Economics: Reflections and Rants – or, talking when I shouldn’t be

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Today’s AP headline informs that Obama is in Indiana stumping for a stimulus plan that the let’s-not-approve-a spending-bill-for-the-first-time-in-8-years-Republicans are bemoaning in WA. Seems money for rebuilding schools, early childhood education programs, meeting state budgets, unemployment benefits, food stamps, improving infrastructure etc. is ‘wasteful big government spending’. The answer predictably enough is more tax cuts because using the government to propel the economy out of a recession is inefficient and stinks of the old bugbear communism. Only the debt strapped, gorged on a false sense of entitlement, archetypal self-reliant (American) individual can save the economy. Too much Ann Rand and John Wayne in your formative years can be very bad for you. Perhaps a new war would justify spending. We could all get behind venting our frustration on some under developed, preferably Muslim, country.

As I suffer from a painfully strong liberal bias, I know certain things to be true even if I am real close to the geographical center of nowhere: Republicans in the US are generally full of shit, government is not entirely evil, and neo-liberal free trade agreements exist only to provide cheap labor and create vassal consumer states for US goods. Additionally, the IMF and World Bank are largely international fronts for pushing advantageous developed world (G1) economic trade policy. As a product of the American media, I also know that the IMF,WB, free trade agreements and the like are resisted by three groups:
1. unions, 'community organizers' and their ilk
2. tractor driving mustachioed French farmers
3. disillusioned middle class white kids who too recently read Edward Abbey and think anarchy is a feasible governance system. this group generally subscribe to some form of vegetarianism and a fondness for saving trees.
McDonalds restaurants often bear the brunt of their angst. Fox News thinks they are terrorists. It's mostly comical. Less funny and not generally available for media viewing pleasure are the viciously suppressed riots by poor people who can no longer afford rice because their countries’ loans were contingent on their governments eliminating costly food subsidies.

Recognizing the power of the word to inform and give one a false sense of knowledge, I have managed to make it 151 pages into a book called Silent Revolution: The Rise and Crisis of Market Economics in Latin America. This rigorous course of study combined with a daily reading of the NY Times opinion page, the aforementioned liberal bias, and the wisdom gained through osmosis from carly’s employment at a regional UN economic commission, clearly make me qualified to get sanctimonious about the short comings of globalization and neo-liberalism. Prepare for questionable assertions masquerading as fact.

Truthfully, my grasp of economics is about as strong as my grasp of marine biology. I do however have much more faith that marine biology is scientific, whereas I am virtually certain that neo-classical economics is largely a whole lot of smoke, mirrors, and bull shit substantiated by mathematical models that purposefully obfuscate, and 99.9% of the time are about as good as the Magic 8 Ball at predicting and explaining economic phenomena. See world’s current economic situation, the joke of the omniscient Alan Greenspan, and the generally universal failed history of the IMF or World Bank to promote development as a few modern examples. Economists want to be scientists applying ‘laws’ rather than social-historians assessing trends or psychologists analyzing group think behavior, so they have concocted their Great and Terrible Oz machine. Alas, people are intimidated by math, confused by econ jabberwoky, and now think economists should run the world, which is just as absurd as failed business men from Texas doing it.

Anyway, to summarize what I don’t know: you have Adam Smith’s Wealth of Nations, the pursuit of self interest being good for the greater community, the deification of the ‘invisible hand’ of the market, David Ricardo’s outdated static comparative advantage, the Univ of Chicago School of Economics, Reagan, Thatcher and most of the politicians and economists from the last 20 years on one side, and on the other, Marx and that fiasco that was the USSR, something called Import Substitution, an English economist names Keynes, FDR and the New Deal. My grouping may be a little (lot) flawed, but more or less, there seems to be gradations from two extremes, and ongoing cycles of theorizing, creating models, making grandiose save the world predictions, and mucking things up; i.e economic ‘science’.

Economic history aside, neo-liberalism started really stretching its legs in Thatcher’s England and Reagan’s US, but there it was still plagued by the meddlesome problems of democracy. However, in Chile in the early 70s, there was opportunity. Here was a dictator who didn’t mind disappearing objectors and willing to let the ‘Chicago Boys’ (Chilean economists trained at the Univ of Chicago) discover what happened if you put market freedom above human freedom. Discounting questions of justice, human rights, income distribution, equality and the rest of those limp wristed notions, the results economically were unfortunately, mixed. There was a period of GDP growth that got dubbed the ‘Chilean miracle’ and a spectacular crash or two.

Out in ‘Sanhatten’, amongst the gleaming buildings, the miracle is proudly displayed. However, one wonders about the miracle when riding the bus to get there. The scenario plays like this: The bus stops. People get on and shuffle toward the back filling the rarely available seating. The bus leaves. Then over the roar of the bus, traffic, and ambient babble, a voice erupts, launching into a ‘senoras y senores muy buenas tardes’ special promotional offer for some fantastic product. The delivery is enthusiastic, detailed and often explains the virtues of the highly coveted product. What could this wonderful new thing be? Strangely, the most common items are band-aids and elastic elbow/ankle braces. Occasionally, a piece of hard candy or some Brazilian mints. The pop sickle man usually does well, but his delivery is less grandiose; consisting of “Ice cream. Ice cream. Ice cream. Pineapple. Raspberry. Chirimoya.” Finally, there are the musicians. It is usually only an older guy with an acoustic guitar singing folk songs of the good old revolution days before the dictatorship. At times though, there are two guitars, drums, and recorder/pan flute bands that squeeze into the middle bendy part of the bus. The more enterprising sell CDs that sometimes work. Then as the bus moves in amongst the shiny glass towers, vendor and musician jump off to catch another going back downtown. The passengers are all suddenly much whiter and much better dressed. A miracle!

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Comments

[Jason Swearingen]

I just don't believe that the global economic crisis has been caused by bad mortgage lending. In my opinion it's called paying for unending wars. I just don't see the return in creating million dollor baseball sized craters in froiegn countries.

[Mike]

A great read
"Too much Ann Rand and John Wayne in your formative years can be very bad for you." Funny and well said. This was a joy to read. Hello and thank you for the words from the KC Frisbee game. Mike S.

[Fleur]

Hear hear!
Skin whitening products do very well in Asia...perhaps we could start a bilateral agreement???

[leo]

the military goverment of pinochet was not "found" by the US it was put there

[Lump]

more or less agree entirely. there is certainly no doubt that the US and senor kissenger played a pretty major role in economically destabilizing the country and strongly encouraging the coup in Chile as well as across South and Latin America. however, i think the overarching objective was get rid of Allende and the communist 'threat'. The relationship with the Chicago Boys and becoming poster child for implementing neo-liberalism was secondary though assuredly strongly encouraged. I believe that at first, the cartel of generals were hesitant, but later persuaded to implement the 'necessary' neo-liberal economic 'reforms'. Even as poster child, Pinochet didn't go all in. CODELCO, or whatever they were calling the copper industry at the time, stayed in the hands of the State. Most everything else followed the model and got privatized though.

[leo]

i am not arguing about the economic changes but your coment implide that the US had no interfired in chilean politics before pinochet took place

[val]

I think economists are like Freud. There is always a theory to explain a problem after it exists. oh, and, I still love The Fountainhead.