Paradigm shift?

For obvious reasons I’ve been thinking quite a bit lately about the severe economic crisis we’re experiencing (can anyone ignore this, even if they try?).  One of the interesting questions the crisis poses has to do with how younger Americans – say, people around the age of my undergraduate students – will react to it, and in particular, what kind of impact it will have on their attitudes toward the free market as an apparently intuitive part of social arrangements in this country.

Those of us who are now around 30, give or take a couple of years, grew up in a period of free market ascendence inaugurated by Reagan, Thatcher, and the rest of the conservative, pro-market politicians who dominated our childhood.  By the 1980s, the Soviet Union, bogged down in Afghanistan and rotting from the inside economically and institutionally (and with little moral authority to speak of), in no way represented the viable alternative to the free market that it did – or seemed to – in earlier decades, when large swaths of the developing world looked to central planning and maybe single-party government as effective means of achieving development.  The crumbling of the Soviet bloc in Eastern Europe and of the USSR itself  in 1991 only confirmed that, as Fareed Zakaria put it in a recent speech in Silicon Valley, capitalism modeled on the U.S. was in the post-Soviet world the  ”only game in town.”  This became orthodoxy during the nineties, and why not, with the domestic economy booming and the stock market reaching heights never seen before?  

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Narrating the Economic Crisis: The Vengeance

As the economy wraps up one of the most gut-churning, frightening, and just plain dramatic weeks in its history, I’m interested in sounding out the Roaring Shark community.  What the hell happened, and what happens now?    Whether or not you’re sympathetic to government intervention, I would propose that the last few days have seen a fundamental paradigm shift: the era of deregulation is, for the foreseeable future, over.  The so-called free market is surely not dead, but it seems certain to me that the economy that will rise from the ashes of this one (if we can assume even this much), will inevitably be more tightly regulated than was the case in the 1980s and 90s, with the government playing a much larger role in it.  So are we entering the sort of New Deal redux I wistfully called for in my last economics-themed post, or something more sinister?  

Narrating the economic crisis

While I have been interested in economics and economic regulation for a while now, I have no real expertise in this area, beyond four or so courses in college.  Despite these deficiencies, I’ve been following the U.S.’s unfolding economic crisis with a combination of fear and intense intellectual curiosity.  A couple of weeks ago I was working on a piece for Roaring Shark on how the current state of the economy is painting perennial defenders of the free market (The Economist editorial board and David Brooks, specifically) into an intellectual corner, causing them to make some fairly substantial concessions in attempting to square their views with the current climate, which seems downright hostile to deregulation, trade liberalization, and a generally hands-off approach on the part of the government.  As I procrastinated, the editorials I was going to quote became less recent and the post eventually lost its timeliness, so I’ve decided to focus here on another aspect of the economic downturn: the various narratives currently being employed to “explain” the implosion of the real estate market, rocketing commodity prices, and related problems in the financial services and mortgage industries.  Here are a few storylines I’ve noticed:  Continue reading

The Yes Men

I was recently going through some old bookmarks and happened upon this site. I didn’t know it at the time, but I was lucky enough to have one of The Yes Men (Igor Vamos AKA Mike Bonanno) as a professor during my all too brief stint at RPI. I only hope I’m ever as brilliant…

Some thoughts on free trade

Borrowing Mark’s format from his TV post and attempting to get a conversation started on free trade and markets, I’ve decided to present a list of quick observations on the subject. Keep in mind that I’m a failed economics major and a long-time resident in a fairly left wing university community. Suffice it to say that I’m skeptical of totally unregulated free trade, but I’m open to contrary opinions:

1. The idea that there are simplistic “pro-trade” and “anti-trade” constituencies is inaccurate. Almost everyone favors some form of robust international trade, and recognizes its potential benefits. It would be better to describe the many people who are wary of free trade (as evinced in the Edwards and Huckabee campaigns) or concerned with what they view as certain of its consequences as “trade skeptics.”

2. On the other side, there are plenty of convinced free traders (derisively referred to as neoliberals in left-wing academia) who understand that free trade, for all of its positive consequences, can negatively impact certain people in certain contexts – like American factory workers who lose their jobs and don’t receive adequate compensation or retraining.

3. I believe there’s a broad middle ground of conscientious free traders and trade skeptics who can talk to each other about how international trade should be structured, the ways in which it should be managed, and how its costs can be addressed. Doctrinaire laissez faire capitalists and reactionary anti-traders seem like minority factions.

4. Not everything should be freely traded – like nuclear weapons or endangered animals, to cite two comically extreme examples.

5. It is in the national interest to have access to certain resources and to produce certain products, regardless of how inefficient this production might be. Just as countries should maintain strategic reserves of food and fuel (and ideally currency, but I’d settle for us balancing our budget), they should retain a strategic manufacturing capacity.

6. We need to stop thinking in terms of trade being regulated or unregulated, and start thinking about different types of trade management. The decision not to tax an economic interaction or not to put quotas on imports is just as much an act of regulation as imposing a tax or creating import barriers.

7. By extension, we should abandon the myth of the market as a sentient being whose autonomy should automatically be respected, and who will “speak” to us if we leave her in peace. Marx (who was wrong about a lot of things, but not this) called this “reification” – i.e. the false personification of an economic good or in this case, an entire economic system. Trade and markets are totally artificial human creations and managing or manipulating them for the common good does not amount to violating a sovereign being. We should, of course, recognize the complexity of markets.

8. Thinking of “consumers” and “workers” in isolation from each other is not helpful. The vast majority of people are both. We should acknowledge that the consumer who benefits from free trade by getting access to cheaper goods at places like Walmart (assuming you consider this beneficial) may very well be the same person who’s been laid off from a manufacturing job or seen her salary stagnate as a result of foreign competition resulting from free trade. We have to start thinking in terms of people’s net gains and losses from free trade as both workers and consumers.