NoisetteandtheDude’s Blog

December 9, 2008

A couple thoughts about economics

Filed under: Economics — noisetteandthedude @ 12:32 pm
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I enjoyed the recent article in The New Yorker about Ben Bernanke, and I hope the “takes a crook to catch one” philosophy works, because Bernanke will be the head of the Fed for awhile. Seems to me that Bernanke can adapt to new realities, unlike the ideologue who preceded him; that’s gotta be a plus. One must never forget that Alan Greenspan, the previous head of the Fed, used to be the main cheerleader of the Ayn Rand fan club. No wonder he seems so baffled now.

The most recent issue of The New Yorker contains an equally fascinating (and equally lengthy) article, this one by Larissa MacFarquhar about Naomi Klein, an article that left me with mixed emotions.  

I’ve already written at some length about Klein’s opus: “The Shock Doctrine,” so you know where I stand on that subject. The background provided by The New Yorker article helped illuminate the origins of her philosophy.

I came away understanding that Ms Klein is certainly more moderate than her parents when it comes to politics, but the conclusion of the article’s author – that Kline is more anti-corporate than anti-Milton Friedmanism – is suspect, I think.

Corporations have indeed been the culprits responsible for the excesses of unregulated crisis capitalism – but the philosophy they followed was Friedman’s. And that philosophy was implemented by governments – most notably our own – not by corporations, who were “merely” the beneficiaries. I suppose it doesn’t really matter; it’s been a hand-in-glove arrangement benefiting all involved. Excepting the people, of course. You know, all us main-streeters who are sticking our grandkids with the bill.

I’m fairly certain Obama is familiar with Ms Klein’s “Shock Doctrine,” as well as Friedman’s “liberal” economics and Keyne’s prescriptions for the government’s proper role in economics.

Let’s hope President Obama shows the same balance in melding their disparate philosophies as he has in assembling his work force – with, one hopes, a whole lot of Keynesianism to counter the unbridled Friedmanism that got us to this sorry situation – and a good hard look at Naomi Klein’s indictment of Friedmanism, too.

He probably will; I’m sure he enjoys The New Yorker just as much as I do.

What do you think?

–The Dude

October 25, 2008

Economics: the Dismal Science


…An especially dismal science lately.  We’re all hurting these days, which is the main reason Obama will be elected in a landslide in 10 days. Poor John never had a chance: not only does he admit that he’s no economist, he’s been swamped by a tsunami of repossessions, forfeitures, and just plain panic.  And all of us have had way more than enough of this crap.

But I think we need to poke around in the pile and see if we can understand just how we got here, then set a course to higher ground.  I mean, someone’s got to do it; might as well be us.

Most politicians now agree that under-regulation of the banking and securities industry is the root cause of this latest economic melt-down.  But politicians tend to line up, lemming-like, marching in lock-step cadence to the latest polls.  You and I need to look a little deeper.

Naomi Kline’s “The Shock Doctrine: Disaster Capitalism” is a good place to start.  A word of caution: the book is not a pleasure read; it’s too full of things that make your blood boil to be any fun as bedtime escapism.  The problem is that I can’t stop reading the damned thing because it’s so real and brutal.  And so very, very scary.

In painful detail, Kline’s book delineates how Milton Friedman’s “Chicago School” taught a whole generation of economists how to take advantage of – and create  “shocks” to speed adoption of unfettered free enterprise.  They’ve succeeded beyond Friedman’s wildest ambition; his “neoliberal economics” dominates the world.

Lots of terms have been used to describe this kind of economics: “neoliberalism,” “classical economics,” “laissez-faire,” “neoconservatism,” or more familiarly, “Trickle-down economics” or “Reaganomics.” [Your assignment for tomorrow, class: How does trickle-down economics differ from getting pissed on? Compare and contrast.]

The most accurate terminology is Ms Klein’s: “The Shock Doctrine: Disaster Capitalism.” Whatever you call it, it’s destroying our country – and our world.

Ms Klein starts by talking about Pinochet and Chile, and how Chicago School economists and the CIA worked hand-in-iron-fist with the Pinochet regime to restructure Chile’s economy – all for the benefit of Pinochet’s governing class, wealthy Chilean business owners and land-holders, foreign investors (especially Ford Motor Company), and the United States government.  All in the name of anti-communism and unregulated free enterprise, and all at the expense of the citizens of Chile, who went from living in poverty to living in fear and ruin.

Much has been written of Friedman’s Chicago School in helping Pinochet achieve the “economic miracle” of Chile.  And much has been written of Pinochet’s human-rights abuses, and Amnesty International’s role in documenting those abuses.  Until Ms Klein’s book, almost nothing has been written about how those abuses were deliberate, and essential to achieve the “Chilean Miracle.”

Amnesty International’s role in documenting human rights abuses in Chile was exquisitely narrow; they could document the specifics of Pinochet’s abuse of his citizens and publicize those specifics in glorious detail, but they could not examine the reasons for the abuse.  They could document the what, but not the why.  Their charter specifically forbad them from looking into the why, and their funding – mostly from the Ford Foundation – was conditional on them not looking for causes.

Which explains why Milton Friedman’s role in promoting those abuses was ignored – and why Friedman was awarded the Nobel Prize for Economics in 1976 for his work with Pinochet, and why Amnesty International was awarded the Nobel Peace Prize in 1977, for its work in the very same country.  For a couple years there, it appears everyone on the Nobel committee was wearing very tightly fitted blinders.  Or, more likely, just seeing what they wanted to see.

Ms. Klein’s book goes on to explain how the shock doctrine remade the economies of the rest of the world, after Chile: the balance of the “southern cone” (Peru, Venezuela, Brazil, Columbia), Great Britain under Thatcher, the United States under Reagan, Russia since the fall of the Berlin Wall, Poland (under Solidarity), South Africa (under the ANC), and China (ongoing).  The list is endless.  And more than a little depressing.

So, what do we do?  I’ve got some ideas – you know I do.  But this tome is already too long.  You’ll just have to wait.  Or better yet, offer your own.

Until next time, thanks for your attention – I look forward to hearing your thoughts.

–The Dude


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