For Thursday: Josh Bivens, Brad DeLong, Jeff Madrick, Ylan Mui: How Mainstream Economic Thinking Imperils America

DRAFT NOTES

Over at Equitable Growth:Josh Bivens, Brad DeLong, Jeff Madrick, Ylan Mui: How Mainstream Economic Thinking Imperils America:

Thursday, October 23, 2014

1:00 - 2: 30 p.m. ET

Economic Policy Institute

1333 H St., NW

Suite 300

Washington, DC 20005

http://www.epi.org/event/mainstream-economic-thinking-imperils-america/

Advice about what points I should try to hit would be most welcome...

Jeff Madrick's Seven Bad Ideas:

The "Invisible Hand"
Say's Law
Friedman's Folly: Government's Limited Social Role
Low Inflation Is All That Matters
There Are No Bubbles
Globalization Is Always Good
Economics Is a Science

In Madrick's Introduction and Reading Along:

Praised in the Introduction:

John Maynard Keynes
Dani Rodrik

Criticized in the Introduction:

Adam Smith--no comment necessary...
Olivier Blanchard--the de facto leader of the Sixth International: on the left of the spectrum of policymakers...
Larry Summers--principal advocate of the Keynesian expansionary-fiscal solution to our troubles...
Milton Friedman--when he was alive, the most powerful advocate of unlimited quantitative easing...
Bob Rubin--on his watch big banks were bailed-in during financial crises, not bailed-out...
Ben Bernanke--most left-wing central banker we had (although I will concede his attachment to 2%/year inflation target, and failure to reach it, are huge minuses)...
Robert Lucas--underbriefed and destructive...

Madrick on Christina Romer:

In a piece she wrote for The New York Times criticizing an increase in the minimum wage, Christina Romer, the former Obama adviser and considered by many to be a political liberal, implicitly made this same oversimplified assumption that workers usually get what they deserve. This is an example of Friedman’s broad influence...

Romer:

We have better policies available: expand the EITC is better targeted
For the long-run, universal kindergarten and pre-K have more bang for the buck
And these are expansionary fiscal policy--spending money gives a macroeconomic boost as well
But if the choice is for a higher minimum wage or nothing, I'm for a higher minimum wage...

Of these 8, somewhere between 5 and 7 are to the left of current North Atlantic policymakers--not excluding Obama

PFoJ vs. JPF, Perhaps?

A little misplaced ire, I think...

But I don't want to go there...

I Want to Go Here: The Problem, as I See It:

Economics starts from the presumption that market success is the benchmark

And that market failure is anomalous
It ought to start from the presumption that market construction is difficult
It ought to have a grammar of other forms of organization--command, bureaucracy, charity, cooperative, regulated monopoly, yardsticks, etc.--and where they succeed and where they fail

We have a great deal of economic life where we know the market will not work well, and these sectors will only grow in relative importance

Pensions
Health-care finance
Education
Infrastructure
Research and development
Information goods more generally

Policy is far to the right--and not to the smart right--of even where the really existing economics profession, at least the "serious" piece of it in an intellectual sense, is

Why?
How to fix it--books like Jeff's, of course, but how else?
Two tasks: move the "serious" economics profession, and move policymaking to the "serious" economics profesion--both seem of equal importance and difficulty

Christina Romer: [The Minimum Wage, Employment and Income Distribution][refThe Minimum Wage, Employment and Income Distribution]: "If a higher minimum wage were the only anti-poverty initiative available...

...I would support it. It helps some low-income workers, and the costs in terms of employment and inefficiency are likely small. But we could do so much better if we were willing to spend some money. A more generous earned-income tax credit would provide more support for the working poor and would be pro-business at the same time. And pre-kindergarten education, which the president proposes to make universal, has been shown in rigorous studies to strengthen families and reduce poverty and crime. Why settle for half-measures when such truly first-rate policies are well understood and ready to go?