Brad DeLong speaks at a Cato event

Here is the closing part of his summary:

One way to understand Keynes's General Theory is that Say's Law is
false in theory but that we can build the running code for limited,
strategic interventions that will make Say's Law roughly true in
practice. The modern American liberal economist's view of
libertarianism is much the same: libertarianism is false in theory, but
it is very much worth figuring out a set of limited, strategic
interventions that will make the libertarian promises roughly true in
practice.

Here is much more.

Comments

“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.†

If only Delong and the rest of the Keynesian acolytes only really how much that applied to them.

DeLong says, "Adam Smith expected the imminent collapse of slavery."

Huh?

Smith lamented, "This institution therefore of slavery, which has taken place in the beginning of every society, has hardly any possibility of being abolished." Though unproductive in Smith's eyes, slavery persists because of the "love of domination and tyrannizing." (Lectures; 1762-3, 114-117, pp. 186-187 of my Glasgow edition)

I made the same comment on his blog. I won't hold my breath waiting for a reply.

DeLong's point about Say's Lay is false, I think, but at least coherent. But his second claim makes no sense. If the government has to achieve something by intervention, it's sure not libertarian. It's like saying, "Protestantism is false, but the Pope can approximate it."

I agree with fin-tastic. DeLong's comment about the butcher is clearly wrong. I stopped reading.

One ballot can feed one persons desire to participate in people's romance. One ballot doesn't do much for improving one person's policy outcomes.

Maybe a PET scan will show the same areas activated by voting for socialists are activated when buying Powerball tickets.

This calls for liveblogging "A Rehabilitation of Say's Law", by W. H. Hutt.

Jason,

I think it's just made up hooey. Let's look quickly at DeLong's four points.

1. The Gilded Age was bad. Sure, if you object to improved welfare for the common man it was a disaster. That's why the US had so many immigrants.
2. The Great Depression was market failure. Sure, if you count the Fed as part of the market. The Federal Reserve System is privately owned, you know.
3. The persistence of unfree labor. Sure, if you ignore the role of capitalism in freeing the serfs and of the state in enforcing chattel slavery.
4. The information economy is pushing us from a Smithian world into a Schumpeterian world. Sure, if you think lower costs of publishing and disseminating ideas will discourage market entry, then the information age is an obvious threat to decentralized sources of information.

I think it's quite possible to be an informed, thinking, intellectually honest "liberal"in DeLong's sense. It's easy enough to make a list of prominent examples. I'm completely stumped, however, by DeLong's list of reasons for preferring his brand of liberalism to the real thing. How could he think that silliness is persuasive? Perhaps I lack imagination, but it's a complete head scratcher for me.

I *almost* stopped reading after the murderous butcher for the same reasons as dave, fin, and MnM. But I went through and decided the article wasn't too bad. DeLong's main point seemed to be that people are not economically rational, so the simple "libertarian" ideal market story isn't reality. That much I can agree with, but of course the obvious response is that there's no reason to think government is any more rational.

Liberals rarely seem to address that point. My theory is that most liberals are good people that want to do the right thing, and so they assume given the right election results it is not too difficult to assemble an able, benevolent executive branch. Personally, I think this is false because "managing" the economy is too complex to work, and also because government actors are under too many irrational external constraints.

For the second time in 3 months I find myself completely disagreeing with Brad deLong in every possible way. Every.Possible.Way. Understand what this means from an Overcoming Bias point of view.

And yet I am a liberal. deLong makes me want to pull my hair out. Srsly. Aaaarrrgh. Eric Alterman could do this argument sooo much better, and did at Brooklyn College on Sept. 15.

For the second time in 3 months I find myself completely disagreeing with Brad deLong in every possible way. Every.Possible.Way. Understand what this means from an Overcoming Bias point of view.

And yet I am a liberal. deLong makes me want to pull my hair out. Srsly. Aaaarrrgh. Eric Alterman could do this argument sooo much better, and did at Brooklyn College on Sept. 15.

DeLong fails from the outset in that he doesn't understand libertariansim; he claims that libertarians believe that economic actors are entirely self-interested

This isn't a libertarian belief at all,* and the opposite is closer to the truth. That most people have at least some honesty and concern for others is an argument in favour of libertarianism, as it reduces the need for state intervention to force people to act as though they were honesty and charitable.

*except for the odd Ayn Rand fanatic, and even they are far more self-interested in theory than in reality.

1. The Gilded Age was bad. Sure, if you object to improved welfare for the common man it was a disaster. That's why the US had so many immigrants.

As Delong points out, what was bad about the Gilded Age was the increase in inequality and attendant increases in labor unrest and socialist/anarchist movements. Today, two of the most unequal countries in the world are Brazil and South Africa and I wouldn't hold out high hope for these two countries going down the path of free markets.

3. The persistence of unfree labor. Sure, if you ignore the role of capitalism in freeing the serfs and of the state in enforcing chattel slavery.

Sure, the state enforced slave owners "property rights" but what if it didn't? Do you think that slavery would have disappeared from the U.S. the minute the fugitive slave acts were repealed? The point here is that some optimists held that slavery was economically inefficient and would crumble under the weight of its wastefulness and inefficiency (I don't remember if Smith made this argument or not, but others certainly have). The available evidence from cotton plantations in the U.S. and sugar plantations in Brazil and tropical regions suggests otherwise.

4. The information economy is pushing us from a Smithian world into a Schumpeterian world. Sure, if you think lower costs of publishing and disseminating ideas will discourage market entry, then the information age is an obvious threat to decentralized sources of information.

Barriers to entry may simply be a consequence of consolidation and information clustering. As Delong himself has pointed out, it would be much more difficult to establish himself as a popular blogger if he were just starting out now rather than having started several years ago. Another example: it's not hard to start up a search engine at all yet this fact hasn't eroded Google's market share at all. The information business seems just as prone to winner-take-all outcomes as heavy industry. Yes, minor players can disseminate information cheaply and some will eventually dethrone the behemoths like Google (and become the new behemoths themselves) but it's clear there are major lock-in effects and economies of scale in the information economy.

Matt,

"Today's "Liberal" must rely, as DeLong states, on a central power to correct the ills he sees in society."

Exactly. All statist philosophies suffer from the fallacy of the divine state. They argue that liberty isn't possible, but then, the divine state isn't possible either. Hobbes has a point that the natural state of man is a war of all against all, but he neglects to mention that the natural state of the state is exploitation of the population under its control. Leviathan, therefore, can never be more than a temporary solution.

Ricardo,

You are making more reasonable arguments than DeLong IMHO. Anyway, here are my responses to your points. (No argument on point 2?)

1. Income distribution in the Gilded Age
I’m not sure I follow you here. You say Brazil and South Africa are “unequal† and therefore they are not likely to go free market. How does that support the idea that free markets produce an undesirable inequality of income distribution? Anyway, I never really get how the Gilded Age is a bad example for classical liberalism. Real wages rose in the US despite great influxes from the farm and overseas. If money income rose more rapidly at the top, quality of life rose more rapidly at the bottom. The long-run tendency of commerce, moreover, is toward greater equality of income. Henry VIII lived high above the peasantry. Today, the Queen and her subjects sit down to the television at the same time, both enjoying ice cream for dessert.

3. Slavery
You say, “The point here is that some optimists held that slavery was economically inefficient and would crumble under the weight of its wastefulness and inefficiency (I don't remember if Smith made this argument or not, but others certainly have). The available evidence . . . suggests otherwise.†
First: Smith most decidedly did not make that argument as DeLong falsely reports. Second: So what! Yes, slave prices were rising in the US in the 1850s and so on. Absolutely. Fogel and Engerman nailed it. How does that count as an argument against classical liberalism, which always defended liberty and equality for all men? (Right, men. With Mill and others, the classical liberals were ahead of the curve on female emancipation, too.)

4. The information economy
You worry that the Internet has turned information markets into winner-take-all markets. I freely admit that some serious folks I personally admire do make this argument. It stumps me, however. How many newspapers could the average American read in, say, 1973? In Cleveland it was two, The Plain Dealer and The Cleveland Press. Today, most Americans can get a large variety of old-fashioned printed newspapers from the local Borders, including foreign papers. The number of readily available independent sources off the Internet is huge. YouTube and blogging have opened things up tremendously.

I know part of being a libertarian is thinking that the state can't do anything right, but I think the point of being a liberal today means that you recognize, first, that power is a disruptive force in the free market and, secondly, that the state can serve a reasonable balancing function against institutions, usually companies, that serve only the interests of a narrow elite (and sometimes not even very well). The liberal also recognizes that inequality tends to enhance the influence of power in the market place and seeks to undermine this directly by reducing inequality.

Delong's doesn't make this argument very well, but I'm pretty sure most genuine liberals would ascribe to some version of this argument, though many could view the fundamental basis of liberalism as being much different. In my opinion, though, this contrasts best with libertarianism. I'm not sure whether libertarians are more likely to ignore the ability of the state to represent a more diverse interest set or just insist that it will do such a terrible job (incompetent/subject to capture), that it is still a bad idea. One difficulty with arguing with libertarians is that they frequently don't really approve of the goals of this state interference anyhow, which tends to reduce their willingness to deal fairly with the issue of competence. I don't mean to slur libertarians by pointing this out: it is simply human nature to do develop this kind of bias. One mark of a very good intellectual is the ability to avoid doing this as much as possible, and I give Tyler Cowen credit their for the most part. He frequently acknowledges the reasonableness of an argument that state interference could be desirable, even if he disagrees with it. And sometimes he doesn't disagree at all.

Matt,

"...those who believe in reason used to suppress the passions and superstitions, and... those who believe in reason to enforce the passions and superstitions."

Interesting concept, and Hobbes mentioned something quite similar, but I suspect that all statists tend to see themselves as the former and their opposition as the latter. That is, they all are both as it suits their interest, and again, their interest is to exploit*. Hobbes clarifies that taxation, lawful requirements, etc., are not exploitation, but then, what would we expect a propagandist for the royalists to say?

*Leviathan, Of Commonwealth, Chap 30, "But as for such as have strong bodies... they are to be forced to work; and to avoid the excuse of not finding employment, there ought to be such laws as may encourage all manner of arts... and all manor of manufacture that requires labor."

Matt,

I haven't read Spinoza. I know only the quotation, "desire is the very essence of man" - one of my favorites, and which leads me to believe that he had at least some sense.

As for religion and state, I do not find value in distinguishing between the two. Religions in power are highly political, and the statists have always seen fit to inculcate mystical propaganda. I see, for example, many, many parallels between the methods and objectives of the Roman Catholic Church at the height of its power and the modern Progressives at the height of theirs. Indeed, what prompted me to read Leviathan was the observation that it was the same basic argument used by both.

Matt, I'll check it out.

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