Recalling Rana Faroohar’s Review of Gary Gerstle’s “The Rise & Fall of the Neoliberal Order”, &
BRIEFLY NOTED: For 2022-10-19 We
FIRST: Rana Faroohar’s Review of Gary Gerstle’s “The Rise & Fall of the Neoliberal Order”
Remembering this very good review of Gary Gerstle from last spring:
Rana Faroohar: The Rise and Fall of the Neoliberal Order: ‘An instant classic… essential reading… puts neoliberalism, defined as a “creed that prizes free trade and the free movement of capital, goods and people,” as well as deregulation and cosmopolitanism, in a 100-year historical context, which is crucial for understanding the politics of the moment, not just in the US but globally. The book also knits together a century of very complicated economic, political, and social trends, which are often siloed but are in fact quite interrelated, creating a new and important narrative about where America has been, and where it may be going…. Reagan and both Bushes… Bill Clinton and Barack Obama were… all… could be described as neoliberals, in the sense that many of their economic policies were at core about unleashing (or at least not restraining) capitalism, with the underlying belief that markets would, indeed, know best….
You can’t really understand the Reagan revolution, with its dismantling of unions, deregulation, and tax-slashing, without understanding FDR’s “New Deal”…. And so, the first section of the book tackles the 1930s to the 1970s….
Gerstle does a particularly wonderful job of connecting the political and economic dots in that post 2000s era in the US, a complicated and fascinating time in which the sort of “techno-utopianism” exemplified by Friedman’s book The World Is Flat (2005) collided with two ill-advised wars in Afghanistan and Iraq, as well as a Democratic party in thrall to both Wall Street and Silicon Valley… and a political narrative—we must save banks but not homeowners—that never quite added up to average voters…. Gerstle has a real genius for capturing political irony—how 1960s hippies turned into Bay Area libertarians, how increased access to credit hurt minorities most, how Democrat Jimmy Carter was a deregulator, how individual “freedom” to pursue prosperity might morph into terrible inequality and insecurity….
Some of this reckoning [with neoliberalism] is racist and xenophobic. Some of it is a necessary swinging of the economic pendulum back to a happy medium. As we wait to see where it lands, Gerstle’s history of where we’ve been is essential reading for a post-neoliberal era…
My thoughts on Gary’s—truly excellent—book are still not ready for prime time:
Notes On Gerstle Neoliberal Order 2022 08 17 219KB ∙ PDF File Download
I do, however, wish to stress seven points:
Neoliberalism in the 1970s was protean—all things to all men, so that by all means it might accomplish something. As it took power, however, it greatly solidified. It turned out that the rock-solid core of the rising Neoliberal Order was this: the liberation of entrepreneurship and the economy from the grip of rent-seeking and bureaucracy. It was a bipartisan initiative. It started under Jimmy Carter. And it came in left-neoliberal and right-neoliberal flavors.
Left-Neoliberalism settled on getting information-technology tools to people—so that they could see opportunities and situations in ways that had previously been accessible only to the high priests of the technostructure—and utilizing the market economy was an unparalleled mechanism for crowdsourcing solutions to social problems—for markets were often the best means to social-democratic ends. Equitable growth would make everyone rich, and they could then use their wealth on the market to demand actions that would solve their life-problems (a la William Beveridge). Government taxes and subsidies would align what was profitable with what was socially desirable (a la Arthur Pigou). And full-employment policies would prevent the waste of depressions, plus give the working class social power—for in a full-employment economy labor would be very valuable—and tight-fiscal easy-money policies would keep interest rates low and mean that any remaining plutocrats could only exercise their social power by spending down their capital, and ceasing to be plutocrats (a la John Maynard Keynes).
What became hegemonic however, was right-neoliberalism. In large part, this was because of the positive hostility of right-neoliberals to technocratic norms: left-neoliberals would put government finances in order so that they were not distorting and damaging the workings of the market; right-neoliberals would then administer huge, unfunded tax cuts for the rich that deranged government finances; and then the cycle would repeat. But right-neoliberalism also drew on a cultural expectation that the only rights that did and should matter were property rights—that if you wanted a voice and power in society, you should first demonstrate that you were worthy and become rich. And never mind that many of the rich had been born on third base. Right-Neoliberal thus gloried in inequality and held it to be not unfortunate necessity but rather social justice itself.
For reasons I do not understand, left-neoliberals tended to slide into right-neoliberalism as they aged.
The shift from left-neoliberalism to Bidenite post-neoliberalism should not be exaggerated. Robert Kuttner is right when he writes that Biden is “closer to the New Deal, with greater public investment, more regulation, progressive taxation…” But we Clintonites’ vote count for the public-investment provisions in the 1993 Reconciliation Bill stalled out at 46 senators, just a hair less than Biden’s 50. This made a huge difference in the congressional mire. But it is not that Clinton was red and Biden is blue. Remember: it was the Clinton administration that launched U.S. v. Microsoft—and, by restraining Microsoft via litigation and threat, kept it from casting devastating shade on rising Google and Apple. Remember: the 1993 Clinton Reconciliation Bill’s EITC expansion and higher top rates moved the tax system far more in a progressive direction than anything Biden has been able, so far, to do.
The key difference between Clintonites and Bidenites is one of rhetoric: The Biden team is not on the defensive, as Clinton was, against a then-attractive right-neoliberalism, in large part because neoliberalism was hegemonic in Gerstle’s sense in the 1990s and is not today.
Hold tight to the fact that global north neoliberalism did not restore productivity growth to its pre-1975 pace, rework the system of economic distribution so that government programs provided more support to the unlucky who had strong claims on public assistance, rework the system of economic distribution so that government programs provided less support to those who were politically powerful and well-connected, reunify the western alliance behind the civilizational project of liberty and democracy, or restore moral order and discipline to rich, post-industrial societies. All it did was make the rich much richer and the non-rich somewhat poorer. Hence advocates of neoliberalism have been reduced, for nearly two decades now, to claiming that it has not failed, but rather that it was failed by unworthy standard-bearers. And that trick never works.
One Video:
EPI: Not So Free to Contract: How unequal workplace power undercuts worker protections
One Image: From Paul Krugman’s Newsletter:
Must-Read: As I Continue to Try to Understand East Asia:
A fascinating paper that I need to work much harder to fully digest:
Edmund J. Malesky: Enhancing the Literature on Authoritarian Regimes through Detailed Comparisons of China and Vietnam: ‘In exploring the role of factions, personalism, and legislative behavior in the two states, the three contributions in this issue dispense with the simplistic notion of a China or Vietnam “Model” of political economy, but instead explain the politics behind how leaders are chosen and how legislative decisions are made and implemented. All three are explicitly comparative, documenting clear differences between the states and showing how these matter for explaining puzzles in critical political outcomes. As I argue in this essay, the insights of these three papers are important for more than just broadening area studies expertise, but for the burgeoning literature on authoritarian regimes, which has tended to black-box countries, insufficiently accounting for subtle institutional differences and variation in the policy preferences of elite actors. In this essay, I explore the unique contributions of each article to larger debates in comparative politics. I conclude by arguing for a unified theory that can help us better understand why these systems have been so successful in good times and resilient in hard times…
LINK: <https://sites.duke.e du/malesky/files/2020/11/20201104_ChinaVietnam_ejm3.pdf>
Other Things Þt Went Whizzing by…
Very Briefly Noted:
It is not just AI-art; it is AI-words too: Fadeke Adegbuyi: An AI Might Have Written This: ‘Writers are using apps like Sudowrite and Subtxt to craft essays, short stories, and screenplays…
It looks as though China’s middle-income trap is knocking on the door: Robin Wigglesworth: China’s low-growth era: ‘Is 3 per cent the new normal?…
A report from the globetrotter: Noah Smith: Amsterdam: some impressions: ‘Travel-blogging from the perfect liberal city…n yway, my stay in Amsterdam was too short, and I hope to be back sometime. In the meantime, I just arrived in Taipei, after cutting out the Singapore leg of my journey (Sorry, Singapore friends! 2 days was just too short, so I went straight to Taipei, and planned a longer Singapore trip for early next year!). So expect another travel-blogging post in a week or so…
Again and again, it is the absence of deployed driverless systems in limited environments that flummoxes me. People are expensive!: Tae Kim: Intel's Mobileye Autonomous Driving IPO Is Shaping Up to Disappoint…
Yes. British is more dysfunctional than American politics. Any further questions?: Robert Shrimsley: Jeremy Hunt is now in charge: ‘Some Tory MPs may conclude it is better to pretend that the chancellor is really PM and see how far it takes them…. The appeal to some of her MPs [is] of not requiring them to do anything yet…. Quite brilliantly, the Conservatives have somehow contrived to have Rishi Sunak’s policies and Liz Truss’ presentation skills…
The first rule of being a rising power is not to challenge the Hegeman prematurely. As long as the system allows ones rise to continue. Emulate America from 1846 to 1943, not Athens in the 430s poking Sparta's core ally Corinth with a stick. The Xi régime did not realize this: Jordan Schneider: Export Controls, Xi's S&T Dreams, and "Technological Vassaldom”: ‘Forcing China to rely on foreign production for the latest and greatest chips plays exactly into Xi’s fear of “technological vassaldom”…
Again, first rule of being a rising power is not to challenge the Hegeman prematurely. As long as the system allows ones rise to continue. Emulate America from 1846 to 1943, not Athens in the 430s poking Sparta's core ally Corinth with a stick. The Xi régime did not realize this: FT Editorial Board: Xi Jinping’s control of fortress China is a watershed moment: ‘New rules and mass movements are in prospect as Beijing builds a “fortress China” able to withstand what it sees as the efforts of the US-led west to hobble its progress.... Beijing is justified in viewing recent US actions as adversarial.... If, however, Beijing’s response is to hunker down… throw a security straitjacket… it risks smothering the entrepreneurial spirit that has driven the country’s remarkable economic transformation...
Will the closing of the Musk Twitter purchase affect Tesla? My view was that Tesla had difficult problems now that it has competition, and that the focused attention of a charismatic charlatan-impresario was no longer a net benefit; thus the distraction of the chaos monkey seems to the good—for Tesla as a productive organization, at least: Al Root: Tesla Stock Sale Is Coming: ‘We Know Who, Why, and When, but Not How Much. It’s looking increasingly likely that Tesla investors will have to deal with their CEO Elon Musk buying social media platform Twitter. In the long run, the issue for Tesla investors is management distraction. In the short run, the Twitter purchase means another large Tesla stock sale is coming—and soon. Just how much, however, isn’t clear...
¶s:
Never forget that the first-term George W. Bush administration was more of a chaos monkey in its policies than the Trump administration was:
Scott Lemieux: The Big Lie 1.0: ‘A telling anecdote about the selling of the Iraq War: Garrett Graff: “Sunday… [Senator Pat Leahy] was out walking with his wife in his McLean neighborhood when "two fit joggers trailed behind us. They stopped and asked what I thought of the intelligence briefings I'd been getting." Leahy went back to the intel officers at the Capitol SCIF and requested "File Eight," and it contradicted what the Bush administration was saying publicly about the WMDs.… I asked @senatorleahy about this incident when I interviewed him at @bearpondbooks earlier this month, if he knew the joggers ever, and he said, "You don't understand—I didn't *want* to know who they were."… After it became clear that Iraq had no “Weapons of Mass Destruction”… the Bush administration and its apologists shifted to blaming “the intelligence” for the mistake. But… most of the case for was either a grossly distorted picture of the available evidence or just flat-out made up...
My view: a ceasefire would be a mistake unless accompanied by immediate Ukraine EU accession and 20 NATO “training battalions” permanently stationed near the ceasefire line:
Lawrence Freedman: Getting to Negotiations: ‘The regular calls for negotiation… tend to be more directed at Kyiv or Washington than Moscow, as if they are the main stumbling blocks. Yet it is Vladimir Putin that is demanding that this war leads to a fundamental change… [who] does not preclude talks, but only so long as Russia is allowed to hold on to occupied territory, and even territory from which it has had to retreat.... Putin has so far refused to scale down his demands to meet his diminished power. His past duplicity undermines any confidence.... We need to think in terms of... separating the fundamental territorial issue... from all the other and consequential issues that will have to be addressed in a proper peace process.... The first stage may well require mediation and devices such as international observers and even peacekeepers but it will need to be kept as simple as possible if it is to be linked to a cease-fire...
Yes, the odds are that the inflation news will look good next year. Whether that means that people will not see an inflation problem is unclear: gas prices are still likely to be high, and rents are still likely to have risen substantially:
Matthew Klein: Wages, Prices, and Taming U.S. Inflation: ‘For the most part... deflationary forces have yet to reach consumers. Durable goods prices have stopped rising, but before the pandemic they generally fell about 1% a year.... It’s therefore reasonable to suspect that the unusual—but temporary—price increases in goods will eventually be followed by unusually large—but temporary—price declines. We may also benefit from normalizing inflation rates for various services that had fallen in price during the pandemic only to shoot up during the reopening.... These developments, should they occur, would make inflation appear slower than the underlying trend determined by domestic conditions. Just as it would have been wrong to conclude that the 11.1% yearly CPI inflation rate in the first half of 2022 was an accurate reflection of domestic conditions, it might also be wrong to view a sharp slowdown in inflation as a sign that spending and production have gotten back into balance.... What will inflation look like once the one-off price spikes and one-off price declines finish working their way through the data? This is not a simple question to answer. But we can be reasonably confident that prices can’t grow too much faster (or slower) than incomes for very long—and the largest source of consumers’ income, by far, is worker pay...
The “west” has always been divided between free-traders on the one hand and mercantilist-defense types on the other. But no matter what the attitude of the “west”, developing countries need to ask the question: can we successfully run a developmental state? If the answer is no, then they should cling to full trade, no matter what the “west” is doing as it balances current wealth off against that defense which is more important than opulence. Egypt, Paraguay, Mali, and Indonesia need to sell their exports and import capital goods and engineering skills. If free trade is the most effective path to that, they should do it—even though it is an “ideology”:
Branko Milanovic: Let’s go back to mercantilism and trade blocs!: ‘The West was “in charge” of the dominant economic ideology. That ideology pervaded all international organizations. If the West is now going for “friend-shoring”, how is the IMF to explain to Egypt, Paraguay, Mali, and Indonesia that they should continue with open trade? If globalization is (rightly) credited with raising incomes in Asia and with the greatest reduction in global poverty ever, are we now to reverse policies on global poverty and to argue that regional trade blocs should become the economic basis from which to proceed? Who is going to tell this to the IMF, the World Bank and the WTO? If the West abandons globalization, this is fully understandable from the mercantilist perspective of national grandeur. Colbert would approve. But one should not delude himself/herself in believing that the rest of the world can just be flipped on the drop of the hat, and would not notice the enormity of the ideological change that this implies. And would not wonder if the initial impulse that advocated economic openness might not have been based on geopolitical concerns that are now found wanting. One simply cannot maintain the universal validity of an ideology that one does not follow...
The need for the pivot to mobile was because your phone is always with you, while your computer—even your laptop—is not. Your VR headset is not going to be always with you. If the phone is to be distrupted, it will be not by your VR headset but by your AR Raybans, and that it still decades away:
The Economist: How much trouble is Mark Zuckerberg in?: ‘As Facebook fades, Meta hopes for success in another dimension…. Mr Zuckerberg is hardly the only one who sees potential in vr. In the first half of next year Apple is expected to release its debut headset, and Sony will launch its latest gaming-focused goggles for its PlayStation console. If headsets do become the new pcs, as Mr Zuckerberg has predicted, Meta will have a considerable first-mover advantage. The Quest 2 accounted for 88% of global vr headset sales in the first half of this year.... The Quest Pro is the most advanced set of vr glasses around. Meta’s hiring binge means it has much of the top vr talent.... The question is timing. Meta’s unusual structure gives Mr Zuckerberg total control…. Executives compare the company’s predicament now to ten years ago, when it was managing the transition of its social network to mobile. Shifting a billion Facebook users from desktop to phone was no mean feat, made harder by the fact that Mr Zuckerberg was late to spot the importance of mobile. That experience may have influenced his approach to the metaverse. Meta’s new vr technology, he said on October 11th, was for those “who’d rather be early than fashionably late”. The risk, as investors grow impatient, is that this time Meta has made its move too soon...
Good advice on whether you should let “metaverse” live rent-free in your brain or not:
Max Read: A timeline of Facebook's journey into the metaverse: ‘Last year… we wrote… “normal readers do not need to know, care, or form opinions about ‘the metaverse’ […] Read Max recommends readers avoid discourse concerning ‘the metaverse’ and devote the brain power they might have spent thinking about the ‘the metaverse’ to reading a good book.” Read Max subscribers who took this indispensable (and, at $5/month or $50/year, inexpensive) advice no doubt forged closer relationships to family members, created unforgettable memories, etc. using the time and brain-power that non-subscribers to Read Max used to think about the metaverse. We stand by this rating. But we also note that “Horizon Worlds,” the virtual-reality world-building platform and hangout space owned by Meta Platforms, f/k/a Facebook, is nearing its one-year anniversary of being open the public, and we increasingly believe it’s worth using some portion of your psychic energy to consume certain journalistic descriptions of the metaverse, because they are very funny to read…
One possible conclusion after reading the China Talk piece: in going all in on "economic warfare", the US has basically confirmed the validity of the CCP's argument.
The difference between the left and right neoliberals? The left neoliberals were in charge of their project, and all came from places like MIT Econ or Yale Law. The left neoliberals were keen on policy, but disdained political economy. The right neoliberals may have a similar mindset, but they weren't running the show. The plutocracy ran the show, and the right neoliberals were merely their priestly class. The plutocracy--skilled rent-seekers--is skilled at practical political economy. And you can't take the political economy out of policy.
There is no symmetry between the left neoliberals--policy wonks--and the right neoliberals: hierophants for their funders.