How Liberals Normalized Conservative Ideas

How Liberals Normalized Conservative Ideas

– Because, ultimately, liberal leaders, in many cases, brought
those conservative ideas into the mainstream, normalized them by virtue of being from the
party that did not naturally, it was not the natural
home for those ideas, and it’s the Kennedy
Administration that begins to dismantle progressive taxation, the Carter Administration
that begins to dismantle economic regulation, and of course, the Clinton Administration
wholeheartedly embraces many of these ideas, and
by the end of the 1990’s, I think there’s not too much
of a functional difference between the two parties
on economic policy. – I’m here today to
with Binyamin Appelbaum of the Editorial Board
of the New York Times. We’re here today to discuss his new book, “The Economists’ Hour: False
Prophets, Free Markets, and the Fracture of Society” Thanks for joining me. – Thank you for having me. – This is quite a provocative title. This is a, how would I
say, when you’re at the Institute for New Economic
Thinking that contains both shudder and promise. (laughs) But, let’s talk a little
bit about what inspired you to write this book, what set you off? What, from your experience,
what brought this to the place where you felt
compelled to create it. – I’ve been writing about economic policy for about 15 years now, and
as I’ve learned about it and written about it, I’ve
become really interested in how we reached the place where we are now, how our current set of economic
policies evolved over time, where they came from, and
as I started to learn more about that evolution, and about what it preceded these current policies. I just became really
interested in that story. It taught me a lot about
the choices we’ve made, the fact that we’ve made choices that were construction these economic policies, that there are alternatives,
roads not taken, roads taken by other
countries in contrast to ours, and I really wanted to tell that story. I wanted to learn that story. – Describe a little bit,
where do you pick it up? In the 40’s or 50’s, after World War II? And how did things change
where the economists were able to ascend,
and then how were they, how were their methods
contradicted by events to lead us where we are now. – So, it’s kind of a play in three acts. There’s a first act in which economists begin to gain influence, and
that really happens during the Great Depression
and during World War II when the depth of our
problems and the complexity of our problems leads policy-makers
to turn to these people who are bringing a new way of thinking, a new set of tools and approaches, and they lean on economists to manage the economy increasingly,
to direct the government’s response to problems, even the war effort. During the Great Depression
the economists are helping to figure out where to build the bridges, during World War II, they’re figuring out which bridges to destroy,
but the point is that they’re now in the engine
rooms of government, and after the war, that
gradually increases. We get the formalization of The Council of Economic
Advisers at the White House, the idea that the President
should have his own economists at his elbow. The first of them are
agricultural economists in the early years–
– Oh, wow – And then Heller becomes really the first highly influential person to
hold that job in the 60’s. That’s sort of the height of Keynesianism, is that secret period in the
early first half of the 1960’s under Kennedy and Johnson
where Walter Heller and informal advisers like James
Tobin and Paul Samuelson really convince policy-makers
that an activist economic policy can take
the economy to new heights. And so, that’s sort of the
beginning of the story, is that the economists
get in there and say, “We can make the world a better place. “We know how to do this. “We understand how the economy
works and we an manage it.” – I remember reading a book,
I think the author’s name was Robert Nelson– – Mhm – Called “The Religion of
Economics” and he contrasted what he called the Vatican
of Heller, Samuelson, and so forth, as top-down
control engineers with Frank Knight, whose
notion of radical uncertainty meant, essentially, you
can’t mechanistically control the future, and that contrast, Nelson, who I believe was at the
University of Maryland and worked in the Interior
Department for many years, sided very much with Frank Knight while being a government economic official is quite an interesting
tension that he revealed. – I love that contrast. And what happens is, those skeptics, the minimalists, if you
will, begin to gain influence as we see this breakdown
of the Keynesian moment beginning in the late 1960’s,
the second act of this play is that a new kind of
economist and economic idea takes hold, a minimalism,
a concern about government, a sense that it would be
better if we took our hands off of the economy and
let markets make choices unimpeded by regulation,
and much of this book is about that revolution,
about that second act– – It’s a prelude to Reagan and Thatcher– – It really is. – It’s a decade, or so, before. – Yeah. – I remember it being
quite prevalent during Jimmy Carter’s Administration. – Absolutely. I think today,
many people have forgotten how much of this preceeded
Reagan and Thatcher, how much this revolution
was really underway by the time they came to power. – And then you see, I mean various people have made documentaries and so forth, about the turning of the
Democratic Party into, what now is referred to as Neo-Liberalism. I can’t remember,
there’s a BBC documentary in four parts, and led
to Blair and Clinton becoming cost benefit analysis mechanistic political leaders of
a, what you might call economist metaphor of
language and leading, and it was quite surprising how much they, in episode four, embodied the echoes of Ronald Reagan and Margaret Thatcher. – Benjamin Disraeli, the
British Prime Minister in the high Victorian era
had a very famous line where he spoke of Tory
men and Whig measures meaning that it was often
a conservative political leader who was required
to bring liberal ideas actually into law and into practice. And I think the opposite
thing happened at the end of the 20th Century when you
had conservative ideas being the cutting-edge ideas, being the things that
the direction of change. It was ultimately liberal
leaders, in many cases, who brought those conservative
ideas into the mainstream, normalized them by virtue
of being from the party that did not naturally, it
was not the natural home for those ideas. – Certainly the growth of
derivatives and financial regulation took place
during the Clinton years. – But not just that, it’s
the Kennedy Administration that begins to dismantle
progressive taxations, the Carter Administration
that begins to dismantle economic regulation, and, of course, the Clinton Administration
wholeheartedly embraces many of these ideas, and
by the end of the 1990’s, I think there’s not too much
of a functional difference between the two parties
on economic policy. – Well certainly as
Donald Trump is elected, they rejected both
Republican and Democrats and chose him, so maybe
the population started to think there was, as they said, “Tina, there is no alternative.” – And that’s the third act, is that period that we’re living in now. – Yeah. – I think, sort of after what
I call the economist’s hour, after that 2008 crisis where
we’ve once again returned to a period where we have
more questions than answers, a lot of uncertainty, a lot
of sense that what we were doing wasn’t working, even
if we’re not sure what might work instead. – And what’s fascinating is the notion, economists were kind of
taught to focus on the market as though politics was a separate
mutually exclusive domain. My sense is that economic institutions are interwoven in a way that can’t
be extracted from politics, but we’re kind of coming
back to that place where political economy, the
governance of climate change, the governance of derivatives, and excess, like the financial crisis of 2008. The governance of so many things,
food and drugs, et cetera, plays an enormous role
in economic evaluation. At the same time it seems
like what was revealed led to a deterioration
on both left and right, occupy and tea party,
of faith in governance. What kind of governance do we need to wrestle with this false
consciousness and move beyond it? – I’m glad you used the term
political economy because that was, of course the
original name of the discipline, and it captures something
very important and true, which is that there is
an inherent element of subjective political
decision-making in economic policy. And I think, you know,
I worry a lot about, to me, the answer to your
question is what we need is to use economics in a way
that is methodologically rigorous and simultaneously explicit about those subjective choices. There are determinations that we simply must make politically,
and we ought to be having public debate and discussion
about those choices, and then there are those things
where we ought to respect the integrity of the
methodological process of facts, of the science of economics, and to say, okay, having made the subjective choices, we will also take advantage
of this very powerful system for making choices once
we’ve set the parameters. Both of those things need to happen, they’re both under attack. We’re both unwilling to
recognize the degree to which we are inherently engaged in
subjective decision making, and increasingly we’re
attacking the usefulness of this methodological process. – When you look at this in
the broad sweep of things, do you see people as earnest and innocent, and just misguided? Or do you see them as actually
slightly more pernicious, creating masks to legitimate power? How do you see what’s unfolded? – I think people are complicated. I think there was an aspect of this, in the first place there
were real problems, the understanding that
people had of the economy in the 1960s, their confidence
as they declared publicly that recessions could now
be managed and prevented was misplaced and as
it became obvious that they weren’t telling the truth, people lost confidence in
that set of prescriptions, so there was a real problem to
which people were responding, that’s number one, and I
think many of the people who responded to did so, in some degree, in the good faith that they
had a better way of doing it, that it really was. This is, to some extent, an argument about how you walk through a dark room. Do you pick a straight
line and stick with it? Or do you sort of grope forward and try to manage situationally? And the situational approach,
people have lost confidence in it, and when people
like Milton Friedman said, no, what you do is you, in
the face of uncertainty, you just minimize your activity,
you pick a straight line, you walk it as straight as possible, that resonated as an alternative, it seemed like a clear
distinction with the way that things were happening
and it had real power. Now that said, I think
that we need to acknowledge that this was a convenient
argument for its proponents in the sense that allied them
with corporate interests, and with moneyed interests that were willing to support them,
that were willing to– There’s a very famous
paper by two economists, Armen Alchian and Harold Demsetz, they wrote this paper in the
mid-70’s about corporations as basically the apotheoses of capitalism, the best possible way
of determining how men, if you look at the bottom of that paper, it says that it was sponsored
by the Eli Lilly Corporation. – Is that right? – I don’t think that’s a coincidence. I don’t think that Armin
Alchain in a vacuum necessarily arrives at the
same place that he does with the support of the
Eli Lilly Corporation, so I do think that we need to be cognizant of the degree to which
this approach to economics coincided with the interests
of a powerful and increasingly assertive corporate lobby
in the United States, resurgence of the conservative movement. – Phil Mirowski studies
of Mont Pelerin Society and the role of, I think it
was the Kansas City-based foundation, the Vulcar
Foundation played a very aggressive role, even
refereeing the fights among the conservative scholars
Reaich and Frank Knight were distanced from and
Henry Simons was suppressed while Friedman and
Stigler rose to the fore. – Yeah – So I would say those
influences are very, if you’re an economist, I
guess you’re supposed to think that financial influences
make a difference, otherwise what are we studying? But it does have an awkward resonance in this particular context. – I mean, a great example of this is, much of this ferment is happening at the University of Chicago, and it’s at the University of Chicago, what we call the law and economics movement, begins to gain traction,
this reconsideration of whether the law is
adjudicated in an economically optimal fashion, and the
first great proof of problems with anti-trust is this
paper that’s written defending standard oil, and it’s published in the first issue of Aaron Director’s journal,
Aaron Director is sort of the great proponent of this new
law and economics movement– – And his sister married Milton Friedman. – And his sister married Milton Friedman, and Director publishes this new journal, funded by the University of Chicago, which was built with Rockefeller money, and the first great
article in the first issue of that journal, is a
defense of standard oil. It’s an outstanding example
of what he was trying to achieve intellectually,
but I don’t think we can ignore that he was essentially
writing an canonical defense of the entity
that funded the school where he was teaching. – Or the question is, is
it analysis or marketing? – Maybe both. – Is probably something
you have to wrestle with in that context, and in many others. – Economics had a real
issue wrestling with the question of how we
deal with the future, because when you start
discounting anything, you minimize it very quickly, and so famously, the
United States chose not to regulate asbestos, not to
ban asbestos in the 1980’s because there was a
determination that the fact that people are going to die 30 years from now, just wasn’t that big a
deal in current dollars, and you know, that same
approach has permeated some of the economic thinking
about environmentalism. There’s a failure to deal with
the fact that some things are so bad, some outcomes so
extreme, that just as a matter of risk management, you need
to deal with tales of the distribution differently. – Yes. – And I think that that, you
know, and there are certainly recognize this and are speaking
very powerfully and loudly about it, but it has impeded,
at least to this point, some of our response to these problems, and it has gotten in
the way of our ability to confront them as a society. – I’m very enthusiastic
about what you’re exploring. I followed you as a journalist for years, we’ve met a couple of times in the past, and your bringing a
sensibility and a voice, and a courage to the table at
a time when its sorely needed, so I just want to thank you. – Thank you.

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27 thoughts on “How Liberals Normalized Conservative Ideas

  1. It’s hard to see how we’d be able to do away with the free market myth at this point. It’s the religion of elite America, festooned throughout discourse in our educational and media institutions. If a major crash couldn’t dispel it, only a revolution would. Can’t see that happening.

  2. Rob Johnson's efforts at building power during these conversations reduce his position within a new economic framework; a strong focus on hierarchical relationships is better suited to the economy in its current condition.

  3. Not enough meat, for fuck sake Rob you placid old goat, try harder … your not dead yet.
    We've had enough goddamn historical anecdotes now … start brain picking and brainstorming.

    Pick yourself up and start planning the video recording of Adair Turner's face when the Fed announces it's going to buy stocks; if you can't find the will to make meaningful headway, then at least entertain us with comedic relief…

  4. Democracy always destroys a nation. People want something for nothing and politicians pander to it in order to stay in power and win votes. So govt gets larger and we all get poorer.
    They break your leg , give you a crutch and then claim they're helping you.

  5. The Democratic presidents mentioned weren't liberals at all. In the case of Kennedy and Carter, quite conservative; Clinton and Obama more moderate. Johnson and Republicans Eisenhour and Nixon were actually economically more liberal.

    To clarify what should be obvious: conservatives, both Dems and Repubs, moved economic policy to the right.

  6. White liberals are greedy coward who value nothing but money thus are more easily controlled by the left wing governments who make them scared of being discriminated against because of not agreeing with the left thus they keep behaving like liberals and conform , cross-dress , ,race mix and have gay sex with black people turning themselves into good little liberal slaves.

  7. Neo liberal does not exist. The reality is these people are corporatists who took over the dem party. Chompsky was right when he said the US has one political party (corporate) with two wings.

  8. If the history of how the New Deal Democrats were sold out and replaced by corporate Democrats pedaling Republican-cooked-up policies is any news to you, Appelbaum’s interview here and book might be of interest. But after your done with it, there’s a ton of more helpful history, economics and theory to read. I’m happy to recommend.

    While it’s refreshing to have NYTimes editorial board member Appelbaum admit what he does about the influence of powerful corporate economic interests on US policy, this isn’t news. While the author does a small service to those unschooled in history by bringing a discussion and critique, albeit cautious, of neoliberalism to “polite society,” he fails to suggest an adequate change of course. Instead of positing solutions, he feigns the question of “what to do!?” By referencing a long-past “Keynesian moment,” Appelbaum diplomatically delineates the limits of the policy response that “responsible” people ought to support. Through omission, the author clearly dismisses the kind of “Green New Dealism,” (including a federal jobs guarantee program, massive federal support for unionization, comprehensive Medicare for All, and a $15-20 minimum wage, etc) that our continued crisis calls for in my view. I think the author won’t speak the words “neoliberalism” because he doesn’t want his readers and viewers to do the crucial study and analysis that follows from that historical concept. And he doesn’t suggest that the neoclassical school of economics should be overthrown, though he admits it was corrupted from the start. It’s also noteworthy that he doesn’t call neoclassical economics by name, he simply calls it “economics,” as though there aren’t other (more successful) economic school of theory. He clearly states that Keynesianism is long past it’s moment, though our economy could use a heavy does of Keynesianism indeed to bring a modicum of “stability” back for sometime to the more fortunate classes of our capitalist society. In refusing Keynesianism, the author essentially shrugs and suggests there’s only a little to be done.

    Keynes had his graduate students read Marx secretly, it is said, because Marx understood what capitalism is, what it does and how and why it inevitably and cyclically collapses even as it transforms. Writers like Applebaum want to deny the inevitable revolutionary transformation of capitalism in to its more advanced and humane form, socialism. With this denial comes the promise of the collapse of capitalist society itself.

  9. The BBC documentary that's referred to at 5:13mins is Adam Curtis' "Mayfair Set" which is a must watch if you have the time and something fortunately still get hold of on youtube, I also recommend people watch Curtis' brilliant series "The century of the Self" on a similar documentary series on the history of advertising which again you can still find on youtube (along with his 'War on terror' documentary series: 'The Power of Nightmares'), Curtis is an awesome documentary maker so I recommend track and watch his documentaries to learn some rather eye-opening facts about our world.

  10. May I be so bold as to suggest any lecture by Yanis Varoufakis? I promise you won't regret it. Available here on YouTube. Peace.

  11. I watched, in the 1980's, while blue collar/union workers allowed themselves to be "red-baited and race-baited" into voting for Reagan. Twice. They willingly put their irrational fears and racial tribalism before economic justice.
    They (the working class as a whole) have never recovered.

    Oh yeah, they did a repeat of that stupidity in the 2016 election.
    It is the working class that has normalized corporatism to their own eventual corporate serfdom.
    A self-inflicted wound.

  12. I remember reading about Kennedy's corporate tax cut (albeit was very high) in a labor studies class and wondering why he was going against Keynesian policies.

    I never considered what the author states but in hindsight makes a lot of sense.

  13. Thank God for my 12 years in the compulsory education system, otherwise I might have just spent the last 15 minutes watching this communist propaganda trying to indoctrinate me into the notion that the leaders of my great country are pathological liars that will say and do anything to get power instead of the selfless heroes dedicating their lives to serving the people and bringing freedom to America Mr. Randackte taught me they were in 11th grade. Don’t listen to this blasphemy. Support America. Support your leaders.

  14. capitalism is a religion, or rather a death cult, but you arent supposd to complain because you live in a "democracy" …. which means you get a choice of red or blue Kool Aid… LUCKY YOU

  15. Do these neoliberals really believe that this unregulated market is the right way or are they just a pack of greedy psychos?

  16. The pervasiveness of Friedman/Monetarism/Supply Side "Economics" was never an act of "Naivety"
    The coordinated roll out of this stuff in Latin America destroyed whatever Democratic Structures where in place and cost many many people their lives;;doc.view=print

    As far as the impact on Economics/Politics, here are a couple of Australian Economists with first hand insights into the Neo Liberal take over of both the Economics Profession and the Left/Progressive/Liberal side of Politics.

    They expose what is clearly Ideological Propaganda masquerading as a Legitimate Social Science.

    They also offer alternatives based on, reality, separation of Ideology from actual structural mechanisms and redirect our arguments toward actual Policy. Prof Steve Keen Prof Bill Mitchell #LearnMMT

  17. The real break from "we're all Keynesians now", as Nixon put it was the oil crisis of the early '70s, and the resulting "stagflation". That gave the " neoliberals their chance. In reality, what had happened was an inflating away of OPEC'S orice increase, followed by another increase, more inflation, until the oil price crashed in the mid '80s. Very deflationary. So then the Fed could cut rates, and did. How is that a failure of Keynesian economics ?

  18. The interviewer should of taken a personal day. He's very nasally and gassy. I'm surprised Binyamin's thoughts didn't get derailed cause it was certainly hard to focus in on what he was saying over the sniffling.

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