Niall Ferguson is Nasty, Brutish and Tall

Niall Ferguson believes that Keynes didn't care about future generations because he was gay and didn't have children. That's the reporting from Tom Kostigan from the Altegris Conference in Carlsbad, California.

"[I]n front of a group of more than 500 investors, Ferguson responded to a question about Keynes' famous philosophy of self-interest versus the economic philosophy of Edmund Burke, who believed there was a social contract among the living, as well as the dead. Ferguson asked the audience how many children Keynes had. He explained that Keynes had none because he was a homosexual and was married to a ballerina, with whom he likely talked of "poetry" rather than procreated. The audience went quiet at the remark. Some attendees later said they found the remarks offensive. ...

"Ferguson, who is the Laurence A. Tisch Professor of History at Harvard University, and author of The Great Degeneration: How Institutions Decay and Economies Die, says it's only logical that Keynes would take this selfish worldview because he was an "effete" member of society. Apparently, in Ferguson's world, if you are gay or childless, you cannot care about future generations nor society."

Meanwhile Ferguson's heroes have spent the past 30 years stealing the livelihoods from working people and beggaring their children... Why are right wing pundits such nasty, selfish, self-serving, ill-informed bigots? And what does it say of their "moral" universe? That it ends at their property line, perhaps. That it's as large as the inside of their safe deposit box on Grand Cayman. Among today's investor class there is very little regard for Burke's social contract ideas, so why did Ferguson make the comparison?

Speaking of swinish right wing punditry... There is a useful summation of the bully boy world of the late Andrew Breitbart by James Wolcott in the new Vanity Fair. The title of the piece is apt. The right wing in this country has all the human kindness of a Roman emperor watching Lions vs. Christians at the Coliseum.

The Fairy Tales of the Business Press

Brad Delong does a pretty thorough job of dissecting the inconsistencies in the so-called "conservative" economic line, the anti-Keynesian, austerity, drown-it-in-the-bathtub anti-government side of the economic argument we've been stuck in for three years. Why isn't the conservative side subjected to any logical analysis by the business press?

Is it just too complicated for business readers? Even for those "superheroes" who are supposed to know more than ordinary workers and citizens? Come on. Superheroes are capable of digesting this, even if they are busy. They ought to find time to think.

Or is it just too embarrassing for business readers? Businesspeople are worshipped as "job creators." Is it wrong to question their beliefs? Is it heresy to doubt the prevailing business thinking––which says that only private sector spending is holy?

Is it only heresy to doubt business orthodoxy if it endangers ad pages and TV air those businesspeople tend to buy as business owners?

How is it that conservatives, who seem to believe in an invisible hand of the market, who believe our economy is magically protected by fairies and elves (no government regulation required), are allowed to call Keynesian economics "a fairy tale" without being challenged about their own magical thinking?

Keynes, who was no liberal, had a fully rounded theory that was borne out by sustained prosperity and growth (and the absence of panics) during the best forty year period in the history of our country––and the planet.

The problem believers in unfettered capitalism had with Keynes was that he advised behaving more like ants than grasshoppers (to borrow from a cautionary fable. Keynesians prefer fables to fairy tales.) That we be prudent and save for rainy days, that we rein in our appetites during up times (with regulation and fair taxation) and support a flagging economy by spending and building during down times. Which is pretty middle-of-the-road stuff, economicswise. Or was Eisenhower a Communist?

The nagging suspicion that I keep having is that these so-called business conservatives, in order to help their Republican operatives, have been sitting on their capital for three years, not spending it, not hiring, not lending, blocking stimulus packages through their elected proxies, keeping the economy down, hoping to hang a bad economy around President Obama's neck like a burning tire. They hoped it might put a Republican regime back in the White House.

(It would be interesting to read the Republican emails with their corporate and banking clients, hoping and planning to foil Obama's recovery efforts. I don't doubt they exist. Airing them would be a good thing. It'd only be fair, considering the Republicans in Congress surreptitiously read the Democrats' emails for over a year in '03 and '04.)

The business sector wants Republicans back in full control. Oh how they want it. But we all know how clever the last Republican regime was. Taking a record surplus and making into a record deficit. Their energy policy resulted soaring fuel prices. Their laissez faire economic policy set up economic collapse. But that Republican president was a businessman. A failed businessman several times over, but a member of the club.

A Narrowing Sense of Loyalty

David Carr has a pertinent column today. Maybe it explains why the news media has been dismissive of the Occupy Wall Street movement. It also raises, again, a key element in the current crisis. It's a matter of loyalty.

When a business ceases to be concerned with what it delivers to its customers and only interested in delivering cash to its owners, we have a problem. When this is the model everyone is copying our society is in trouble. When our news is crafted in a way that supports this model we have a hard time resisting it, but that is the picture we get from most of our reporting class––most uniformly on FoxNews and on radio. That, in the words of the recent Bush White House, is "our new reality."

Pay cuts for workers are seen as a revenue source by those further up the food chain. It's unattractive, antisocial, predatory, but it's described admiringly in the business press. American business used to have three key loyalties: to customers, employees and owners. (I've written about this before.) But there's been a dramatic shift in the past forty years; the first two have been degraded to feed the last loyalty. We are loyal to our companies but our companies have ceased to be loyal to us.

All obligations to employees and customers are set on the debit side and seen as negative to the only true value, profit, and profit feeds the bonus machine. So employees and customers are, in a very fundamental sense, seen as the enemy in many or possibly most executive suites and also by the economists and accountants who equip business plans with their rationale. Look at our present economy: 99% of Americans are in financial difficulties and afraid, but very eager to work for whatever they can get. This is a very pleasant picture for the lucky few.

Look at the Austerity model being pushed by Republicans today. Is it telling us that we never deserved the broad prosperity of the recent past? Was the postwar boom an illusion or an aberration or a problem that it took the executive class forty years to eliminate?

Does prosperity belong only at the top of the pyramid? We get to build that pyramid and admire it from a distance, but in the economy built by Reagan and Milton Friedman and Grover Norquist and the U.S. Chamber of Commerce, the pyramid is purely for the glorification and enjoyment of the small class whose names are engraved at the top. And this circles back to something I wrote in 2002 and posted to this blog's first entry in 2004. Who are we working for? What are we creating with our labor? What is this vast efficient machinery meant to do? Who is it meant to serve?

Handling a Manic-Depressive Economy

For half a century it was the successful policy of the U.S. government to moderate the moods of the economy, mostly to keep the economy from dropping into a depression, but also to keep it from overheating. To act as a thermostat. This required government to modulate markets, to soften the hardship and deprivation at the low end of the cycle and rein in the excess reward at the upper end––something it's much harder to do because the rich investor class has thousands of lobbyists working to keep the upper end from any moderation however rational. When there is excess pressure in one direction it's necessary to pull in the opposite direction. This is what keeps boats afloat and cars on the road.

COUNTERCYCLICAL. Try Googling that word and you don't come up with much. A few arcane economic articles available in PDF. One of the most important jobs of government is to counter the irregularities of the economy. Prior to the regulations inaugurated in the early 20th century the U.S. economy had catastrophic nationwide bank panics every few years. These panics ruined millions of people and threw millions more out of work, broke up families, bankrupted thousands of farms and businesses, saw towns dry up and disappear, and precipitated waves of suicide and child abandonment.

The veers and spikes of the economy allowed a few speculators to become enormously wealthy. Bubbles inflated and popped leaving millions in the hands of a few clever people. Sometimes the speculators precipitated the bubbles and the panics in order to profit from them. Regulation put an end to the worst predatory market behaviors and ushered in the long period of broad prosperity that characterized the best half century in American history. It was a bit boring, perhaps, but homeowners and families don't benefit from financial rollercoasters. The dismantling of those regulations in the years after Reagan took away or weakened the countercyclical tools of the federal government and ushered in poorer labor markets, more fluctuations, more bubbles, more Wall Street misbehavior and led to the near collapse of 2008-2009. If the government had a stronger hand we'd be recovering more broadly now, but Reaganism has concentrated the recovery at the top. We have a topheavy poorly balanced economy that is more unstable and less seaworthy.

Unregulated economies sometimes behave like those overloaded ferries that occasionally capsize in the straits of southeast Asia. When they become overweighted on one side, everyone rushes to the opposite side and the craft capsizes. In moments of imbalance the craft needs a counterbalance to remain afloat. In the economic context this is the job of government. To put weight on the side that everyone is rushing away from. To spend money when everyone is afraid to. To spend money in areas that are slack, on necessary infrastructure that has been neglected––even when there is a shortage of revenue to do so. That is a function only government can fulfill, because government works over longer spans of time and across broader areas. Government thinks in terms of economic climate patterns rather than the weather of the moment. Across the United States one year's drought will visit another region next year. Knitting smaller regional markets and different sectors together helps keep the broad economy afloat.

Government's job is to moderate the spikes and the depressions, to balance the interests of different sectors, and it's foolish to take that capability away. There is a name for that do-nothing philosophy. Herbert Hooverism. Government isn't the enemy in an economic crisis. As was seen in the worst weeks of the crisis, government is essential, and never more essential than when free markets fail. We need a better vocabulary for explaining this. A better set of descriptive models. The government is a sure hand on the steering wheel, a thermostat to keep the house livable summer and winter. The government is also fire and police and public health departments when things go wrong. But this countercyclical role of government, this balancing mechanism, is key and little discussed. It needs to be part of the public conversation. When no one is spending is the most important time for government to keep money flowing in the economy. Government is the only entity that can and will work in opposition to the frightened impulses that have us paralyzed. Countercyclical is a cumbersome word. Maybe we need a better one.