Re: FWD: Whither the AEA?

[Sven R Larson <slarson@xxxxxxxxxxxx>]

I didn't go to San Diego so I'll pass on Paul A's analysis of paradigmatic
bias in sessions etc. But what he says about "Republicans" vs. "Democrats"
deserves a comment.

Here we have a president that has turned Reagan's fiscal theme "the deficit is
big enough to take care of itself" into his macroeconomic credo. Here we have
a president who is miles away from Lieberman's 2000 campaign punch line "you
gotta be stupid if you don't want to balance the budget every year". Here you
have a president who's spending on credit like a drunken sailor, to quote the
Washington Times. So why would someone - anyone - who's ready to call
him/herself a Keynesian in any even remotely honest sense of the word, be
critical of this policy? The critique plays an even stranger tone when the
alternative sought means LESS deficit spending, i.e., MORE budget balancing
efforts.

Tax cuts for the rich are better than tax hikes for anyone, especially in a
recession. Tax cuts for the poor are better than tax cuts for the rich,
especially in a recession. Unfortunately it's hard to find a consistent
strategy for the latter alternative among Democrats, just as it is hard to
find a tax cutting strategy at all among European leftists. However, American
Republicans and - to a lesser extent - European conservatives have discovered
the paradox of thrift, which should be of great joy to Keynesians everywhere.
But when it comes to actually bettering the world the guy on the Keynesian's
left shoulder - the one with horns, a hammer and a sickle - always gets the
last laugh. Keynes was by no means a socialist and he was sternly against
collectivization of ownership and income. His theory was one of active
government, not big government.

With all this in mind, I'm the first to admit that there's a risk that the
fiscal responsibility wing of the Republicans may take over again. That would
be bad since there's little if any Keynesian thinking in sight within the
Democratic party. It would mean that America would be moved a little bit
closer to the European scene. At the same time, it is important from a
Keynesian perspective to recognize that there are two different kinds of
fiscal responsibility. On the one hand you have the big government socialist
approach which means ever higher taxes and ever tighter spending; on the other
hand you have the conservative approach according to which tighter spending is
paired with lower taxes. From a strictly Keynesian perspective I'd take the
conservative version any day of the week. While it's as non-Keynesian as the
socialist version, at least it leaves more room for consumers to spend.

Many American leftists see Europe as a role model for America, and I've come
to realize that they're ready to sacrifice any Keynesian principle they have
so long as it can help them transform America into Europe light. But Europe is
the socialist's land of sour milk and stale honey, because the continent is
sinking slowly but steadily into the swamps of socialist fiscal
responsibility, with ever more people depending on welfare, social security
and other government benefits to make ends meet, with cutbacks in government
spending on education and health care, and with growth rates that should make
any American run for the exit.

The macroeconomic nightmare that ought to keep all of you, especially here in
America, from sleeping good at night is a Hillar-ious national health plan
COMBINED with a return to the leftist version of fiscal responsibility.
(However, if you mandate net deficit spending over a business cycle...)

"Keynesians" who advocate fiscal responsibility are even less honest than
mainstream Ivy League economists who pass themselves off as the working man's
buddy and then vote for tax-hiking budget-balancing spend-slashing fiscal
extremists who are more interested in shedding the balanced budget light over
ailing public schools and rusting med-tech equipment in socialized hospitals
than to actually make a difference in people's lives.

So, who'll be the first to tell me that Bush is a supply sider, not a
Keynesian?

/srl

>===== Original Message From "Ric Holt" <rholt@xxxxxxx> =====
>----- Forwarded Message -----
>From: Paul_A <paul_a@xxxxxxx>
>To: Ric Holt <rholt@xxxxxxx>
>Subject: Whither the AEA?
>
>An entirely subjective report from the AEA sessions of some trends
>(compared to say five years ago).  I am not writing about the sessions
>organized by heterodox groups as there were too few of them for
>generalizations.
>
>1) Overall: 	The AEA continues to be ever more monolithic (as hard as that
>is to belive).  Grad students and younger professors especially show signs
>of the near-capture of graduate programs by neo-classics and, as one
>professor put it, an almost boot-camp like training regime.  The presenters
>(and even the presentations themselves) also seem to have ever tighter
>funding ties to the Federal Govt\Bretton Woods\consulting firm complex -
>without much effort at outside balance.  In some cases, and in an earlier
>time of academia, I believe questions of academic ethics and  intellectual
>objectivity would have been raised by such ties.
>	This said, having the program away from the East Coast did allow for what
>seemed like a little bit of space for topics like economic history and the
>history of ideas.
>
>2)	Topical themes coming to the fore included health policy, public pension
>(esp privatization), corporate governance, deflation, terrorism.
>
>3)	U.S. govt. policy.	I was eager to find signs of re-thinking, second
>thoughts, or misgivings.  I found few, if any.  The "Republicans" were
>adamant: full speed ahead - and at a faster pace (Hubbard, Forbes,
>Barro).  There were practically no 'Republicans' who spoke in moderate
>tones (e.g. 'this far is good, but not much further') or even reflective
>tones, except ironically Greenspan.
>	I looked hard to see whether the 'Democrats' present had found a newer
>voice - but I did not find it.  There was the much reported deficit hawk
>presentation by Peter Orszag\Rubin (cited Krugman in NYT of 1\6), lavish
>praise for Greenspan by Yellin, 'more of the same' by Rivlin, others talked
>of the need to "fix" Social Security, etc.  There was no effort to even
>appear to have learned some 'lessons', in fact some younger 'Democrats'
>showed a full display of their renowned smug arrogance - from the
>podium.  [Also, anyone know anything about the Peter Orszag and his brother
>Jonathan?  I see that they were Clinton advisors and that now they, Laura
>Tyson, and Stiglitz have a private 'consulting firm' in the Bay Area
>offering advice and lobbying to their former institutions.  I suspect we
>will hear more of them.]
>   One bright spot was Robert Pollin who although given only 5 minutes as
>practically the only non-mainstream participant in all the AEA, very
>effectively covered a large amount of territory.
>
>	[The sessions I attended often had a broad review of economic performance
>over the last 15 years and a forward perspective.  Yet there was NOT ONE
>mention of the massive and unprecedented shift in income distribution, with
>the prospect of an historical shift in the American economy and society
>back to a 1920's type dual economy.]
>
>4)	"Globalization" :	There were far more international sessions (and
>participants) than there were say 10 years ago.  Yet they were almost
>exclusively organized by and with either academics who are currently paid
>as consultants with the Bretton Woods institutions or the BW staff
>themselves.  Unlike east coast conferences, no current senior BW staff
>actually came to California - all this was handled either by former
>staff/now consultants (Rogoff, Edwards), senior consultants (Kaminsky),
>soon-to-be staff (Aizenman), or Bush admin officials (Kristen Forbes).  In
>one session, even a majority of the participants appeared to be either BW
>staff or mid-level officials from newly independent countries brought to
>the conference on a "training" program.
>
>Some of these same senior consultants\employees were on the Program
>Committee that framed these sessions.  Only one mild dissenter was included
>(Rodrik; I don't think Bhagwati really qualifies).  There was no effort to
>represent the now very large dissenting movements from the Washington
>Consensus, and even Stiglitz and Sachs were referred to (by name, behind
>their backs) only in sneering terms.  One panel on "Capital Liberalization"
>seemed designed only to refute Stiglitz and promote a new effort by the IMF
>to further "liberalize" banking in Latin America [there are, apparently,
>some specific not-yet-public proposals].
>
>In some cases the panels, of IMF employees and consultants, were designed
>not just to present IMF ideas and policies but to actually assess the
>performance of their employer.  In many cases, throughout the conference,
>there was no public disclosure of a financial relationship that one knows
>of only through separate sources.
>
>One exception was Dani Rodrik (on global issues), although he was critical
>only on the narrowest grounds, his comments were clear and decisive.
>
>Paul

--
Dr. Sven R Larson
Department of Economics
Skidmore College
815, North Broadway
Saratoga Springs, NY 12866
(518) 580 5278