zombie economics

Update Nov 20 I’ve revised this as a result of thinking about the comments, though I haven’t yet had time to take all the comments on board. The main change has been to focus specifically on the idea of “expansionary austerity”. As Keynes said in 1937, public sector austerity is desirable if the economy as a whole is booming. And, later in the chapter, I’ll talk about whether austerity is sometimes the least bad response to problems of foreign debt. The claim that is implicit in the current policies of the ECB, the UK Tories and the US Republicans is not merely that austerity is necessary as a response to debt but that it makes sense as a response to a deep recession. This idea is commonly described as “expansionary austerity” End Update note

I got an email the other day, trying to set up an interview about Zombie Economics: How Dead Ideas Still Walk Among Us. Shortly afterwards there was a cancellation – they actually wanted the author of Zombie Economics: A Guide to Personal Finance, due to be released in May.

I’m well aware that there’s no copyright in book titles (Zombie Econ was originally going to be called “Dead Ideas from New Economists, and back in the 90s I wrote one which the publisher insisted on calling Great Expectations), but I can’t help wondering about the implications for sales. At least for the moment they don’t look too bad. According to Amazon, 12 per cent of people who viewed the doppelganger ultimately bought my book, while the proportion going the other way is zero (although some zombie fans go for Chris Harman’s Zombie Capitalism). But I imagine that’s the result of bad search results among people looking for mine, rather than a spillover from those looking for the doppelganger. If so, I imagine the flow will reverse when the new one is released.

Are there other interesting examples of book title recycling, or interesting ideas for new takes on classic titles?

I get nostalgic for old Rankin/Bass stop-motion holiday specials. I just watched Jack Frost with the kids. Somehow I never noticed this as a kid myself, but there is some interesting monetary policy involved. The evil Kublai Kraus has taxed away all the ‘real money’ – down to the last kaputnik – from the inhabitants of January Junction. But every winter Jack Frost is responsible for a massive helicopter drop of cash, in effect, in the form of icicles, which the townfolk saw into slices and use as ‘ice coins’. The economy then does ok until spring – not great, mind you. They aren’t rich. But there is a lot more buying and selling in the market. So the town loves Jack. He’s sort of a genius loci, not of a place, but of a part of the calendar: the holiday shopping season. (The story isn’t actually about this.)

Zombie economics is all well and good. But maybe we need a volume on the Economics of Elfland. ‘The Magic of Money’ is a standard theme. It’s mysterious stuff, how it grows and breeds and exerts strange power over the mind, charming whole populations. All gold, in an economic sense, is fairy gold. It lasts as long as the spell it casts lasts. So how has the general subject of economics – not just money and gold – been treated in fairy tales? There’s Midas, of course. Bit of a cautionary tale, that one. I can’t think of too many examples, but I expect they would tend to be along Jack Frost lines. The magical creation of money is an invitation to satire. Are there fairy tales about elves crashing the economy with fairy gold-induced hyper-inflation? Or saving the economy with a heroic helicopter drop? Stories about elves themselves fleeing Elfland for the human world, with its relatively stable currencies? Hedge fund managers practicing crude ‘hedge magic’, to get rich quick, only to call up dark forces beyond their control or comprehension?

UPDATE: The whole Jack Frost special is on YouTube. (Oddly enough, it’s in the Public Domain, its Wikipedia entry says. Can’t imagine why.) Economically speaking, it’s also nice for the scene in which everyone gives everyone else an empty package, in which they imagine they find the thing they want the most. Sort of a cross between a potlatch ceremony, Plato’s Form of the Good, and Wittgenstein’s beetle in a box.

I’m speaking at the London School of Economics tonight, basically recapping my Zombie Economics book. It’s a bit late notice, but in case any London-based CT readers are interested, I thought I would give the event a plug here.

Details here

After finishing Zombie Economics, and confident that it would soar to the top of the best-seller lists, I had the idea of a franchise-style list of sequels – Vampire Econ (on the financial sector), Cyborg Econ (the market and the mixed economy) and so on. Now, though, I’m thinking I could spend a lifetime on the zombie ideas that dominate the political right.

One of the most tenacious has been the DDT myth, that the writings of Rachel Carson led to a global ban on the use of DDT[1], bringing to an end a program that was on the verge of eradicating malaria[2], and causing the death of millions[3]. I thought that Tim Lambert and I had finally administered the coup de grace with this piece in Prospect a while back, after which some of the leading promoters of the myth (such as Roger Bate and his Africa Fighting Malaria group) appeared to have given up and moved on to other projects.

But zombies are hard to kill, especially for such reliable sources of misinformation as Britain’s Channel Four. C4 has just run a documentary by Stewart Brand, entitled What the Green Movement Got Wrong in which the DDT myth was repeated in its full glory. Amusingly, Brand made the plea ‘I want to see an environment movement that can admit when it’s wrong’. When challenged by George Monbiot on his glaring errors of fact, Brand exhibited the familiar pattern of weasel words and blame-shifting, followed by silence.

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I’m paying close attention to Amazon rankings just now[1], and it’s striking that both the #1 and #2 spots in “Economics-Theory” are held by FA Hayek’s Road to Serfdom. Whatever your view of Hayek’s work in general, this is truly bizarre, and indicative of the kind of disconnection from reality going on on the political right. On the natural interpretation, shared by everyone in mainstream economics from Samuelson to Stigler, this book, which argued that the policies advocated by the British Labour Party in 1944 would lead to a totalitarian dictatorship, was a piece of misprediction comparable to Glassman and Hassett’s Dow 36000. So what is going on in the minds of the buyers? Are they crazy? Do they actually think that Hayek was proven right after all? Is there a defensible interpretation of Hayek that makes sense?

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I’ve spent a lot of time double-tapping[1] the zombie ideas of market liberalism. But the comments on my recent rejoinder to Dan Drezner remind me that there are some zombie ideas on the Keynesian side of the fence as well. Perhaps the most important is the claim that the breakdown of the Keynesian system of demand management was the result of an exogenous event – the oil price shock of October 1973, which arose out of the embargo imposed by OPEC during the 4th Arab-Israeli war.

There’s a tiny element of truth in this – after the oil shock, the collapse was rapid and disorderly. But the Keynesian economic order had already broken down by October 1973, and the oil shock was a consequence of that breakdown, not a cause.

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I sent the manuscript of Zombie Economics off to Princeton University Press last night. There’s still plenty of work (figures, index, copyediting, some last-minute changes, galleys) to be done for a planned release at Halloween. But this is the official submission. In writing the preface I checked over the comments I’d received, here and at my blog. Several thousand in total, from more than a hundred different commenters. Thanks to everyone who took part. It was a huge help and encouragement to me.

Discussion on my last post on reanimated zombie ideas in economics touched on a lot of the themes I want to talk about in this one, about the efficient markets hypothesis and why this undead monster can never be laid to rest. (Warning: favorable references to Popper ahead!).

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A glutton for punishment, I’ve decided the Zombie Economics book manuscript I submitted a month ago (mostly online here) is in urgent need of more zombies. I’ve been struck, even in that short space of time by the extent to which, with undeniable “green shoots” now appearing, the zombie ideas I’ve written about are clawing their way through the softening soil and walking among us again. The most amazing example is that of the Great Moderation – surely you would think no one could believe in this anymore, but they do.

So, I’m planning to add a bit to each chapter, pointing to examples of these ideas being revived. I’d appreciate good examples for the rest: Trickle Down, Micro-based Macro the Efficient Markets Hypothesis and Privatisation (of course, the Queensland government gives an example v close to home).

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As regular readers will know, CT blogger Ingrid has long been making the case for limitarianism, that is, the idea that there should be an upper limit on the amount any one person can own or consume. As Ingrid has observed, limitarianism is a constraint, rather than a complete ethical principle, so it’s important to consider how it interacts with other principles. In the case of utilitarianism, the answer is surprisingly well, at least in (using Ingrid’s terminology) this and nearby worlds. But understanding this requires a little bit of background and some arithmetic.

Shorter JQ: utilitarianism implies limitarianism. The full argument is over the field (no tricks this time, I promise).

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