Procrastinating on August 21, 2016
Links for the Week of August 21, 2016

(Early) Monday DeLong Smackdown: Pseudoerasmus of Chokurdakh on DeLong and Eichengreen on the Marshall Plan

Pseudoerasmus: Greece from Postwar Orthodoxy to “Democratic Peronism”:

In a paper which passes for a reasonable parody of the Washington Consensus fad of the 1990s...

...DeLong & Eichengreen argued that the main effect of the Marshall Plan was enticing postwar Europe away from economic dirigisme and toward market mechanisms. Given their wariness of markets in the wake of depression and world war, Europeans lacking such inducements might have stressed the controls aspect of the mixed economy more than the market part of it. IMF-like ‘conditionalities’ saved them from the self-destructive impulses to which the unconstrained Argentina surrendered in its postwar stagnation and decline.

Thus, in this argument, the Marshall Plan was ‘history’s most successful structural adjustment programme’. I don’t really buy that argument (that’s for another day), but it might be the best way to think about the Greek economy in the long run. Not simply the Marshall Plan, but external institutional incentives in general have played a major role in the evolution of the Greek economy since 1949.

In short, external factors have interacted positively or negatively with Greek cultural traits and population characteristics. When Greece was constrained, the Greek economy performed well. When constraints were relaxed or gave way to outright perverse incentives, the Greeks let their worst impulses rip and behaved like a Third World country...