Beltway Bullshit, my interview with JW Mason on Bernie’s economics

My interview with JW Mason on how wonk critics of Sanders’ economic ideas reinforce low expectations was transcribed for Jacobin under the great title, “Beltway Bullshit.”

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Michal Rozworski: There’s been a big debate recently around Bernie Sanders’s economic ideas. It was precipitated by Gerald Friedman’s claim that Sanders’s plans would lead to 5 percent nominal economic growth over a certain period, substantial working- and middle-class income growth, and massive job creation. Pretty quickly, liberal economists like Paul Krugman or former chairs of the Council of Economic Advisors attacked this paper as unrealistic. What is your argument here?

JW Mason: So far, until now I think in the campaign the core questions of macroeconomic policy — whether we can or should want to see a higher level of GDP and employment or faster growth going forward — haven’t really been central on the Democratic side and Jerry’s paper really raised those issues.

Now I don’t think we want to get caught up in the specific strengths or weaknesses of that paper or the plausibility of particular numbers. I think that there are some problems with the paper. If you were to do the same exercise more carefully you would probably come up with lower numbers.

I think it would be foolish to defend the specific estimates that Friedman put out there, but I also don’t think that there is any real need to do so because the fundamental issue, as you say, is not this number or that number. Obviously things evolve under the pressure of events.

Economic forecasting is a very imprecise science in the best case. The question is whether there is good reason to think there is space for a substantially more expansionary policy. Is there good reason to think that a big expansion of public spending could substantially boost GDP and employment?

And I think that there the answers are clearly yes. This paper and the debate that it has sparked has actually been very productive in getting people to engage that question and getting a number of more mainstream Democratic-associated economists to agree that there is actually space for substantial additional expansionary policy.

What does this debate say about the diminished expectations about the economy that we have? Is this what you’re saying that it’s fundamentally about?

That is what it’s about. The position on the other side, the CEA chairs and various other people who’ve been the most vocal critics of these estimates, has been implicitly or explicitly: “This is as good as we can do.” (more…)

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The return of the modernist left

In the past few years, what has been loosely called the modernist left has seen some revival. Whether coming out of the ultimate failures of the Occupy movement, dissatisfaction with moralistic lifestyle politics or an attempt to analyze the current conundrum of moribound but hegemonic capitalism, some have returned to the idea of the left as a modernizing force—progressive in the most literal sense. Agree with its postulates or not, this broad current on today’s left deserves to be engaged, as it seriously grapples with everything from ecology to technology to economics and the left’s strategic response to our unhappy contemporary situation. This week, I present two interviews with authors of recent books that fit squarely into this current.

First, I speak with Nick Srnicek, who, along with Alex Williams, has written Inventing the Future: Postcapitalism and a World Without Work. Next, I speak with Leigh Phillips, author of the more colorfully titled Austerity Ecology and the Collapse-Porn Addicts: A Defense of Growth Progress Industry and Stuff.

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Legislating a real raise: Minimum wages and real earnings growth

In a recent post titled, “What happened to the distribution of real earnings during the recession?”, Stephen Gordon presents a graphs that shows some significant growth in real (adjust for inflation) earnings in Canada between 2007 and 2012. In addition, plotting average annual growth rates in real earnings against the distribution of earnings, the graph has a U shape. That is, the growth rates of real earnings are higher for those at or near the bottom and those at or near the top of the earnings distribution, with a “hollowed-out” middle.

Figure 1. Stephen Gordon’s graph showing a U-shape in real earnings growth 2007-2012 (black line). Source: Worthwhile Canadian Initiative.

This graph, as well as several others presented by Gordon in this post and a previous article that show some sustained general growth in real earnings, goes against the received wisdom that real earnings have been stagnant, in Canada and across the world, for the past 30 or 40 years – especially so for low earners. What is behind the discrepancy between this new data and the long-standing trend? Gordon claims it is lower-than-expected inflation and, if not the active, then at least the passive policy of the Conservative government. I take issue with these claims.

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Notes on Black Friday

Black Friday may be a fitting day to start a blog on political economy. A day of extreme consumerism, a “working holiday” for many in the service sector, an outlet for anger and violence played out across store aisles and parking lots. At the same time, also increasingly a day of protest, of working people ready to say “enough!” even in the face of serious repercussions. It is a day when the global capitalist economy shows a bit more of its true face. This is the much-vaunted Western consumer, often poor and in debt, racing to buy the baubles produced in the global South by her even poorer counterparts…so that the profit engine can keep churning, GDP can keep growing and those like the Waltons can keep lining their pockets.

I was motived to write this blog entry after seeing too many news stories, images, Facebook posts and conversations of the “look at these stupid poor people trampling each other” variety. Today is an easy day to be smug. Sure, people don’t have to trample and fight with each other over trinkets. (more…)

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