Monday, December 26, 2016

The silly, simple capitalist

The election of Donald Trump has brought out a burst of "ain't capitalism grand?" commentary by certain economists, and amongst them is the always annoyingly simplistic Deidre McCloskey.

Her recent column in the NYT carries the message of "don't worry about inequality in the US, you can never fix it, and trying to do so only makes things worse" is chock full of over-generalisations of the most irritating kind.

She doesn't address criticism of inequality by economists such as Stiglitz and Piketty, she just ignores them outright, and goes on to talk as if any attempt to address inequality is akin to the full blown Socialism of Russia and China in the 20th century:
 Another problem is that the cutting reduces the size of the crop. We need to allow for rewards that tell the economy to increase the activity earning them. If a brain surgeon and a taxi driver earn the same amount, we won’t have enough brain surgeons. Why bother? An all-wise central plan could force the right people into the right jobs. But such a solution, like much of the case for a compelled equality, is violent and magical. The magic has been tried, in Stalin’s Russia and Mao’s China. So has the violence. 
 McCloskey distinguishes herself amongst Right wing straw man loving economics writers only by seeming to accept that climate change is real (oh, and perhaps by accepting that it is appropriate for the State to pay for education to year 12).  So why does she not devote any time to criticising the abject failure of the American Right to accept the need for capitalist friendly policies (obviously, a price on carbon) for the problem that is bound to have vast economic consequences and affect the growth she loves?  Instead, let's just write a swooning love letter to capitalism.

Yes we know, Deidre, capitalism has done a great job in many respects and outlived the doomed to fail examples of Russia and nearly every other communist state.  And free trade has helped drop poverty levels globally - even Krugman is a fan of it.

But stop pretending that inequality critics are Communists, and that inequality counts for naught in nations like the US, where examples of the working poor are legion, in comparison to other successful capitalist nations that manage to reduce inequality by policies that haven't killed their economy and don't stop the rich being rich.

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