Those who consider reported GDP growth to be the be-all and end-all of prosperity would do well to think about what GDP measures.
The fees collected by Wells Fargo by cheating its customers are included in U.S. GDP under the financial sector. The costs of rebuilding Houston will give a spurt to GDP since the values lost in demolished homes will not be subtracted off. Pity poor Holland: the intelligent actions they’ve taken mean that they’ve not had a major flood since 1953. With the time that could be used “productively” repairing their homes and increasing GDP, they may just take their kids on strolls through parks, with no benefit to GDP unless they buy some junk food on the way.
Any government that doesn’t want to regulate the country’s currency is insane. Governments for thousands of years have understood control of the monetary system to be of utmost important for control and plunder of the people. Governments are unlikely to relinquish that kind of power, so no, Rothbardianism does not prevail.
Ah yes. Here’s another point worth making. Just thought of it for some reason.
Suppose we have the misfortune to come across a very stupid person, who makes a very stupid argument. We see the inanity, and we are justifiably repulsed.
However, I think there’s a tendency to get “inoculated” against the conclusions of those arguments, to build up a resistance to any and all logical statements that feel like they’re even in the same general region of the very stupid argument we’ve already seen. But it’s worth pointing out that not all arguments have similar quality and that even a stupid argument can reach a correct conclusion. I can say that my mother has blue eyes, and the earth is the mother of us all, and that’s why the sky is blue. And someone else can say that air is blue, and that’s why the sky is blue. The second argument is pretty much true, and it simply doesn’t matter how bad the first argument was, because the second argument can stand on its own terms.
This effect gets even worse when political tribalism comes into play.
We really, really, really don’t want to have anything to do with the arguments of our political outgroup. But it’s still worth pointing out that even a blind retarded squirrel might find an acorn every once in a while. Even people we detest can be right on occasion, and that can be true even if they are largely incapable of logical thought and therefore are never right for the right reasons. It’s a good idea to be open to changing our minds, even with respect to conclusions for which we have seen a tedious supply of bad arguments. If a good argument ever happens to come along, we should be ready to accept that good argument on its own terms.
It’s a bad essay. Metcalfe obviously doesn’t have the chops to analyze Hayek’s ideas; note how little reference there is to Hayek’s actual writings. Instead you get sweeping and exceedingly dubious generalizations like :
He also seems to have very little knowledge of actual economic policy over the last 40 years ; reading the piece you might get the impression that there has been some kind of massive revolution with a radical shrinking of government. In fact government remains roughly as large today in the US as it was in the late 70’s. Reagan and Thatcher had much less long-term impact on economic policy than either their supporters or opponents seem to think.
Actually it’s pretty much the opposite. GDP measurement was a tool promoted by Keynesians to help governments carry out macroeconomic policy. Hayek and other Austrians were highly skeptical of such aggregate measurements.
In any event, the measurement errors that you cite are pretty small compared to the total GDP of a country. As an approximation, GDP remains a useful way of measuring the economic performance of different countries.
The instance of Chile shows a weakness in neoliberalism is that there generally is not a consensus on monetary policy. In the case of Chile there was hyperinflation in the early 70s that was eventually brought down to a still very high 40% by 1979. In order to get this to a manageable level the government set a dollar peg. While this tamed inflation, the sudden change in inflation expectations meant that the banking system collapsed. The government rescued the banking system and preventing defaulting on foreign loans by using alot of resources. Finally around 1987 the banking system had recovered, inflation had been tamed, and the foreign loans paid off. After this the economy took off and a couple years later Pinochet was voted out. The replacements were leftists but they left the neoliberal structure of the economy intact.
I think arguments like these cover all the bases though. If you pass neoliberal economic policy and things don’t improve, you can claim they will improve in 10-20 years. If you pass neoliberal economic policy and things improve immediately, you can say neoliberal economic policy caused the immediate growth.
I recall back when W Bush passed his first tax cuts and there was a recession. People on the right were saying ‘the recession would have been way worse without the tax cuts’. Even if the policy was associated with negative economic growth, they still called it a success.
Basically no matter what happens, it can be used to support the agenda.
Things get better immediately - the policy works
Things stay the same now but get better in 20 years - the policy works
Things get worse immediately - the policy works
etc
Things like nationalizing the banks, tariffs & subsidies followed by leftist presidents raising taxes, increasing welfare spending and increasing regulation aren’t neoliberalism. Neoliberalism is usually associated with hands off capitalism and weakening the safety net, regulations and the role for the state. Chile seems to have done the opposite in the 80s and 90s.
That’s why we try to take a broad perspective on what we’re seeing.
That’s why we look at a lot of data instead of a little data.
That’s why we run regressions with multiple countries and multiple years and multiple situations.
Every single statistical analysis that’s ever run has two basic parts: That Which We Think Is Correctly Explained vs… Everything Else. Noise. Error. Ignorance. All a bunch of names for random shit that happens in the real world, which means that the nice pretty line we draw through our graph will not actually run straight through every data point in the set. What I’m trying to do here is point at the shape of that line, which we have drawn with many countries over many years. I’m trying really, really, really hard to point at what the general shape of that line looks like, because that general shape is derived from quite a lot of information and might be informative in ways contrary to our ideology.
And you are pointing out, correctly, that the line doesn’t fit early Chile under Pinochet. No, it doesn’t. That is a true observation.
But what I am saying is that the line was built from many, many more observations than just Chile under Pinochet, or even just Chile, or ultimately even just South America. I’m saying that meaning was extracted from a broader look at the world. This is why I’m basically assigning deviations from the line into the Everything Else portion of the analysis. Yes, that is a clear deviation from the line. That’s correct. But those are going to happen. You are never going to have a human system where there aren’t such deviations, sometimes very large deviations. But I believe the line is (basically) valid because the line is built from a sufficiently large number of experiences/countries that it contains the bulk of the underlying meaning I’m trying to drive at here. This isn’t a fully buffed out argument, and I realize that. But a fully buffed out argument is going to involve a lot of mathematics that would be hard to get across. Right here, I’m trying to lay out the basic idea.
I think the line is (basically) meaningful, and the errors from the line are (basically) random stuff.
(But not entirely. I could try to tell a story like puddleglum does. In a more advanced case of telling this story, I would try to do a multiple regression including NGDP growth or inflation/deflation as variables. A multiple regression is drawing that same kind of line in n-dimensional space, rather than on a 2d piece of paper. And yes, in fact, I believe that the story puddleglum is telling is basically correct: it soaks up a bunch of the Error, explains a good bit of the difference between the data point and the line for Pinochet Chile. But that’s a harder argument to make. It’s much harder to visualize an n-dimensional line for our purposes here, or even more complex, an n-dimensional non-linear analysis. So I’m staying simple right now.)
Or for another example, we can look at the Obama administration’s claims about the fiscal stimulus before it was passed. There is quite a famous chart that speculated on the path of future employment with and without the stimulus. But the stimulus happened, and unemployment was even worse than the bad scenario on the chart.
The same argument could be thrown out: things would’ve been even-even-even worse without the Obama stimulus. They can argue that the general idea of the chart was right, it simply wasn’t calibrated correctly to the depth of the recession.
Yes, you’re right here. This kind of argument can be easily offered. Happens all the time.
I want to point out what I believe is an essential difference between what I’m doing here and what the Bush and Obama administrations did.
They had one “data point”. So to speak. One recession they were dealing with. And then they told a story with that one data point, and – surprise! – the story they told fit their ideological preconceptions. You can draw an infinite number of lines through one data point.
But this, again, why I’m trying to keep my own argument simple, and the data as broad as is readily available. I’m not taking a single event like the Bush tax or the Obama stimulus and drawing whatever line I want through it. I’m taking literally the entire world’s experiences, or even all of South America’s experiences. I am NOT saying that this line that I’ve drawn is perfect. No no no. But I am saying that this line represents more than just one recession, more than just one country, more than just one political leader. This line represents many types of countries, many types of policies, many types of leaders. It also must necessarily contain many types of random shit, but the mathematical purpose of “drawing the line” – especially the more sophisticated kinds of lines that come from more complex techniques – is to try to sift through that random shit and find some underlying meaning.
I believe this sort of line has that genuine meaning because it is not so tragically focused on the narrow partisan issues that tend to blind us into short-term stories where we say, oh well, things would have been even worse if my favored policy hadn’t been followed. When we pull back as far as possible, we have more data to soak up and a larger chance of striking at genuine meaning under that data. And yes, with more data, we’re also going to have more peculiar circumstances, more of that Something Else that must necessarily show up in different countries, different cultures, different peoples. While you are absolutely right that people can tilt perspectives in their favor with certain methods of argument, there is also a way to try to avoid that bias. This is with the careful use of data. My own argument here doesn’t achieve very high standards, but I hope it’s clear that I’m trying to push in the direction of those higher standards.
Basing everything on free market principles often leads us too far from humane values. After all, judge’s decisions and policing actions are commodities that could be sold to the highest bidder — and should be sold to the highest bidder in an extreme *most pure) free-market system. Certainly Russia would be a prime example of this. Recall that neoliberals were delighted by the quick privatisations at the fall of USSR. Such anarcho-capitalist states usually are run by warlords (Somalia, feudal Europe) or by an autocrat (Putin).
Even the USA has moved lately to higher levels of political corruption. We’re still a long ways from anarcho-capitalism but Trumpo and right-wing trends have increased the threat.
Bloated? Does this refer to VA? The few scientists still working at EPA?
**intervantionists **tend to be the neoliberals themselves. Protectionism? Assuming you mean more than a slogan for voters, the Free-market kleptocrats running USA do push for Protectionism when it suits them. Income and wealth inequality have grown far beyond desirable levels. Free healthcare would go a long way to help that, but the meager progress may be rolled back.
To come up with a complete manifesto from scratch we’d need a new thread, but that mightn’t serve a purpose because all that a single ordinary citizen like me can do is hope to push the USA from 7 to 6.999999 on this scale:
9 Russia
7 USA
5 Germany
4 Sweden, France
Can we stipulate for the puepose of this discussion that a 6 setting might be optimal, a little more “neoliberal” than Germany? I might not argue. But we’re at 7 and climbing. Increasingly the US has a well-entrenched kleptocracy enabled by a twisted neoliberal philosophy. This tendency needs to be fought strongly and eloquently. Instead we see Dopers defending the status quo against strawman alternatives.
Neoliberalism is a tremendous engine for growth. Nothing else. It is emphatically not an engine for equality. Any nation state that’s been called a neoliberalism “success story”, like Germany and Canada upthread, already had strong historical and cultural bastions of wealth redistribution and labor rights defence mechanisms.
Neoliberalism is the engine of a Ferrari in a chassis of nothing, dragging no load, with the only passenger being a corporate executive duct-taped to it.