shifted its focus from blue-collar workers and the undeserving poor, to teachers (and students) in the public schools.

Not long ago at the farmer’s market (where else?), I ran into a guy I used to work with at the Working Families Party. Turned out he now has a top job in Michelle Rhee’s organization. He claimed, sincerely as far as I could tell, he didn’t see any contradiction, that his politics hadn’t changed. Fighting the teachers unions and supporting charter schools was just another part of the fight for working and poor people that he’d been part of at WFP and at ACORN, where he’d been for years before that. So I can attest from first-hand experience that the idea that “neoliberalism is consistent with the goals and values of US liberalism/social democracy” can still be found in the wild.

But hey, what do I know, John Quiggin reads Nick Kristof in the newspaper.

23: The Marxian left has somewhat identified neoliberalism with Mandel and Jameson’s Late Capitalism, with help from the French Regulation School to try to generalize the biopolitics of post-Fordism with something like:

“Neoliberalism is about overtly using public and common means toward private and personal ends.”

Thus, both Hollywood I/P and gay marriage; pharmaceutical patent protection and Title IX; bank bailouts and Obamacare are all neoliberal. The Marxians, being dialectical, don’t particularly judge, while in analysis mode, these as particularly good or bad, just symptomatic, base and superstructure.

“…claiming that neoliberalism is consistent with the goals and values of US liberalism/social democracy”

I might make that claim, having no attraction to whatever you see in the US that you think is liberalism/social democracy ,with the proviso that the 1% get the benefits and the 99% pay the costs. “Privatize the profits, socialize the costs” We have a black President! Obama and HRC are doing just great.

mark @11 nails it

and E Warren, among her 1t 3 votes in congress
voted to confirm obamas nominee for DCIA, the odious J Brennan (can u imagine, what warren would say a repub nominated brennan ?)

voted to confirm notorious antichoice C Hagel Sec Def (test – why does choice view sec def matter ?)

voted to confirm J Lew sec treasury; lew is all that is wrong with our gilded age

I agree that the good ship neoliberalism is sinking. What I find noteworthy is that the rats leaving the ship are mostly jumping off the port side. Brad DeLong is far more typical than Michelle Rhee. Heck, not too long ago, Paul Krugman could fairly be called a neoliberal. Paul Krugman! This is unlike the 1960’s anticommunist liberals, who mostly morphed into Republicans.

http://www.nakedcapitalism.com/2015/05/give-the-democratic-trade-turncoats-hell-over-fast-track-vote.html

“Today, Obama got ten Democratic senators to flip their votes without giving them the concession that they had wanted, that of passing a set of other trade-related provisions along with Fast Track authorization. As we indicated yesterday, one of the changes they had wanted, putting more stringent sanctions in place against foreign government currency manipulation, was anathema to the Administration. So after what appears to have been no more than a dressing down, ten Democratic party senators relented, giving Obama a clear path to moving Fast Track authorization to a vote in the Senate.”

“if it’s a choice between African-Americans freeing themselves from urban blight as Republicans, or remaining in public housing and voting Dem”

The most nonsensical thought experiment I have heard for a while. BTW, about half of all public housing residents are white.

Of course kidneystones forgets, as do many conservatives do when talking about poverty, that poverty is a FLOW not a stock.

A lot of the comments here reflect confusion about the different meanings of “liberal” in Europe and the US. In the former, liberal retains a lot of its nineteenth century connotation, of “anti-statist and pro-laissez faire.” So neo-liberals are Thatcherites, people who want to revive 19th century anti-statism and glorification of free markets in a late twentieth century world, which means, among other things, the destruction of trade unions and social welfare institutions. Their American counterparts are generally called “free market conservatives,” or even “libertarians.” Think Milton Friedman. In the US, “liberalism” generally means skepticism about unrestrained free markets and acceptance of government regulations–whether this takes technocratic form (the Progressive Era) or social democratic one–the New Deal. “Neo-liberals” are Democratic Party politicians and journalists and academics close to them who want to rejigger the relationship between markets and governmental regulation in labor relations and economic matters, taking the latter down a notch (or several notches), without totally abandoning regulation, or social welfare. Think Bill Clinton and, to a lesser extent, Barack Obama. Their European counterparts–Blair, “Red Ed” Milliband, Gerhard Schröder, François Hollande, the whole “Third Way” crowd–are actually the enemies (if, maybe, not very effective enemies) of “neo-liberals,” i.e. Thatcherites, in Europe.

Re: J.W. Mason @28: “DeLong says that ending teacher tenure is one of three most important things the we can do to boost long-term growth…”

Now, now, Mr. Mason. That bullshit coefficient is rather large, isn’t it?

>[Cato’s] Brink Lindsey asked me what I would do to the U.S. economy to increase economic growth if I could just “wave a magic wand”. The problem I have with such questions–with such “magic wands”–is that I am never sure just how powerful they are supposed to be. Let me propose three, all of which are small scale in terms of policies but larger scale in that in order to become durable policies they do require, as John Adams said, changes “in the hearts and minds of our countrymen [and women]…”

>(2) State and local governments committed to raising salaries of K-12 public-school teachers relative to median salaries by 50%, in exchange for severe reductions in teacher tenure: As Eddie Lazear tirelessly points out, our state and local governments still substantially set public-school teachers’ salaries following a sociological pattern set generations ago, when the occupations open to women were (a) housekeepers, (b) laundresses, (c) waitresses, (d) telephone switchboard-operators, (e) secretaries, (f) nurses, and (g) teachers. Those days are long gone: women who would have become teachers and nurses in the 1950s are now becoming doctors, lawyers, managers, and bankers. School boards across the country have responded to the difficulties of hiring as the coming of feminist liberties has allowed their captive female labor pool to escape by offering tenure in order to attract the risk-averse to teaching without having to require their taxpayer principals to face reality. But this is, at most, a second-best solution.

>A nationwide network of good schools is both one of the very best ways to build productive capital–human capital–and a powerful step toward turning equality of opportunity in America from a sick and cynical joke to something not that far moved to reality.

>How to actually wave this magic wand, however, is beyond me. My reading of the evidence is that charter schools have been disappointing in ways somewhat similar to those in which 401(k)s have been disappointing–too-high rewards to flash and marketing and too-little repetition for successful social learning about true quality to take place. Teachers will fight attempts to disrupt security of employment unless they have confidence that the grand bargain by which they trade security for higher salaries will be kept–which they do not have. Fiscal conservatives will fight teacher-salary increases unless they are confident that the Democratic Party-public sector union complex will then disarm itself of its weapons–which they are not. And the very smart Jesse Rothstein in the building next door thinks that eliminating teacher tenure is in no wise low-hanging fruit–that it substantially boosts the salary needed to acquire good teachers as it leads the risk-averse to exit the profession, and that nearly all who should not be teachers as identified as such before they gain tenure.

>Suggestions?

Bruce Matt Bruenig has a better response to your comment than I could ever come up with. Read it at your leisure:

“Put simply: poverty is a flow, not a stock. Poverty is when someone lacks a certain level of resources for a specific period of time. Ending or reducing poverty is an endless task because producing and distributing income are endless tasks.”

http://www.demos.org/blog/4/3/14/war-poverty-cut-poverty-12-billion-people-years

Seconding 44. On first sight one is mystified why DeLong would want to tie increases in teacher salaries to union-busting and a weakening of employment security and why the latter should have any bearing at all on economic growth (unless DeLong is really going to argue that there is an empirical correlation between growth rates and lack of tenure in each state). So one wonders why the professor comes up with such a bizarre non sequitur?

But then of course one reflects that DeLong’s call for a 50% raise in teacher pay is totally unrealistic – as he is very well aware – but the call for abolishing tenure is exactly what very powerful forces on the right are working for anyway. So one observes that DeLong is making the case for a benign policy change that has absolutely no chance of being realistic, and for a destructive right-wing agenda that is very close to being enacted.

And that is perhaps one of the better definitions of the American neoliberal: they are centrists advocating for some progressive as well as some regressive ideas, but it just so happens that the progressive ideas never go anywhere while the regressive ones shape political reality, and the “centrist” support makes it so much easier to push down the public’s throat. But the clever centrist likes to maintain plausible deniability: “anti- teacher, me? I’m the one who advocated for a 50% pay increase!”

(On rereading, I notice that he isn’t in fact calling for 50% pay increases, only that teacher salaries should be 50% higher than the median. Median earnings of all full-time workers in 2013 was 44k and median high school teacher salary was $55k. So DeLong is calling for a 20% increase.)

TM @ 47 – Actually DeLong makes clear in his post that the ideas he is ‘advocating’ are actually hypothetical changes he would make to the economy if he ‘could wave a magic wand’ – that is, a thought experiment, not a policy prescription. Indeed he explicitly states that the ‘how’ is ‘beyond him.’

By all means criticise DeLong for things he has actually proposed or supported, but I fail to see what value can be gained by what amounts to denouncing people for heresy.

“If I could wave a magic wand, I would strip all American economics professors of tenure. This is just a thought experiment, not a policy prescription, the ‘how’ is beyond me, but I’m sure it would result in a great improvement in the intellectual output of the profession.”
Ha!

Daragh McDowell @ 50

I don’t believe that anyone who comments on CT is an enemy of thought experiments, and most would also probably admit, however grudgingly in some cases, that Brad DeLong is good — very good — at them. The problem that bedevils everyone, Brad DeLong included, is that the politics of the well-meaning have always been disadvantaged, and in our age perhaps terminally so.

There’s unfortunately little incentive for an innocent bystander (if there be any such) to choose between Bruce Wilder’s savagely ironic there is no alternative, and DeLong’s irritatingly glib Joan Robinson quote, the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all. We need not only a re-think, but also a re-do, and a massive one at that — but sadly, despite the denials of democratic socialists, Stalinism is a real threat, one which must inevitably bedevil any sincere and strenuous attempt to set things right before it’s too late. It’s perhaps fortunate that Stalinism is as difficult to get going as lupus est homo homini is to bring to an end.

Is there any sense in pummeling those who offer solutions which aren’t solutions at all? Doing so can be an interesting parlor game of the whose-is-bigger sort familiar from the letters pages of the NYRB, but as I see things, it leaves us pretty much back where we started. I suspect that bob mcmanus has the best take: the politics of getting ourselves sorted is more like geology that we’d like to admit. It takes time — a lot of it — to change anything in human affairs. Butchery, too, if we’re being honest about the history of our species. While it may be true that all the individual players have their contributions to make, impatience to see, and more importantly, to touch the results of their efforts, will be no help to them at all. On the contrary….

When did I quote you Brad? I quoted TM but I never quoted you. Please go reread my posts.

/I do wonder how making people less secure in their jobs is supposed to improve performance.

//being mistakenly attacked by a former Clinton advisor. I must be moving up in the world.

///I read your blog almost every day.

Performance can be improved by firing those who deserve to be fired (and replacing them with others who don’t). There was no tenure for engineering jobs at GE under Jack Welch (rather the reverse), yet I knew a (very) few engineers there who didn’t work well enough to deserve their jobs, but survived for a long time before the bureaucratic inertia involved in firing them was overcome. I have several relatives who are teachers, and occasionally have heard similar stories from them. I can think of at least one person at Berkeley whom I think Prof. DeLong would like to see fired (in a different department). I am guessing that is the sort of thing that he has in mind.

On the other hand, there are bad administrators and managers too – in my experience, more of them than the few bad workers I have known (what with the way power corrupts, and the Peter Principle). So it becomes the age-old question, is it better that the innocent not be fired unjustly or that the guilty have tenure? Inasmuch as most administrators and managers have a sort of tenure, in the form of golden parachutes, next to which public-school teacher-tenure (which amounts to needing enough fair cause to fire them to convince an arbitrator appointed by the school in my state) is rather weak, I think it is fair for teachers to have tenure after their probationary periods. I know Prof; DeLong worries about the trend toward inequality and I think we might be able to persuade him that teacher tenure is a mild step in the right direction – although higher salaries would be a much bigger step.

I did not agree with the OP that neoliberal is anywhere near its last gasp, but I did think it was sufficiently deprecated that Brad DeLong would be embarrassed to be identified with the label. I stand corrected.

But, I do thank Professor DeLong for providing additional texts illustrating what “neoliberal” means. I’ll leave it to others to judge from Professor DeLong’s own statements, whether his claims are genuinely consistent with the goals and values of US liberalism/social democracy. My judgment is that they are not.

With the greatest respect to professor DeLong@44, I don’t think this statement is accurate:

School boards across the country have responded to the difficulties of hiring as the coming of feminist liberties has allowed their captive female labor pool to escape by offering tenure in order to attract the risk-averse to teaching without having to require their taxpayer principals to face reality. But this is, at most, a second-best solution.

Harold @63
Good to see someone stand up for it, particularly in terms of it being an uncorruption measure. One of the great problems of our time, is the defining down of corruption, so that it has disappeared from Western sensitivity. (The Chicago thesis seems to be basically that corruption is inevitable, so we should embrace it. Ask Indians where that leads.) We are in a sense living on past capital, and that capital is being depreciated.

Perhaps the Right should be made to realise that private property is a socialist concept. In an individualist jungle, the only thing you own is your body and your genes (until someone eats you): everything else you have to fight to gain or to keep. There is certainly no right to enjoy the fruits of your labour: look at kleptoparasites like skuas! And usually the best means to inheritance is to kill/evict your parent.

Any kind of private property requires some kind of social contract of agreed rights and obligations, and collective protection of that that right/privilege by legal recognition and enforcement. Of course, a minority of humans try to behave like kleptoparasites: the worst one work in the City of London and on Wall Street. But without a social contract, which must inevitably entail limits upon private property, like taxation, there would be no rights and no justice, but perpetual strife instead.

65 You are aware that Carson is black, I hope, and that there are a number of non-WASP elected Republicans, some of whom are women. Bet you can’t name one without looking.

All African-Americans look alike to some people. You’d be one of them. Take a bow!

kidneystones @68
(Perhaps you should again read what I actually wrote.)

70 Quite right! You made no reference to color. You’re swipe was at female Republicans. Please accept my apology on that point. I was sloppy and flip – a fail twofer.

As I regularly read the right and the left, I happened in the interval to stumble on this nugget which may help you recalibrate your own invective – elected Dems in Congress are now older than Republicans on average, according to Ellen Carmichael, a (female) Republican communications consultant. Support for Republicans is, of course, still overwhelming older and male and white, compared with that of Dems.

I’m actually serious re: the need for blacks to consider options other than the Democratic party for several reasons. The first is that the great society programs do not seem to be having the desired result. No need to cite the appalling stats. The second is tied to this thread. The consensus view at CT seems to be that HRC and the Dem neo-liberal establishment isn’t remotely interested in proving anything but sops to the American left, as far as that left actually exists. The notion that HRC in the WH is somehow going to herald a bright new day for African Americans is ludicrous. She needs the constituency to be sure. As a former fan of HRC, I could not understand in 2008-12 how she and Bill could turn the other cheek to the accusations of racism leveled at them both by the O folks. I see now (I think!) that the Clintons were playing the long game, aware that HRC would need African American support in numbers to get through the primaries, and then the main event. What do African-Americans expect to get in return? They’ll be lucky to get more of the same. What will the Republicans give them? Nothing. Which may, in fact, be better than the something they’re getting now from the Dems. I’d like to see African-Americans cut the knot with Democrats and the teachers’ unions and try to figure out how to rebuild their communities on their own, without government assistance and the helping hands that do not seem to have helped much, or enough. I don’t see more money being the answer, and I’m far more interested in seeing blacks start to get some part of the American dream than seeing millionaire Democrats take their turn at the helm of the permanent security state. Troll!

my read todays (Friday) Times, your analysis vote TPP totally off; I wouldn’t be surprised the lib dems have deal with Mitch about how many of these protest votes will be allowed

63: ” It was and is an anti-corruption measure designed to protect the public against bureaucratic cronyism and nepotism.”

Yes, okay, but like any other human institution, it’s become corrupted over time. The difficulty of firing public employees for not doing their jobs has become proverbial. Most public employees *do* their jobs and do them well, but it should not be so difficult to fire those who don’t. They should be protected from arbitrary and capricious dismissal, but that should be it.

I would like to see some empirical backup for the statement that, in response to the feminist movement, school boards originally offered tenure to teachers to keep better ones from leaving the profession. Which is what I understood Professor DeLong to be saying.

I want to add that my grandmother taught for twenty-five years in Harlem, NYC, and she had only two years of higher education at Hunter College, then a Normal (i.e., teacher preparatory) School. She also drove a taxi, during the war and I suppose, as a working woman, she was a feminist.

“Thank you MPAV – you were right: I did enjoy it! ;)”

Glad you liked it!

/Sometimes I worry that I link to Matt Bruenig and his wife Elizabeth so much people will think I am a paid shill. The truth is I just love that I found 2 young, brilliant, leftist writers.
//Also anyone who enjoys mocking libertarians and right wingers is missing out by not following Matt on twitter. He is a force of nature when he gets going.
///I may have a crush.

Government is a necessary corporation that must take care of a large portion of the economy which cannot be handled by the market system.

Any ‘it’ that cannot be handled by the market system either doesn’t exist, or should be destroyed.

“Market failure” is impossible. The market is that by which other things are judged. The market tells us stuff about things — things cannot tell us anything about the market.

It can’t be wrong. You might as well say the meter is ‘too long’.

Brad de Long @55 is echoing Keynes’ words in The End of Laissez-Faire

In Keynes’ own order, the second point first: “devotees of Capitalism are often unduly conservative, and reject reforms in its technique which might really strengthen and preserve it, for fear that they may prove to be the first steps away from capitalism itself.”

The first point: “I think that Capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself it is in many ways extremely objectionable. Our problem is work out a social organisation which shall be as efficient as possible without offending our notions of a satisfactory way of life.”

I wonder how a modern-day Keynes might incorporate environmental concerns into his thinking? Actually, I don’t – we have John Quiggin! :)

BTW Paul Krugman has two excellent op-ed’s this week.

http://www.nytimes.com/2015/05/15/opinion/paul-krugman-fraternity-of-failure.html

I know that economic has been called “the dismal science”, but the second piece literally did make me laugh out loud – as JK Galbraith’s writings often did.

http://www.nytimes.com/2015/05/11/opinion/paul-krugman-wall-street-vampires.html

I would prefer, on ideological grounds, Sanders to Clinton as the Dem nominee (not that that will happen), but NIMBY @2’s quoted passage from Naked Capitalism is a tad over the top. The Clintons have become rich, but it’s likely that their foundation has done at least a couple of good things as well some things that could be questioned on various grounds. To dismiss them all as “grifters,” as the quoted Naked Capitalism excerpt does, seems a bit excessive.

Ex-President is not an especially easy job. It was/is predictable that Obama will follow the Jimmy Carter/Bill Clinton path of setting up an organization or foundation, rather than the G.W. Bush path of golf, painting, and quiet acts of philanthropy. In a capitalist society, organizations and foundations — like art museums, orchestras, theaters, and other cultural institutions — have to court wealthy donors. Why this sad but rather unavoidable fact causes even a left-wing site like Naked Capitalism to start labeling everyone nothing but grifters and tools of Chicago real estate interests is perhaps a bit of a mystery. YMMV.

Correction:
In my comment @88, replace “in a capitalist society” with “in a capitalist society of the U.S. variety”

The problem with thought experiments as represented, perhaps, by Delong’s comment about teacher unions and salaries is that they aren’t experiments – that is, they aren’t instantiated in any material environment where we can see what happens.

In my opinion, delong’s comments on his blog tell us a lot about the elementary failure of liberal neo-liberalism and its assumptions. The notion that what we need to make everything sweetly social democratic is a non-interventionist government that concentrates on providing superior regulation for the market system is a political notion, the instantiation of which is in a social political context. It is not something imposed by heaven or a magic wand, but a political arrangement. In this arrangement, the side being regulated, under the market system, accumulates more and more money – which is political power, while what Galbraith calls countervailing power loses more and more power. It is, I think, disdainfully, a typical economists idea – it completely misses the social mechanism in which it would be instantiated and on which it will have an effect. Neo-liberalism not only abandoned egalitarianism, it trashed the whole idea, and thus became, either consciously or unconsciously, the instrument for plutocracy. Plutocracy isn’t used here as an insult word – very coldly and objectively, when you have a push to create ISDS – international courts run for multinationals that can successfully make claims to punish the sovereign decisions of governments because they “unjustly” ate into the profit of said multinationals – you have plutocracy. And of course latent plutocracy becomes the default governing option, from rescuing banks and hedge funds in a slump, while letting homeowners slip into the drink, to making government budgets less about public investment and more about deficits.
On Delong’s site, he finds it “depressing” that Milton Friedman’s ideas (much less Keynes’) are ignored in the slump. This is a huge exaggeration, I think, but even so, that this evokes depression rather than curiosity about how the system he had a large hand putting in place came to this political outcome shows the intellectual bankruptcy of neo-liberalism. Or in other words, I find his depression depressing. There’s nothing like learning nothing from the events that are consequent to one’s policies that should depress those of us too powerless to change things.

91 You put your finger on one of the real successes of the great society programs and of the Affordable Care Act, which (after you strip away all the hand-outs to big pharma and big insurance) does represent an expansion of the health programs for the poor. I certainly don’t think the issues are ‘black and white,’ but that when all things are considered African-Americans may well find the route forward does not involve perpetual faith in the magic pony of neo-liberalism.

As some here may know, I compound my apostasy by trying to read as much as I can of right-wing grass-roots movements, groups that many on the left – Firedoglake, Think Progress either can not or will not admit exist. Why? Well, they’re new and I very much appreciate anyone who can give the status quo a good hearty kick in the scrotum. I’d like nothing more than to see some/any constituency discomfit Democratic party/Labour elites by daring to demand to be taken seriously. That’s what the Lib/Dems and the Greens do in the UK, and what the Naderites did, once, in the US. If I have an African-American/non white barber, dentist, doctor, psychiatrist, accountant, baker, etc. etc. I’m a practicing liberal. And yes, that does mean I have to be willing to drive to the next town to give the disenfranchised my business. One of my most religiously liberal pals tells a great story of walking into a black barber shop outside Toronto ‘by mistake,’ and running out followed by hoots of laughter. To his credit, he tells this story freely to illustrate his own hypocrisy. Conditions for African-Americans in America are much, much worse after the last six years of Dem rule. I see plenty of benefits in exploring alternatives – certainly at the local and state level.

kidneystones @72
the great society programs do not seem to be having the desired result [for blacks]

The aim of LBJ’s ‘war on poverty’ was not *specifically* to target African-American urban poverty, but poverty in the US generally. There was deep poverty among some whites, esp. though not only in Appalachia, and ‘the Great Society’ was as much about rural and semi-rural poverty as it was about urban poverty. Over the course of the ’60s and prob. after, the degree of severe poverty and hunger in the US was, I believe, reduced somewhat. Obviously the programs fell well short of complete success. The history of social policy is not my bailiwick, and I don’t recall when Aid to Families with Dependent Children originated, but when it ended in ’96 I doubt that helped the poverty rate. A program like Head Start, which iirc does date to the Great Society, continues to exist, albeit never funded as it shd have been (esp under Repub. Congresses).

As a former fan of HRC, I could not understand in 2008-12 how she and Bill could turn the other cheek to the accusations of racism leveled at them both by the O folks.
I don’t recall many (or any) “accusations of racism” being leveled at the Clintons by Obama supporters, certainly not directly. Possibly my recollection here is faulty. But wd HRC have accepted Sec of State job under Obama if she thought he had condoned accusations of racism vs. her during the ’08 campaign?

far more interested in seeing blacks start to get some part of the American dream than seeing millionaire Democrats take their turn at the helm of the permanent security state
There is a reasonably sizable black middle class now; there wasn’t 50 or 60 yrs ago. (Which is not to say things are generally fine, which they obvs. aren’t.)

I have no problems with BDL in general, but contra Daragh his quoted piece is clearly policy advice, and a prime example of the dangers of becoming a member of a tiny tribal insurgency and not realising it. ( ‘a magic wand you say ? Well rather than me give a clear answer that might clarify deep strucutural issues with the US economy and education system I’ll offer this minor irrelevant nonsense, a technical fix truth be told, to signal my seriousness since I’m debating a moronic libertarian windbag’ )
If we can all proclaim non resolutions to a topic, that proves our seriousness? I do it every time I go to my mechanic.

Watson Ladd @97
Deindustrialization has ripped apart society in these areas
Yes
and spending money won’t bring it back
My short answer: it depends (on how it’s spent, what on, etc.). There are certain areas — e.g. (to take one example) southernmost W. Virginia, where coal jobs are largely gone — that are perhaps beyond salvage economically (and socially). But one shd try to avoid that conclusion if at all possible.

I have no particular interest in arguing candidates/parties/electoral strategy w kidneystones (or, really, anyone else), but kidneystones’ claim @94 that African-Americans are collectively worse off now than in Jan. ’09 (when Obama took office) I don’t think is correct.

Professor Mason @93:

I agree with Professor DeLong that “DeLong says that ending teacher tenure is one of three most important things the we can do to boost long-term growth” is bullcrap. He said (in my reading) that increasing teacher’s salaries + ending teacher tenure is one of the three mostly likely ways to boost growth that might be politically available. I don’t know if he thought the tenure part was necessary to get conservative votes or whether he is against tenure himself, but I am certain he meant the two to be linked.

<a href="http://money.cnn.com/2012/06/21/news/economy/wealth-gap-race/index.htm"<CNN Money has a more recent figure

Using the Bouie linked above, Black wealth

2005: $12, 124
2009: $5, 677
2010: $4, 965

Kidneystones , have you been in a coma until yesterday ? Or are you just a moron ?

Or are you actually a brain implanted into a Mac.

cross posted !!!!!!

Excuse me ?

Kidneystones- I apologise for calling you a moron and asking are you a Mac with a brain implanted in it. I shouldn’t have allowed my frustration at your schtick develop into such vitriol.

kidneystones @107
your earlier claim that you don’t recall the O folks accusing the Clintons of racism in 2008, you’d be perhaps the only person I’m aware of who doesn’t recall the case. Indeed, the issue was discussed at Crooked Timber on March 7, 2008.

When I have time I will look up this reference to CT March 7, 2008, which you have (unhelpfully) not linked.

Brad DeLong @ 44 “… the very smart Jesse Rothstein in the building next door thinks that eliminating teacher tenure is in no wise low-hanging fruit–that it substantially boosts the salary needed to acquire good teachers as it leads the risk-averse to exit the profession, and that nearly all who should not be teachers as identified as such before they gain tenure.”

Um, the “very smart” Mr. Rothstein is now singing a rather different tune.

http://dianeravitch.net/2014/09/23/vamboozled-jesse-rothstein-on-vam-and-tenure/
“Rothstein, on teacher tenure:

“Even if you give the principal the freedom to fire lots of teachers, they won’t do it very often, because they know the alternative is worse.” The alternative being replacing an ineffective teacher by an even less effective teacher. Contrary to what is oft-assumed, high qualified teachers are not knocking down the doors to teach in such schools.

“Teacher tenure is ‘really a red herring’ in the sense that debating tenure ultimately misleads and distracts others from the more relevant and important issues at hand (e.g., recruiting strong teachers into such schools). Tenure just doesn’t matter that much. If you got rid of tenure, you would find that the principals “don’t really fire very many people anyway” (see also point above).

But if a “very smart” economist down the hall said it (before he said the opposite), it must be true for all time.

Kidneystones @ 94, your rambling response to my criticism is interesting enough, though in fact it doesn’t actually address my criticism. If nothing else, you should admit that 1) the incidence of senior poverty was greatly improved by the expedient of throwing money at it in the form of health care, and 2) the other anti-poverty measures of the Great Society have by and large been ended by conservative Republicans with a big assist by neo-liberal Democrats, and 3) it cannot then be the case that Great Society programs (e.g. Welfare) are responsible for the plight of today’s poor. In light of that, why couldn’t throwing money at poverty help (we know in fact that it did), and why should African Americans turn to Republicans for solutions?

p.s. for the record, I am fully aware that it was Clinton who ended AFDC in ’96 (via congressional action).

There are typos in my comment above.

Layman @124

Good point…

LFC I’m certain you can do better simply by checking basic facts, which you very oddly refuse to do. You’ll also need to explain why you’re retraction is provisional, rather than unconditional given the evidence from multiple sources.

Re: your attempt to educate me on the meaning of illiteracy. This is very poor, but I instructive, I sincerely hope. In the same comment in which you admit that you mouth without reading the basic facts (hint), you then offer compelling evidence that what this isolated error (oops, no more free articles whatcha gonna do?) may in fact be habitual. Had you bothered checked (note the pattern, please) you’d have discovered that illiteracy does in fact mean ignorance. Here’s just one dictionary example : illiteracy • lack of knowledge in a particular subject; ignorance: his economic illiteracy. Or, as in ‘LFC’s illiteracy regarding the plight of African-Americans. Or as in LFC’s illiteracy regarding the use of polysyllabic English nouns. I very much fear that you suffer because of your illiteracy and because you are willfully ignorant, in the sense that you refuse to check basic facts. Good luck, really. Your retraction is an excellent start.

What parents know and what has been known and understood from time immemorial is that neither the Dukes and the Dauphins, with their risk-taking “entrepreneurial spirit” nor the “best-and-brightest” “smart people” who can bedazzle solipsistic billionaires with scientific-sounding grant proposals that plausibly reinforce the prejudices of said billionaires, make the best teachers for young children. The best teachers are those that have a rapport with children and parents and who plan to stay in the job.

http://www.theguardian.com/education/2015/mar/31/finnish-teachers-special-train-teach

First, an apology for multiple comments and for hitting the submit key without proofing my edits. Easily remedied.

@ Ronan(rf) 116. I confess I fail to see any evidence of counter-argument in any of your remarks addressed my way. What I do see is a continued attempt to sidestep your lack of evidence by shifting from name-calling to another form of insult.

@LFC 118. When/if you search for the specific link, you may discover as I did, that the connection times out before you can link. Please check yourself before asserting that I’m being ‘unhelpful’ for failing to do something you’re demonstrably to lazy to do yourself.

@LFC 124. I concede in 94 that expanding healthcare for the poor is one of the great successes of the O administration (hand-outs to corporate America, aside). No doubt you missed that (as well). Your retraction covers everything else, I think. The issue is not, I remind you, who cut programs, but whether African-Americans might wish to dispense with government hand-outs, food stamps, etc, and try another approach – ie. voting for Republicans at the local and state level, definitely, and perhaps for CEO of America inc.
UKIP and the Tea Party (2008-2010) confirm that playing nice is always seen as weakness by elites, blue and red.

If you don’t know anything about Emmeline Pankhurst, I sincerely suggest you find out.

LFC, kidneystones, Ronan(f)
The article kidneystones linked to in the Washington Post has nothing to do with President Obama. It is a longish piece, with some historical background, about why black homeowners have suffered worse and longer lasting effects from the recession than white homeowners.

Having read it fairly quickly, the two main points I took out of it were: historically black people have had much less opportunity for capital accumulation that whites, so tend to be much less wealthy; predominantly black neighbourhoods have not seen as much rise in their home values as predominantly white neighbourhoods, because white people don’t tend to buy into them. So you have a smaller housing market, made up of people with less capital, therefore less rebound after the recession. Racism is the underlying cause, as ever.

I’m not defending President Obama, I think he bowed far too much to Big Money, but from my perspective as an Australian, all American presidents do that (ours do too, just not quite as much). In the case of kidneystones, I think he (I believe kidneystones is he, please feel free to correct me if I’m wrong) is more like a right wing concern troll, using supposed concern for black poor to make attacks on president Obama (the real agenda).

I think kidneystones has claimed to be left, etc, but I don’t really believe it.

Two of things Obama could have tried, was explicitly asked to try, and deliberately chose not to pursue in 2009 were mortgage relief and protection (FDR did this a lot; and Obama/Bernanke provided trillions to banks); and revenue sharing/infrastructure various help to state and local governments to prevent the massive downsizing under budget stress. Both/either of these would have disproportionately helped middle and lower-middle class blacks.

And a whole lot of the gains for minorities and women since the late sixties were due to expanded government and public sector jobs; anyone who seeks to shrink gov’t, and Obama was enthusiastically proud of doing so, knew exactly who would be the first to be laid off.

@139
Thank you for the kind words, kidneystones, they are appreciated even if I remain suspicious of your agenda. Why the continued focus on attacking Obama? I take bob mcmanus’ points @140 on board, they are good points, but I don’t see why anyone thinks any middle of the road Democratic president would have done better? And who else is going to get elected but a middle of the road president? Truly, I’m puzzled. What did Americans expect?

Again, the political system that I know a bit about is ours, and I can’t claim to know much about others, but those are genuine questions from where I sit. Is Obama simply the victim of inflated expectations? Because if leaders from minority groups (yours) or female leaders (our former PM), are going to be subjected simultaneously to inflated expectations and exaggerated criticisms, it’s a big problem.

I will bow out with that I think.

kidneystones @132
you [LFC] refuse to check basic facts

I don’t “refuse to check basic facts.” I don’t always have the time or inclination to conduct research before every comment, but if I make a statement about which I’m uncertain, I qualify it appropriately (e.g., “I think,” “it may be the case that,” etc.). You make it sound as if I go around habitually asserting confidently that “X, Y and Z are true” without bothering to check if X, Y, and Z are indeed true. That is not my practice in comment threads, and it has never been. And btw, an error about the meaning of a word is not the same as an habitual refusal to check facts.

Your remarks are consistently insulting, and I have made an effort not to respond in kind. Though I would add that I have no problem with an occasional bit of name-calling for the sake of name-calling, because this is, after all, a blog comment thread (even if it is at a (supposedly) high-class intellectual blog).

144@ LFC. You have a very curious notion of what constitutes an insult. You have repeatedly questioned the veracity of my own claims and even tried to correct my use of basic English. When I point out that these claims are, in fact, common knowledge and express astonishment at your illiteracy, you claim I’ve insulted you.

I recommend you stop, and start checking before mouthing off, because each time you publicly assert that I’m wrong I’m going to check to see if your criticism has any foundation. If it has, I’ll happily thank you and perhaps offer an apology. Either way, if I respond, I’m going to respond publicly. I admit I derive some small satisfaction from vindication, but I much prefer to be corrected on questions where I really am in error. Which does happen often, just not here as often as I’d like.

Some people call this ‘learning.’ I rather enjoy it. When you don’t check, I don’t learn. I don’t much mind re-checking my sources for you, but then having you whine that I’m being ‘unhelpful’ in not providing you with links does tax my patience I confess.

I’m quite sincere in wishing you well and commend you for your retraction. It’s never easy for some to admit fault. I’ve already made several lifetime’s worth of mistakes and can’t imagine getting from my bed of the door without screwing-up along the way. Cheers!