Neoliberalism

Uchitelle in the NYT, Borosage, and, my favorite, Dean Baker on why Obama (wisely) didn't pick a crazy-ass progressive economist like say, Dean Baker.

The reality is that if Obama had picked a progressive economist (a.k.a. a Neanderthal protectionist), who had not been initiated into the Wall Street club, he would have gotten beaten up so badly by the media that he would want Reverend Wright to come back for more press events.

There's also supposedly a video of Baker floating around in which he exclaims, in his prophetic voice: "God bless American capitalism? No, God damn American capitalism!"

Furman argues in Uchitelle's article that his own views are "irrelevant.” But that strikes me as spin—the blow-up around Furman's appointment will help keep him fair and balanced, but based on his writing and quotes, he's a true believer in Rubinomics, and it's inevitable that those views will influence the advice he gives.

Baker is probably right about how a progressive economist would have been treated by the media, and Borosage is right when he says Furmangate really isn't about Furman, it's about Obama's economic views. But I'd still love to see an economist from the non-Rubinite camp on Obama's staff alongside Furman. And to be even more super-duper-radical, how about a woman on either the paid staff or unpaid economic advisor list (right now the same list of roughly five white guys is regularly cited). My top pick for either would be Heather Boushey, who's currently working for the Joint Economic Committee on the hill, has as much or more policy savvy as Furman, and knows way more about labor market economics, which I hear just might be an issue in this election, than he does.

This graceful E.J. Dionne column got me thinking about one more casualty of conservative economics: neoliberalism.

Conservative economics propped up the neoliberals. Many embraced a watered down version of the conservative understanding of market dynamics and government, while professing to keep their liberal moral compass. This now seems counterproductive, because they reinforced right wing ideas for the sake of short-term survival and compromised with an ascendant far-right that should have been blocked.

But there are some good things about neoliberalism that ought to be salvaged. An aggressive and confident liberalism would be great, but not one makes the same mistakes that the 60s and 70s liberals did. It should understand the new political and economic environment, that things have changed and we need something different, but that the answer is not to be more like conservatives.

Nobody I know has explicitly tried to combine the better elements of both perspectives. So what are some good things about neoliberalism and liberalism?

Two good things about neoliberalism, I think, are it's claim to the public interest and belief in pragmatism. For too long, these ideas have been tied to conservative policy and values, but they don't have to be.

Two good things about liberalism are its inclusiveness and idealism. Liberals believe in accepting and supporting outsiders, and that we, through government, can take active steps to make the world "as it should be."

To be sure, there are major tensions here. But both traditions can learn from each and serve as a check on excess. For the time being, neoliberals need the check that liberalism provides the most. They've become too anti-government and need to stress that interventionist policy can promote the public interest- by preventing a mortgage meltdown, for instance. And liberals could benefit from a pragmatic approach to integrating outsiders into the economic mainstream. Talking up the economy, as Margy argues, is a good way to do that.

And it should be instructive to remember what William F. Buckley did for conservatism- he combined and legitimized the warring factions of conservatism- the social conservatives and free-marketeers- by finding common ground. It turned out that they all started from the perspective of individualists. For liberals, that unifying force is the community- belief in its power and value, that everyone's fate is tied together and that we all need to look out for each other, that deep down we're all cut from the same cloth, and that everyone has something to contribute and an important role to play in creating a better society. Developing this common ground could bring together the disparate elements of the progressive movement, including anti-war folks, the environmentalists, the identity issues folks, etc.

An excellent summation by CEPR's Mark Weisbrot of the case against neoliberal development policies:

.... For twenty-five years our government has pushed a series of reforms throughout the region: tighter fiscal and monetary policies, more independent central banks, indiscriminate opening to international trade and investment, privatization of public enterprises, and the abandonment of economic development strategies and industrial policies. The Bush team thinks that these reforms, known as "neoliberalism" in Latin America, were just the right formula to stimulate economic growth.

In fact, Latin America's economic growth over the last 25 years has been a disaster - the worst long-term growth failure in more than a hundred years. From 1980-2000 GDP per person grew by only 9 percent, and another 4 percent for 2000-2005. Compare this to 82 percent for just the two decades from 1960-1980, and it is easy to see why candidates promising new economic policies have been elected (and some re-elected) in Argentina, Bolivia, Brazil, Ecuador, Nicaragua, Uruguay, and Venezuela. They also came close to winning in Mexico, Peru, and Costa Rica.

The left governments that have introduced new economic policies have done pretty well: Argentina has grown by a phenomenal 8.6 percent annually for nearly five years, pulling more than 8 million people out of poverty in a country of 36 million. Bolivia has increased government revenue from hydrocarbons by about 6.7 percent of GDP, an amount that would equal $900 billion in the United States, and is using the additional revenue to help its majority poor. Venezuela is also using the government's increased take of oil production to provide health care, education, and subsidized food for the poor. All of these governments have succeeded by implementing policies that Washington opposed.

Some additional points on the Brook's Neoliberalism op-ed, from TAPPED's Ben Adler:

[Brooks] notes that TNR's circulation has declined but fails to note that the Monthly shifted leftward and enjoyed a circulation increase in the last several years (nor does he mention that Kevin Drum, who he cites as a typical lefty blogger, works for the Monthly.) He also fails to note the rising circulations of TAP and The Nation. And Brooks makes a rather curious assertion, that The Economist's high circulation is caused by the increasing number of Independents (this comes from Brooks' usual handwringing over our polarized political debate), which seems odd since The Economist is a news magazine that people across the spectrum who may not agree with its libertarian editorials read for its dispatches on little-covered regions.

But most significantly, Brooks doesn't acknowledge the substantive policy basis for the turn away from neo-liberalism. Today's liberal jouranlists, bloggers and activists aren't merely disinclined towards neo-liberalism as a political strategy. Seeing the devastating effects of free trade agreements like NAFTA on Mexican farmers and American workers, and the disaster of the Iraq War that many neo-liberals supported, they reach a new set of conclusions. Brooks' characterization of the new cadre as merely reactionary on a political level, rather than acknowledging their substantive critiques, shows we can still count on a little lightweight punditry in even his stronger columns.

I suspect TNR's circulation decline also has something to do with its increasing ideological incoherence, and tendency toward contrarianism for contrarianism's sake—and some people will rightly never forgive TNR for its 1994 smear job on the Clinton health care plan.

If David Brooks seemed a bit premature in calling for the end of "hipster parenting", we can hope that he's more on target with his declaration today that "neoliberalism had a good, interesting run—while it lasted."

What Brooks doesn't mention, however, is the extent to which neo-liberal cause has been taken up by new, well-funded think tanks and policy projects inside the beltway. The prominent neo-liberal think tanks and policy projects started up within the last few years include The Hamilton Project at Brookings, The Bipartisan Policy Center, and The Third Way. In essence, even as neoliberal ideas fall out of favor in the marketplace of ideas, neoliberals, with plenty of Wall St. and other corporate money, are mounting a counterinsurgence from their office-building bunkers inside the beltway.

Instead of acknowledging and taking a serious look at this development, Brooks waxes nostalgic about the virtue of neoliberalism and whines about the lassitude of liberalism: neoliberals "rejected interest-group politics" and "while the old liberals could be earnest and self-righteous, the neoliberals were sprightly and lampooning. While the old liberals valued solidarity, the neoliberals loved to argue among themselves, showing off the rhetorical skills many had honed in Harvard dining halls." Brooks goes on to claim that "the left, which has the momentum, is growing to look like its old, pre-neoliberal self".

All of which makes one wonder whether Brooks reads anything other than The Economist these days. Perhaps the leading theme in Jerome Armstrong and Markos Moulitsas Zuniga's book Crashing the Gate is the need for the Democratic Party and progressives to move beyond interest-group politics. Moreover, the new progressive left, particularly as represented in the blogosphere, is less earnest and self-righteous, more sprightly and lampooning, more prone to arguing among themselves than the current crop of neoliberals. (On the last point, I recommend reading the debate that ensued after Matt Stoller's TPM Cafe post on the netroots and generational differences among progressives.) Thankfully, the pomposity, self-righteousness, and unsprightliness evidenced by the phrase "showing off the rhetorical skills many had honed in Harvard dining halls" is one that you are unlikely to encounter in the progressive blogosphere.

PS: Near the end of his op-ed, Brooks says "The New Republic has tried to keep the neoliberal flame alive .... But there is no longer a readership for that." He then goes on to undercut his point by claiming that "many of those who were semiaffiliated with one party or another are drifting off to independent-land. (The Economist, their magazine, now has over 500,000 American readers—more than all the major liberal magazines combined.)" It's true that TNR's circulation has been falling (by almost 50 percent since 2000) and The Economist's has been rising, but it's not clear that they have anything to do with one another or are signs of any particularly important political or attitudinal shifts. The New Yorker, like The Economist, is classified by the Project for Excellence in Journalism as a non-traditional news magazine, but its viewpoint is consistently liberal. The New Yorker's circulation also has been steadily increasingly, and it's more than double that of The Economist (and also larger than all of the major conservative magazines combined). (For more on circulation trends, see PEJ's The State of the News Media.)