Concrete Economics @ SXSW!: Speaking 12:30 PM Meeting 10AB Level 3 :: Signing 1:00 PM Bookstore Level 3
Procrastinating on March 13, 2016

Speaker's Notes for: Concrete Economics @ SXSW!

Speaker's Notes for: Concrete Economics @ SXSW!: Speaking 12:30 PM Meeting 10AB Level 3 :: Signing 1:00 PM Bookstore Level 3:

Stephen S. Cohen, J. Bradford DeLong: Concrete Economics: The Hamilton Approach to Economic Growth and Policy] (Allston, MA: Harvard Business Review Press:1422189813)

The Book:

  • Small book
  • Readable book
  • Important book (we think)

The Thesis:

  • America's political-economic governance from 1787-1975 or so was extraordinarily successful
  • America's political-economic governance since 1975 or so not so
  • What changed?
  • America's political-economic governance took a destructive turn, an ideological turn, about 1975

Hold It!: Wasn't America Governed by Political-Economic Ideologies Before 1975?

  • No
  • There were strong ideologies:
    • Jefferson's agrarian ideology
    • Madison's (early) small-government ideology
    • Calhoun's Herrenvolk ideology
    • Lochnerites--the claim the Constitution imposed Herbert Spencer's Social Statics
  • But they all lost in the great political-economic scrum
    • Hamilton overcame Jefferson
    • Even Madison and certainly Madison's successors overcame Madison
    • Lincoln overcame Calhoun
    • Teddy and Franklin Roosevelt overcame Herbert Spencer and the Lochnerites

What, Then, Did Govern America from 1787-1975?

  • Pragmatism
    • Hamilton's state-led push for commerce, industry, finance
    • A very heavy governmental role in westward expansion--very bad for the Amerindians, very good for the settlers and the settler economy
    • Lincoln and his successors' push for the acquisition of capital--farm capital via homesteads, human capital via education, plus corporate capital
    • Teddy Roosevelt's Progressive curbing of overweening Gilded-Age power
  • All of these were ruthlessly pragmatic: looking not at ideology as a guide but at the world, and what seemed likely to work to increase popular wealth

But the New Deal! FDR Was Ideological!

  • No
  • FDR's New Deal was the antithesis of ideology
  • FDR tried everything
    • Corporatism
    • Keynesianism
    • Agricultural subsidies
    • Antitrust
    • Social insurance
    • Unionism
    • And he reinforced what seemed to work
    • The New Deal policies that survived became an ideology, but they started out as the most ruthless pragmatism
  • And Eisenhower:
    • Highways, automobiles, suburbs, massive federal support for technology
    • But also fear of the military-industrial complex and a strong desire neither to break inherited things from the New Deal the worked
    • Eisenhowerism was, as Daniel Bell wrote, an attempt to institutionalize the permanent end of ideology

So What Has Gone Wrong in the Past 40 Years?

  • Belief that the inflation and oil shocks of the 1970s demonstrated that Eisenhowerism was tapped out
  • And the fault laid to insufficient love of the free market (and excessive big government)
  • Hence the big push for:
    • Spending two Pentagons on excess wealth for our overclass in an attempt to give them "incentive"
    • Spending a Pentagon on excess health care administration and excess unnecessary and harmful treatment
    • Deregulation and financialization leading to a Pentagon's worth of waste in over-financialization
      • Is corporate control better? Is risk-bearing more advanced?
      • Plus two additional Pentagons' worth of waste in permanent damage from the financial crisis
    • The only rich capital-inflow economy in history
      • A really rich country should be exporting capital
      • And leveraging its innovative, intellectual, and human-capital expertise over ever-growing communities of engineering and entrepreneurial practice
        • To some degree, we have been doing the second
      • But we have been letting "the market" greatly reduce the scale
  • From the middle-class perspective, 8 Pentagons worth of waste over the past 40 years--all of them driven by ideology (and interest)

What to Do Next?

  • All such books are supposed to end with: MY PLAN
  • We refuse: such "my plans" are never convincing
  • What we do seek to convince you of is this:
    • The world is a complicated place
    • The world surprises you--and the more bound you are to your ideology, the more you will be surprised
    • Feedback and pragmatism are better than ideological oversimplifications
    • Arguments against policies of the form "this breaks ideological principle X" should have much less purchase than we give them

Today That Principle Leads to a Total Rejection of the Republican Party and All of Its Works

  • But that fact is a judgment on the Republican Party as it is currently constituted
  • And whatever parties we have in 30 years will be equally vulnerable to ideological viruses--as vulnerable as were jefferson, Madison, Calhoun, the Lochnerites, and more recently the Bushites, Cruzites, Rubites, Gingrichites, and even the Kasichites.
  • We need to defeat them and be pragmatic--with Hamilton, the later Madison and company, Lincoln, Teddy and Franklin, and Ike...