Taking Sides: the TLS v. the LRB

(perhaps worth noting that it may have been lanchester who had a hand in that - they seem to get on ok and co presented a few things in the post-GFC analysis industry)

just on chris dillow - he’s v much of the third camp: that the route to a society guided by marxist thought is via social democracy.

typically the goal is to do counterfactual prediction ('what would happen if we did x policy instead of y?') rather than unqualified prediction ('will there be a financial crisis in the next 5 years?'). since you only get to observe the policy that actually gets implemented, the prediction is never really borne out.

Counterfactual prediction is pretty much what the hard sciences deal in so I don't have a problem with that. Obviously you can't run randomised double blind controlled trials with a country's economy but you can look at other countries and other historical events, what I was hoping for was some evidence using the available data of whether economists' predictions are ever reliably borne out.

But maybe that's not the whole story, Fizzles you do a great job of explaining why economists are necessary for the broad picture even if they can't make detailed and accurate predictions - unlike this guy I found yesterday (https://opinionator.blogs.nytimes.com/2015/07/14/what-economics-can-and-cant-do/ ) who while trying to defend economists more or less admits that their predictions are of little value, they view outcomes through a narrow lens, and their decisions are unavoidably value laden and political.

Re: prediction, meteorology, for example, is surely a legitimate and robust science but it can barely forecast if it will rain tomorrow. Nevertheless it can describe broad trends and offer guarded predictions. The problem there is that the models, though in all likelihood accurate in terms of behaviour, are necessarily incomplete, the climate is a chaotic system and tiny differences in the model will lead to huge differences in outcome. It seems unlikely that the economy is chaotic - could someone spending a Peso in Mexico cause a depression in America? - but either way if economists are still relying on things like rational actor then their models are not just incomplete but wholly inaccurate.

Good work Fizzles. My feeble brane was only able to absorb the gist of Tooze's article via Will Davies' point that the radicalisation of Gary Neville is precisely analogous to that of Krugman.

I think I'm about 4 issues behind Fizzles, so certainly not ready to read his analysis till August.

i quite like bataille's definition in the accursed share: the sexual act is in time what the tiger is in space wait no wrong page

Hahahaha.

I think that another point that contributes to people's animus against economics as a discipline is that there's a popular misapprehension of it as a hard science - which a lot of economists take no great pains to dispel. So when predictions fail to come true ppl reasonably feel gipped. But if you view it as more akin to political theory or sociology it starts to make more sense - I mean Francis Fukuyama built an entire reputation around a now totally disproven thesis and that dude somehow still has a career.

Economic experts have historically supported bad or questionable policies in the US. They are regularly trotted out to support cutting taxes (especially taxes on capital gains), reducing regulation, reducing government intervention in the economy in general, opposing minimum wage increases, reducing barriers to free trade, etc. By and large these positions also seem to benefit the class of capitalist business owners, perhaps not coincidentally. Taken to an extreme, these policies have not always been so beneficial. We still have taxes on capital gains for instance that are lower than taxes on income from work. It's not clear that this policy could be maintained for so long without cover from economists. Economists also seemed to be lopsidedly in favor of for example increasing trade with China in the '90s, which due to the scale and pace of its expansion, had some harmful effects on US industry, which were pooh-poohed at the time. There are many such examples.

Good post O. Nate !

Economics is pure pseudoscience and its total domination of the political sphere is 90% of why we're fucked as a species.

Economists that are endorsed by the American political class are horrible yeah, of course, what do you expect?

There's also economists who advocate for everything from a left welfare state model to marxism though, and I see no reason to discount them.

Good point. Also most of these problems are related to macro-economics. My impression is that micro is a more fertile area of research and actually more of what actual economists focus on.

i think o nate’s post is otm to a large extent but imma springboard off it to try to make some points in defence of economics to explain why i like it despite those things and also clarify what i was trying to say about counterfactuals and prediction. extreme tl;dr strictly 4 my lrb homies ilx made me split this up into 3 posts lol

imho what’s relevant isn’t the historical q of whether economists have supported bad/questionable/good policies in the US in past but the potential for economics to provide answers to the question ‘which policies should we support?’ in the present and future

there are economic arguments that favour right wing policies and ones that favour left wing policies. even if you rule out all right wing policies on ethical/ideological grounds, there are a lot of different mutually exclusive policies within the set of left policies to consider that you might want to use economics to compare

take two recently hot utopian leftish policy proposals: the universal basic income and the job guarantee. can we do both, or are they in tension? what are their costs and consequences? how would different groups of the population be affected?

it’s not just that economics is a helpful tool in answering those questions: any answer to those questions is by definition economics. if those questions don’t interest you because you have used first principles ethical introspection to decide that one policy is superior regardless of its costs or consequences, then ok fine, but you’ve defined the problem away. anyone with doubt or curiosity has no choice but to do economics, the trick is to do it “well”

if historically economists were most influential in providing arguments in favour of right wing policies, that’s interesting as a matter of record, but it’s not super relevant if I’m a left wing person who wants to think about the consequences of different left wing policies today. physicists at CERN use the same theory of physics used to build the atomic bomb, not because they want to kill people but because it’s useful for multiple purposes

so the question is: is economics a logical straight jacket that locks you into arguing for right wing policies?

in some sense the answer to that is: yes. classical economic theory is this beautiful mathematical edifice that starts from some pretty innocuous-seeming axioms (‘if someone has the choice between 3 apples and 2 oranges and 2 applies and 3 oranges and they choose the former then they must value a third apple over a third orange’) and then suddenly you’re proving that the optimal tax on capital is zero. the intellectual rigor can be dazzling to young impressionable/budding contrarian-sociopathic minds that experience it. since the response of many non-economists is to make emotional pleas against the conclusions rather than to argue for alternative premises, it tends to cement the perception in the minds of young economists of their tribe as cold logical uncomfortable truth-tellers

but classical economic theory isn’t all right-wing; it’s a weird mix (this ‘weird mix’ is one of my preferred pet definitions of neoliberalism). it contains within it arguments in favour of left wing policies, too. ill give three examples

1. the assumption of marginal decreasing utility implies that taking a dollar from the rich and giving it to the poor increases overall welfare and therefore justifies redistribution. the classical theory of public finance as laid out by economists like Anthony Atkinson in the 1960s treats the problem maximizing egalitarian social welfare using taxes transfers and other instruments as an optimization problem solved by calculus. it’s full of fun results like “you should tax the single richest person in the economy at a rate of 100%” and extremely relevant to any socialist who wants to think about how government ought to go about funding itself

2. theories of firms with increasing returns to scale support antitrust, nationalization or regulation of industry. under increasing returns to scale, small firms can’t enter the market to compete down prices and there is a tendency to monopoly or oligopoly. the work of economists like recent nobel prize winner Jean Tirole (and the entire field of empirical industrial organization) uses more modern models, but the starting point is always from a model where competitive forces are absent and so the governments involvement can at least in theory improve on status quo

3. the same theory which supports free trade in goods (which parts of the left have opposed historically but not consistently) is equally supportive of free migration of labour/open borders. it’s actually exactly the same theory, you just relabel it. for an accessible recent paper arguing for open borders in a mainstream academic outlet, see Michael Clemens’ “Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?”

(btw, many libertarians dislike classical economic theory for this very reason. people like hayek or von mises saw these ideas being used in their own time to justify the new deal and the great society and tried to theoretically disarm it using arguments that stressed the impossibility of humans ever understanding economics enough for government interventions to have consequences. I’ve encountered leftists making similar arguments: economics is impossible, so rather than try we should just apply pure socialist principles. my personally take is that this is doomed to incoherence. inevitably at some point the more pragmatic economic arguments will be irresistible to even the most principled comrade)

if there is a reason why historically economists in the United States tend to have been more vocal in their support of the conservative policies that classical economic theory supports, and more quiet on its left wing side, it’s something sociological or perhaps historically-contingent.

indeed you can look to other countries or periods where the opposite dynamic took hold: in Sweden, economists like Gunnar Myrdal, Olof Palme and Rudolph Meidner built unprecedentedly lavish welfare states that nonetheless were exposed to international free trade and encouraged capital investment. (the theory was that international competition would weed out all but the most productive industries in Sweden, who would then grow to take a larger share of the economy, which would provide a larger tax base for the welfare state—this is exactly the answer that you get when you study free trade under models with increasing returns to scale). even the more radical elements of the “Meidner plan” that included worker ownership of firms and a transition path to socialism were heavily influenced by economic theory; the institutions were designed carefully to preserve incentives to produce the means which were distributed. Sweden, like the US, also had a rightward turn in the late 20th century, and as a consequence of not following through with the Meidner plan now has sky high inequality in capital ownership (although it has a relatively a low degree of inequality along other dimensions). but they got to that part by not listening to economists enough. so i think historical extrapolation is of limited use

so far I’ve only mentioned classical economics. in classical economic theory prices are flexible, transactions frictionless, each agent is “atomistic” (and so any one person can’t influence prices) and information is “perfect” or evenly distributed across all agents. modern economics is defined by departures from the classical features. wages and prices are sticky, transactions are the result of costly searching bargaining and contracting, agents are “granular” (think of a systematically important financial institution like Goldman Sachs) and information is asymmetric.

classical economics is a wrapped-up topic, now preserved in textbooks and lapped up by precocious sociopathic teens like your young flopsons. all economics in economic journals in the last 3 decades features departures from classical economics. many papers consider the classical model as a baseline, examine some patterns of economic data it can’t explain, and then discuss various departures that can rationalize them, and try to decide among them

(this is not just lipstick on a pig. the departures can be drastic, and in some cases there are so many of them at once that no resemblance to the original remains. the impression Tooze gives of modern new Keynesian models as being classical models with one or two slight differences was true for a while but no longer so. virtually any economic model can be achieved by applying enough departures and state of the art macro models are Frankenstein’s monsters. (this doesn’t mean they’re good.) also, it is hard. only the brightest people work on it, the rest of us fiddle around with applications and other things. the difference between modern mainstream economists and people like post-keynesians is that the latter don’t write down models. they’re more like a mix of a humanities professors (read long manuscripts and argue about what Keynes or Sraffra really meant) and business journalists who use informal verbal arguments and casual analysis of data (usually eyeballing time series charts). most “post” Keynesian ideas were first written down as actual models by mainstreamers. google Emmanuel Farhi on the Cambridge Capital Controversy or Ivan Werning on Minsky are two recent examples u can watch youtubes of)

modern economics contains even more arguments for left wing policies. in frictional or monopsonistic labour markets, minimum wages can raise both wages and employment. in health insurance markets with asymmetric information, single-payer can reduce premiums and expand access. in economies with rigid prices and wages, countercyclical fiscal policy is effective at stabilizing employment during recessions. the triumph of modern economic theory is mechanism design, which can be interpreted as the study of algorithms for allocation of goods by non-market means. some computer scientists and economists have a conference where they try to use it to allocate things like social housing or slots in good public schools more fairly than the status quo of rationing with lotteries, and some people have semi-seriously joked that it could bring back central planning (although in a much more decentralized way, where the planner “designs” the rules of a game that members of society then play)

however, the arguments of modern economics are much less decisive than their classical counterparts. there are no provocative simplistic bangers like “open all borders, set minimum wages to 0, set capital gains tax to zero, nationalize the steel industry.” theorems feature many more qualifications. minimum wages can raise employment, but only up to a point. up to which point? it’s hard to say. it depends on which model you use, and also on features of the labour market.

for this reason, economics is increasingly empirical. many economists double as statisticians. (btw, there’s a huge internal debate in the profession about whether this process has gone too far, with some people arguing we’ve given up our roots as people who use powerful theories that make stark predictions to be mere bean counters. the “empiricist” side is winning, but its a struggle every graduate student probably has at least 2 committee members on either side of)

we left the “eden” of classical theory and its weird ideological mix of policies endorsed with logical certainty, and are now cast into a fallen plane where no one quite knows which model to use and therefore which policies to pursue. contemporary economists, especially those of younger generations, are more “epistemically humble”. they’re also, cautiously, more left wing

in light of this situation, modern empirical work mostly tries to do counterfactual policy analysis in the hopes of ruling out some models in favour of others. if a model predicts that employment always falls when minimum wages increase, but careful comparison of employment in states that pass minimum wage hikes with neighbouring states that don’t systematically find no subsequent difference in employment, we’d have to reject this model in favour of one that admits the possibility of null effects. for example, an alternative model where after a minimum wage hike firms raise prices, or maybe they contract and their former workers are then hired by larger firms who pay higher wages further from the minimum wage. we could then go further and test those predictions to decide between those models. the ability to test these theories has, perhaps surprisingly, only recently become a possibility due to the advent of data at more granular levels

the role of the empirical analysis here is to get an idea of how employment changes in the counterfactual world where the minimum wage is increased. these kinds of counterfactual predictions are provisionally useful for policy guidance (a majority of respondents in the chicago IGM survey of elite American economists now support raising the minimum wage), but their real purpose is to select among models

as someone said upthread, this is a lot harder to do at the level of a macroeconomy. so the situation there is currently a proliferation of models that give more and more contingent answers but with less empirical tests to rule any out. the problem is not a lack of answers but a multiplicity of answers with no way of deciding amongst them. those are kind of the same thing in practice

in this epistemic world, there is a bias toward the status quo. we kinda know what things look like in the world as it exists and we think we can extrapolate to slightly different worlds (with ie incrementally higher minimum wages) but we have no idea what the world would look like if we radically switched shit up. so we can’t really recommend that responsibly. in this sense, policy leads economics. as the world boldly moves forward and recklessly passes untested policies, we’ll be able to explore their effects and learn more

fin

Booming post. There is something very attractive to me about the idea of building a mathematical model of the actual economy with enough precision that you could make predictions with some degree of accuracy about variables of interest. At the same time, I am skeptical this can ever be achieved. Even when trying to predict very broad aggregates, it seems economists have not made much progress with this dream. I guess its not too surprising. I think the economy of a country must be many orders of magnitude more complex than the atmosphere, yet even with supercomputers the best we can do in weather prediction is about 1-2 weeks in advance. However, I think perhaps the best use of these models is as tools for thought. I know Krugman often extols the value of "toy models" to help clarify one's thinking. However, I'm not sure that even when clarified in such a way intuition can get us as far as we'd like. Perhaps the empiricist and statistical approach is the best we should hope for. There's a lot of value in the work of economists like Gabriel Zucman of Berkeley, who's done a lot of work to map out the web of tax shelters used by the wealthy around the world, and to come up with reasonable estimates of how much wealth is being sheltered in this way. There's lots of value in that kind of research.

1.4.2021:

Hannah Black on Art Club 2000: seems vapid.

Jenny Turner on Sybille Bedford: I couldn't get much from this or see what was interesting about the writer.

Katherine Rundell on storks: makes a change to have one of these articles not end by saying, quite properly, how endangered the animal is.

Donald Mackenzie on digital advertising: I understood and learned a little bit. The odd thing is that Mackenzie is expert in these things (from other articles), but in this one keeps saying things like 'I'd never known what a cookie was till now', as if he were more like me.

Matthew Bevis on Charles Wright: treading water, failing to make the poetry not look like a waste of space.

G. Partington on UbuWeb: I wasn't sure about this topic but I have to hand it to the reviewer, it does get the material across in a well-structured and inclusive way; and is aptly sceptical about Kenneth Goldsmith.

Joe Dunthorne on Kleist: quite impressed that this film-maker character can write this. I suppose I learned something about the mysterious Kleist character.

Harry Strawson on Rave: not my scene.

Michael Wood on French words in English: starts as only Wood can start, with happy analysis of Cole Porter - but then rather devolves into unclarity and arguments that are feinted at rather than directly explained. I think MW is right to cast doubt on the final quotation lamenting English insularity - it looks like fish-in-a-barrel piety.

Owen Bennett Jones (an interesting character?) on Robert Maxwell - interesting topic, good stuff. One thing he doesn't really get into is the fact that Maxwell was an egotistical tycoon ostensibly of the Left - or just, if you prefer, of Labour - which naturally made him seem somewhat different from Murdoch. It's indicated that Maxwell only became a Labour MP because 'the establishment' wouldn't have him. But his paradoxical role still always seemed one of the most notable things about him.

I also recall him owning Derby County and Oxford United; and Brian Clough (and ... Mark Lawrenson?) greatly distrusting him.

i liked the maxwell piece as well. v interesting and morally complicated life to say the least. i can’t remember whether peter rachman is mentioned in the article, but with the convoluted background at the centre of history and equivocal social conscience. i use conscience and social entirely separately there rather than their usual paired concept indicating a positive virtue.

Jenny Turner on Sybille Bedford: I couldn't get much from this or see what was interesting about the writer.

I read, coincidentally, A Favourite of the Gods shortly before I saw this piece. I don't get it either.

Back to LRB 18.3.2021: actually quite a dull issue.

Jonathan Parry on Conservatism: remarkably poor to be a big lead article. Incredibly banal, indulgent towards 'Conservatism', treats its ideas with historic reverence, and hardly begins to get into the facts that modern Conservative parties are a) not conservative but dangerously radical, b) corrupt. This character should spend 5 minutes scanning down, say, the ILX politics thread and noting the number of times someone notes that 'nothing matters', to remind himself that we do not live in an era of normal, principled 'conservatism'.

Clair Wills on Molly Keane: a lot better. Overlong, especially as it spends so much time on the one reissued novel, but well written and insightful.

Thomas Meaney on Singapore: again long, somewhat informative but, to me, grim.

Blake Morrison on Lawrence Osborne: I have to hand it to Morrison - he's held on as an LRB reviewer, and despite seeming a minor contributor, he seems to crop up about as regularly as Neal Ascherson does. Both of them are in fact much more frequent than Collini, let alone James Wood (who's barely ever in then LRB now).

Several other articles - on the fall of Rome, Puritans, China, et al - also look more like duties than pleasures.

an era of normal, principled 'conservatism'.

i mean this never happened but otherwise otm.

"Grim" sure but it's a pretty grim topic? I don't tend to go to the LRB for feel good writing.

Ledge: if you mean 'conservatism has always been bad and corrupt' - then I would be inclined to believe you.

In which case, the reviewer's mistake would not be to fail to point out that 'conservatism' now is vile and corrupt (which I am certain it is), but to fail to point out how corruption has been endemic to it.

But I don't really know enough about eg: 18th century conservatism to know how corrupt it was compared to other politics at the time, or now.

The fundamental problem with the review is taking 'conservatism' seriously as an *intellectual* tradition (from Burke etc) and conflating this with a contemporary (never mind past) practical politics that is not intellectual or serious or principled in any whatever, but simply vile and corrupt.

The corruption is endemic to the very principle of conservatism, stated thus: "Conservatism consists of exactly one proposition, to wit: There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect..."

(I don't know if this formulation is already considered cliched despite being recently coined, i find it refreshing and useful.) Re: the intellectual tradition, the author goes on: "As the core proposition of conservatism is indefensible if stated baldly, it has always been surrounded by an elaborate backwash of pseudophilosophy, amounting over time to millions of pages. All such is axiomatically dishonest and undeserving of serious scrutiny."

https://www.bradford-delong.com/2018/12/frank-wilhoit-the-travesty-of-liberalism.html

Funnily enough I don't think ILB's favourite prolix analyst Perry Anderson would agree with the last statement - he has analysed conservative thinkers, on their own terms, at great length. Maybe, indeed, too much length.

FWIW I think my view would be: it is OK in theory to discuss conservative ideas as potentially valid ideas, but it is misguided to discuss actual conservative political practice today* as an enactment of such ideas, rather than as corruption. The LRB article went wrong in doing that -- and was just remarkably banal and complacent.

(*Today, but possibly, as Ledge implies, ever)

"maybe… too much length"

i mean the clue is in the author (it's why we love him so)

{maybe… too much)

18.3.2021

Michael Wood on Billie Holiday film: not his best. Odd that he likes the film so much when at least some other critics didn't.

Malcolm Gaskill (wait, this is the same bloke that wrote that dreadful article about quitting UEA!) on Puritans - disappointing. Very little on the social relation between puritanism and radicalism in the 17th century, as per Christopher Hill long ago, which seems more interesting. Meanwhile the theology is obviously cobblers.

Josephine Quinn on Alaric the Goth: well-informed on the Fall of Rome et al. The LRB has such a constant attachment to classical history; is it because the editors were steeped in it?

This issue is quite a slog.

Adam Shatz has written a really good overview of Edward Said's life and work, finished it at like 1am last night so there is some interesting bits on identity politics as it was like then.

Today, it seems like a version of it has become matter for the culture war, which has become like a lot of the noise of politics today.

Finishing with LRB 18.3.2021:

Niela Orr on THE WIZ: not a good article, but reminds me that I always liked this film and was then always surprised, even pleasantly surprised, to see people mention it - maybe I should see it again.

Laleh Khalili: on Chinese infrastructure projects outside China: I was at least surprised to learn how far back these went, to the 1950s.

Thomas Jones on KLARA AND THE SUN: probably gives away too much of the book. Disjointed review, really. In standard LRB fashion it refers to all the author's past works, meaning that there is now a whole string of LRB reviews of KI talking about everything KI has published - here even referring back to those earlier reviews. Was this really the place to talk about how great THE UNCONSOLED is?

Mouin Rabbani: direct and instructive about Middle Eastern politics.

David Trotter on gimmicks: simply incomprehensible. They should have sent it back and told him to rewrite it so that an ordinary reader could have any idea what he was on about.

Ange Mlinko on Harry Mathews: the reviewer is admirably knowledgeable about poetic terms, but doesn't convince me that this particular body of poetry is appealing.

Tim Parks on Gianni Rodari: somewhat interesting on an Italian children's author; seems deliberately to punctuate the review with tellings of the tales.

Arianne Shahvisi: mixes practical knowledge of bricks and building with a much more social and political view of the building of homes. I'm relatively gratified that it seems to confirm my view that we should have less emphasis on building new buildings and more on making better use of existing (including empty) ones.

In the end I'm afraid nothing in this particular issue was very appealing.

David Trotter on gimmicks: simply incomprehensible.

lol my thoughts exactly, I wondered if it was just me.

I've been reading the LRB for around six years now. For I think the third time ever I've bought a book based on a review. First was Outline by Rachel Cusk, 5/5, got the two sequels. Then a book on Victorian working class economy for my mum, and now The Idea of the Brain by Matthew Cob. Maybe Patricia Lockwood wouldn't have been so much on my radar without the LRB.

I open an April LRB, see Lanchester on shipping, Tooze on Krugman that people discussed above. This is going to take forever.

You don't have to read it

The Lanchester was fine

i realised that i haven't read the lrb in maybe months. since the first perry anderson was published. I kindof wanted to hate read it but never did and it has ended up casting a pall. i've thumbed it a bit and read the odd article. maybe the said article will renew my interest.

Or that Tim Parks piece on Rodari. It's very good.

As incentive for the PF to keep on keeping on, there is a quite good nice review of Roy Foster's Heaney book by Seamus Perry in the 6 May issue.

Yes, both good and nice.

I have read that book!

I managed to read Tooze on Krugman. I note that others above have already commented on this, largely from the POV of: what is economics, is it valid, can it predict? - etc. The article also made me think a bit.

Tooze writes well. He's brisk. I believe that he's progressive, intelligent, thoughtful, good. Like others, I'm glad that he is getting more and more of a platform or hearing.

But the article did make me, too, think about economic commentary. Often, I felt: I am no longer really understanding this. Perhaps it was too specialised; perhaps too much jargon; as when he introduced Dynamic Stochastic General Equilibrium models. 'Stochastic' is a word I don't understand, so I wasn't going to do well with those models.

This would then raise a meta-question: is economic commentary in the LRB, or generally, like this? Should it be made easier for us to follow? Or are we, many readers, the problem? Is this in fact the same for other areas - for instance, why should someone with little knowledge of poetry understand the LRB's poetry articles (let alone the poems?!)?

But what Tooze especially made me feel was: among the labels (like Neo-Keynesian), what concrete policies is he talking about? I think this is the area where he, or such writers, could do more, without writing less intelligently.

I asked myself what kind of economic policies are available to a government. Like:

* raising taxes (on certain groups)
* lowering taxes (on certain groups)
* investing state funds in infrastructure, eg: building hospitals or repairing roads -- thus putting money into circulation (eg: for the construction workers), while also making concrete gains.
* hiring government staff, eg: civil servants -- thus increasing those people's spending power, thus perhaps increasing economic activity (is this 'stimulating demand'?)
* setting a minumum wage -- perhaps increasing workers' spending power, and thus spreading economic benefit, though employers may find grounds to argue against it.
* regulating banking or the stock market (but here I run back into abstraction as I'm not sure what the regulation concretely is)
* altering interest rates (but here I run into difficulty as I have never really understood interest rates or their relation to other things).

Are these the kinds of things that Tooze is talking about, when he talks about economic policy? Or is it something else?

Most of the things in that list, many of us could understand. But Tooze stays quite aloof from mentioning them much. It might help me, and some readers, if he mentioned them (or other, concrete policies), and their direct effects, more.

I also note that Tooze becomes increasingly figurative. In the last couple of pages he starts to talk casually about 'running the economy hot'. But he doesn't define that term. It's almost as if he has run out of vocabulary at the end of a long seminar and is falling back on loose talk that he knows everyone will nod and broadly say they understand. He does it again 3 paras from the end, writing that the plan is 'to dry out the labour market'. Dry out? Where does dryness come from? Is it related to being 'hot'? I suspect not directly in a chain of images, though it may be connected in his actual thought about causality.

It's normal for people to use metaphors. I don't blame Tooze for that. He wants to remain brisk. But I find, as I say, a certain shorthand turn to loose metaphors, which are not defined, when he could keep talking in concrete terms. I think that the problem with this intelligent and accomplished article is that it remains too abstract; too coolly aloof from concrete decisions and actions; too much at the level of labels.

I agree with poster James Morrison: Lanchester on shipping, despite what one says about him, was basically sound. Readable, informative, concrete. The notion of flags of convenience, ships registered in countries they have nothing to do with, struck me.

He only goes wrong at the end where he repeatedly says "We have colluded with ignoring the world of shipping", "We put it out of mind". He himself has stressed that shipping has become "invisible", so the ascription of agency to ordinary people ("us"), who have many other things to think about, for repressing it is false. (It would be more reasonable to say this about homelessness.) It's an example of how Lanchester can easily fall into lazily bad thinking and writing, despite having written a mostly useful article.

i can help fill in some blanks, pinefox

But the article did make me, too, think about economic commentary. Often, I felt: I am no longer really understanding this. Perhaps it was too specialised; perhaps too much jargon; as when he introduced Dynamic Stochastic General Equilibrium models. 'Stochastic' is a word I don't understand, so I wasn't going to do well with those models.

dynamic stochastic general equilibrium (DSGE) models are mathematical models of the economy coded up as programs on the computer. once coded up, you can feed the simulated economy an unanticipated "shock" to the model (that's the stochastic part) and then it tells you how a variety of objects in the economy (GDP, unemployment, wages, interest rates, inflation--that's the general equilibrium part) will respond over time (that's the dynamic part). the output looks like a bunch of different wiggly lines:

https://forum.dynare.org/uploads/default/original/2X/8/8bbb50e96bf0fadab72e6ec8de4a9064ca501e31.png

the minimal intellectual history background that you need to know about DSGE models is that they have been out of favour since the great recession for being insufficiently realistic along various dimensions, and also having poor predictive power.

an example of an unrealistic assumption is that of a "representative household": the idea that patterns of consumption, employment and savings in the economy at large (which are formed by aggregating over millions of heterogeneous households) can be represented by one household

keynes critiqued exactly this kind of aggregation with an example he called the paradox of thrift. suppose everyone in the economy saves 10% of their income. then they reduce their consumption on goods by 10%. then all shops in the economy see 10% lower sales, and hence they cut wages by 10%. then the same households that initially saved 10% of their income now have 10% lower earnings. therefore, the total amount of savings in the economy may decrease in response to an increase in the rate of savings. this is not the way it works if an individual household decides to increase their savings

an example of a poor prediction made by DSGE models can be seen in the chart above: all the wavy lines tend to return to their initial value. this property, that an economy rebounds to its initial state after a shock (and does so relatively quickly), is in dispute after the great recession. here's a graph of greece's gdp; as you can see, no rebound

https://www.theglobalist.com/wordpress/wp-content/uploads/2019/03/mayer-chart-5.png

* raising taxes (on certain groups)
* lowering taxes (on certain groups)
* investing state funds in infrastructure, eg: building hospitals or repairing roads -- thus putting money into circulation (eg: for the construction workers), while also making concrete gains.
* hiring government staff, eg: civil servants -- thus increasing those people's spending power, thus perhaps increasing economic activity (is this 'stimulating demand'?)
* setting a minumum wage -- perhaps increasing workers' spending power, and thus spreading economic benefit, though employers may find grounds to argue against it.
* regulating banking or the stock market (but here I run back into abstraction as I'm not sure what the regulation concretely is)
* altering interest rates (but here I run into difficulty as I have never really understood interest rates or their relation to other things).

Are these the kinds of things that Tooze is talking about, when he talks about economic policy? Or is it something else?

he is mostly talking about macroeconomic stabilization (fighting recessions) which consists of two parts

(1) fiscal policy: government sending out cheques, extending unemployment insurance, spending money on infrastructure, etc. during a recession

the basic idea here is that governments have license to spend in excess of their usual budget during a recession. this is in part because there is more need (many unemployed people, increases in poverty) and partly because some resources sit idle during a recession, so if government spending can get those resources back in use there is a potential for output to increase.

(2) monetary policy: central banks cutting interest rates, printing money, buying debt

the only thing you really need to know about interest rates is that they are a cost (specifically, the cost of borrowing and the return to saving), and all the interest rates in the economy (rates on car loans, mortgages, the rates firms face when they borrow money to make investments, etc.) move up and down with the interest rates set by central banks. in general if the central bank raises interest rates, you are raising the cost of doing things in the economy, and output contracts. if the central bank cuts interest rates, economy-wide costs decrease, and output expands.

these two different approaches, fiscal and monetary, can both be used in tandem to fight recessions.

I also note that Tooze becomes increasingly figurative. In the last couple of pages he starts to talk casually about 'running the economy hot'. But he doesn't define that term. It's almost as if he has run out of vocabulary at the end of a long seminar and is falling back on loose talk that he knows everyone will nod and broadly say they understand. He does it again 3 paras from the end, writing that the plan is 'to dry out the labour market'. Dry out? Where does dryness come from? Is it related to being 'hot'? I suspect not directly in a chain of images, though it may be connected in his actual thought about causality.

"running the economy hot" is jargon for leaving interest rates low and keeping government spending high even after the economy has recovered from a recession. the idea is that, after the recovery (say, after output and unemployment have returned to their previous trend), low interest rates could be too stimulative. they might cause an excess of borrowing and debt which may cause problems down the road.

"drying out the labour market" is a mixed metaphor, but it's related to running the economy hot. here's the basic idea. before the covid crisis started last march, the unemployment rate was around 3.5%. then it spiked to over 13%. over time, it has gradually come down and now sits at 6%. interest rates have been low and government spending high in the hopes of bringing this number down further. suppose unemployment continues to fall, such that it eventually reaches 3.5%. if the central bank continues to keep interest rates low, and the government keeps spending high, they are running the economy hot. if unemployment continues to decrease, say to 2.5%, then firms may find it hard to find workers. they may even resort to raising wages in order to fill positions. the labour market is then "dried out." the idea is not just to wait until the labour market reaches its pre-crisis normal, but to go a bit further and hold it there a while

Thanks, ILB poster Flopson, for taking the time to share your knowledge at length. It's all too rare that one finds this anywhere in life.

I'll try to read your posts properly and try to understand them.

np, happy to answer any follow ups

Meanwhile, finished at last with LRB 22.4.2021.

Rivka Galchen on the brain: credit to her, she takes on a topic like this that isn't, I think, her field, and writes knowledgeably and accessibly on it, if only on the basis of the hefty books under review.

James Romm on the invention of medicine: this turns out to be all about ancient Greeks like Hippocrates and at exactly what dates they wrote. Specialised but in a way more satisfying than vaguer conceptual stuff would be.

Irina Dumitrescu on early medieval women's writing: worthy, but expands the idea of 'collaboration' too far when it describes a present-day writing process.

Richard J. Evans on 'civilising Europe': looks like it'll be OK, but it's remarkably poor - ending up saying little about the book but little about the real topic either, and instead just giving a generalised, clichéd account of the last 70 years of world history. Ends up vapid.

Stephen W. Smith: informative on French military adventures south of the Sahara.

I ploughed through most of the others but no comment really needed.

On to the next issue and Edward Said: already fascinating on him and the whole issue looks promising.

Rivka Galchen on the brain: credit to her, she takes on a topic like this that isn't, I think, her field, and writes knowledgeably and accessibly on it, if only on the basis of the hefty books under review.

she has an MD and specialized in psychiatry, so i think it very much is her field

I learn that an MD is a postgraduate medical degree -- that's very impressive!

I only knew ms Galchen, or apparently *Dr* Galchen, from more literary essays.