Albert O. Hirschman had a big impact on my thinking about economics and society. He passed away here in Princeton this past December. Reading the press release from the Institute of Advance Study, I realize that he was not only a brilliant scholar, but a very brave man.
Most of my blogs about Hirschman have been in Swedish, but here is a link to an English language comment:
Thomas B. Edsall has an interesting blog post in the New York Times.
"The slow implosion of the Republican Party — along with the growing strength of a Democratic coalition dominated by low-to-middle-income voters — threatens the power of the corporate establishment and will force big business to find new ways to reassert control of the policy-making process."
(...)
“Economists on both the right and left, from Kenneth Rogoff of Harvard University to the Times columnist Paul Krugman, are increasingly talking about the detrimental consequences of high concentrations of economic and political power – concentrations that threaten the innovation that is supposed to be what makes unequal outcomes worth the price.
Daron Acemoglu of M.I.T., who wrote the highly regarded book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty” with James A. Robinson of Harvard, argues that concentrations of wealth and market power allow “the already well off and already well organized” to exercise excessive leverage through “lobbying, campaign contributions and otherwise” that distort market processes."
Can a company be intelligent? An organization? A country?
One could say that a culture embodies and transfers accumulated wisdom and
knowledge, but cultures evolved slowly until transportation and communication
technology allowed for faster migration of people and ideas. Today we have
cloud computing, instant communication and cultural flux. I don't think we will
ever fuse our minds into a "hive mind", but our minds are becoming
ever more extended and interconnected, allowing mental winds (trends, memes) to
shake up organizational structures built on established social, intellectual
and political patterns.
The market system works fine in most cases. It gets the baker to bake our bread and the gadget maker make ever newer and smarter gadgets, but the market is guided by prices and the pricing mechanism doesn't work very well when decisions are interdependent and there is plenty of insecurity. At the core, it is a matter of people and groups of people (companies, organizations) agreeing on a price, which is relatively easy for shoes, and eggs and ipods, but very hard for disaster relief and enviromental protection. The obvious solution is to leave such decisions to non-market systems, usually local or national governments.
Market-fundamentalists like Romney and Ryan have a skewed view of what markets and governments can and should do. New York Times nailed it in today's editorial:
A Big Storm Requires Big Government
Disaster coordination is one of the most vital functions of “big government,” which is why Mitt Romney wants to eliminate it. At a Republican primary debate last year, Mr. Romney was asked whether emergency management was a function that should be returned to the states. He not only agreed, he went further.“Absolutely,” he said. “Every time you have an occasion to take something from the federal government and send it back to the states, that’s the right direction. And if you can go even further and send it back to the private sector, that’s even better.” Mr. Romney not only believes that states acting independently can handle the response to a vast East Coast storm better than Washington, but that profit-making companies can do an even better job. He said it was “immoral” for the federal government to do all these things if it means increasing the debt.
It’s an absurd notion, but it’s fully in line with decades of Republican resistance to federal emergency planning."
"New data from the European Union, released on Monday and analyzed in The Times by Landon Thomas Jr. and David Jolly, show that countries that have most ruthlessly cut their budgets — Greece, especially — have seen their overall debt loads increase as a share of the economy.
The data provide objective support for what has been clear to just about everyone except pro-austerity German officials and deficit-crazed Republican politicians. Namely, deep government budget cuts at a time of economic weakness are counterproductive, complicating, if not ruining, the chances for economic growth."
New York Times' editorial on October 24, 2012: The Austerity Trap
On his NYT blog, Thomas B. Edsall summarizes a National Bureau of Economic Research paper written by Robert J. Gordon, an economist at Northwestern University. Here is the opening salvo in a very interesting blog essay:
The American economy is running on empty. That’s the hypothesis put forward by Robert J. Gordon, an economist at Northwestern University. Let’s assume for a moment that he’s right. The political consequences would be enormous.
In his widely discussed National Bureau of Economic Research paper, “Is U.S. Economic Growth Over?” Gordon predicts a dark future of “epochal decline in growth from the U.S. record of the last 150 years.” The greatest innovations, Gordon argues, are behind us, with little prospect for transformative change along the lines of the three previous industrial revolutions:
IR #1 (steam, railroads) from 1750 to 1830; IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900; and IR #3 (computers, the web, mobile phones) from 1960 to present.
(...)
"Taken in full, Gordon’s controversial N.B.E.R. paper challenges our belief that innovation and invention will continue to drive sustained expansion in the United States."
A new Pew study shows that Americans are disconnecting from their churches.
"For the first time since researchers began tracking the religious identity of Americans, fewer than half said they were Protestants, a steep decline from 40 years ago when Protestant churches claimed the loyalty of more than two-thirds of the population."
(Number of Protestant Americans Is in Steep Decline, Study Finds, NYT)This is good, but also troubling news, as it is more a reflection of a growing existential homelessness than a rational move towards secularism.
"When they leave, instead of switching churches, they join the growing ranks who do not identify with any religion. Nearly one in five Americans say they are atheist, agnostic or 'nothing in particular',” the New York Times writes.Unfortunately, this fits in with the pattern that I have written about before, a pattern that reminds me of the parallels between our time and the one Hannah Arendt analyzed in "The Origins of Totalitarianism."
In periods of chaos and dislocation, people tend to look backwards, search for a Golden Age or a Savior. That has happened over and over again in human history, often with disastrous consequences (read Hannah Arendt's The Origins of Totalitarianism for a chilling analysis.) Newt Gingrich fits the image of a maniac who could be really dangerous if given enough power, while Mitt Romney at the core is a pragmatic and cold businessman.
After Florida, he is starting to look like a winner. There is even something Reaganesque over him now that the battle has made us see him as an underdog, a dog that can bite.
I hope team Obama pays attention.
New York Times' Nick Kristof is a wonderful columnist, a great journalist and eminent foreign correspondent.
This morning he brought the whole debate about where America is going down to the basics by asking us to "imagine a kindergarten with 100 students, lavishly supplied with books, crayons and toys."
But there is trouble in this corner of Paradise, because "one avaricious little boy is jealously guarding a mountain
of toys for himself. A handful of other children are quietly playing
with a few toys each, while 90 of the children are looking on forlornly —
empty-handed."
If this sounds unfair, it is because it is. And not even in America is this seen as right.
"On this issue, Americans seem by intuition to be flaming lefties. A study published last year by scholars from Harvard Business School and Duke University asked Americans which country they would rather live in — one with America’s wealth distribution or one with Sweden’s. But they weren’t labeled Sweden and America. It turned out that more than 90 percent of Americans preferred to live in a country with the Swedish distribution.The question now is whether Americans are ready to open their eyes and face reality or not.
Perhaps nothing gets done because, in polls, Americans hugely underestimate the level of inequality here. Not only do we aspire to live in Sweden, but we think we already do."
(Nicholas Kristof: Why Let the Rich Hoard All the Toys? New York Times Oct 4, 2012)
J.D. Kleinke, an author, a former health care executive and a resident fellow at the conservative think tank, the American Enterprise Institute, wrote a straightforward column in New York Times's Sunday Edition.
The Conservative Case for Obamacare
"Clear away all the demagogy and scare tactics, and Obamacare is, at its core, Romneycare across state lines. But today’s Republicans dare not own anything built on principles of economic conservatism, if it also protects one of the four horsemen of the social conservatives’ apocalypse: coverage for the full spectrum of women’s reproductive health, from birth control to abortion.
Social conservatives’ hostility to the health care act is a natural corollary to their broader agenda of controlling women’s bodies. These are not the objections of traditional “conservatives,” but of agitators for prying, invasive government — the very things they project, erroneously, onto the workings of the president’s plan. Decrying the legislation for interfering in the doctor-patient relationship, while seeking to pass grossly intrusive laws involving the OB-GYN-patient relationship, is one of the more bizarre disconnects in American politics."
Sounds so simple and true. Could it be?
