Nice gig if you can get it

19/11/2013 § Leave a comment

Paul Krugman points us over the weekend to a talk by Larry Summers, and comments on it. I haven’t watched the lecture — text really is much more my speed — so this is a reaction to Krugman’s comments. But basically, my reaction was, nice gig if you can get it. Yeah, and that’s heavy on the snark.

Why?

Okay, yeah, I’m not in a charitable mood — end of the year and all that. And Summers gets my goat, anyway. How do people keep failing upward? The whole Harvard episode was appalling. He’s apparently a social scientist (an economist), and yet has no sense of social construction of identity. I’m not asking him to be post-modern, but what about even being structuralist? My daughters have an amazing natural affinity with maths and science, and we have had to fight their entire schooling for them to get an education that would build on their abilities. We see — even in the coolest little capital in the world — that the boys’ high schools get more training, support and extension in maths than the girls’ schools. So who wins the competitions? Well: (training + apititude) > natural talent.

<climbs off hobby horse>

Apparently, Summers has discovered that the current economic set-up might be unsustainable. We might have an economy that is not just prone to bubbles, but actually need bubbles to keep the game going. We might also need to pay negative interest rates, or target higher rates of inflation in ‘normal’ times. And this has all been delivered as hard thinking, pushing the envelope, by someone who is willing to take currently findings to logical conclusions.

Not the first time I’ve heard any of this. Nope. I read fairly widely in economics — not deeply, I’ll admit, but widely. One of the things I liked about Steve Keen’s book Debunking Economics was that it summarised a bunch of heterodox thinking in one place. It didn’t get everything right, but it showed the diversity of thinking in economics. Other people have been saying these things for years: inflation needs to be high enough to allow adjustment; negative interest rates in medieval times encouraged investment in physical capital; bubbles have been driving the economy for three decades (no links, sorry — class starts in five). If you really want to follow it back, you cannot avoid Marx and the declining rate of return on capital.

(I can’t say whether these ideas are right or wrong. I haven’t worked through them enough and done my own analysis — my day job tends more towards microeconomics.)

What I can tell you is that other people — people other than Larry Summers — have been talking and writing and thinking about these ideas for a long time. For Summers to ride on in at this late date and skim a few notions off the top is galling. First, first, he needs to do penance. Because those writers and thinkers are found at the margins of economics. They don’t have the fancy offices and big salaries. They aren’t running the major universities or international monetary organisations. They could use a bit of dosh from Summers and his mates who control the journals and the hiring committees and the rest of the infrastructure of the profession.

Here’s an idea — maybe Summers, etc. could pay a royalty. Or invite the experts ’round for some paid consulting. Let’s see someone like Doug Henwood schooling the IMF. That’d be a laugh. And probably more informative.

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