Friday, October 06, 2017

Krugman on Fed; Corbyn

Get Ready for Prime Minister Jeremy Corbyn by Rachel Shabi

Will Trump Trumpify the Fed? by Krugman 
For more than a decade the Fed chair has been a distinguished academic economist — first Ben Bernanke, then Janet Yellen. You might wonder how such people, who have never been in the business world, who have never met a payroll, would deal with real-world economic problems; the answer, in both cases: superbly. 
In particular, both Bernanke and Yellen responded effectively to a once-in-three-generations economic crisis despite constant heckling from back-seat drivers in Congress and on the political right in general. And their intellectual and moral courage has been completely vindicated by events.

Monday, October 02, 2017

1970s stagnation

THE LESSON OF THE 70s by Chris Dillow


The Disastrous Decline of the European Center-Left

The Disastrous Decline of the European Center-Left

by Sheri Berman (10.2.17)

Among the many worrying outcomes of the recent German elections was the further collapse of the main center-left party, the Social Democrats, which received only 20.5 percent of the vote, its worst performance since World War II.

Across Europe, social democratic or center-left parties are in decline. In elections this year in France and the Netherlands, the socialist and labor parties did so poorly that many question their future existence. Even in Scandinavia, considered the world’s social democratic stronghold, long-dominant parties have been reduced to vote shares in the high 20s and low 30s.

Even if you don’t support the left, this should be cause for concern. Social democratic parties were crucial to rebuilding democracy in Western Europe after 1945. They remain essential to democracy on the Continent today.

During the postwar years, social democratic parties acknowledged capitalism’s upsides and downsides. In contrast to Communists, center-left parties recognized that markets were the most effective engine for producing economic growth and prosperity. But in contrast to classical liberals and many conservatives, social democrats did not embrace markets wholeheartedly. Instead, the center-left insisted that it was possible — indeed, necessary — for governments to cushion markets’ most destabilizing effects. Capitalism would be kept subservient to the goals of social stability and solidarity, rather than the other way around.

By the late 20th century, this distinctive message had been mostly discarded. Instead, the left became dominated by two camps.

The first was epitomized by Tony Blair of Britain and Gerhard Schröder of Germany. These new center-left politicians celebrated the market’s upsides but ignored its downsides. They differed from classical liberals and conservatives by supporting a social safety net to buffer markets’ worst effects, but they didn’t offer a fundamental critique of capitalism or any sense that market forces should be redirected to protect social needs. When the financial crisis hit in 2008, this attitude repelled those who viewed globalization as the cause of their suffering and wanted not merely renewed growth, but also less inequality and instability.

The second camp is an anti-globalization far left, represented by the Occupy movement, Jeremy Corbyn’s wing of Britain’s Labour Party and Syriza in Greece. This camp took seriously the market’s downsides but saw few upsides. Lacking a conviction that capitalism can and should be reformed, these parties generally offer an impractical mishmash of attacks on the wealthy, protectionism, increased welfare spending and high taxes. These policies may appeal to the angry and frustrated, but they turn off voters looking for viable policy and a progressive, rather than utopian, view of the future.

During the postwar decades, social democracy promoted solidarity and a sense of shared national purpose so as to avoid the fractures that undermined European democracy during the late 19th and early 20th centuries. In contrast to Communists, who exclusively focused on class conflict, the center-left built bridges between workers and others. And in contrast to the individualism of classical liberals and many conservatives, the center-left’s emphasis was on citizens’ obligations to one another and the government’s duty to promote the good of society.

By the late 20th century, however, this understanding of social democracy’s goals had been largely abandoned. Some failed to address concerns generated by social and cultural change, either out of lack of understanding or out of a hope that solving economic problems would make them disappear. Others uncritically embraced these changes, promoting both cosmopolitanism and the interests and cultural distinctiveness of minority groups. This camp became associated with the politically deadly idea that strong national identities were anachronistic, even dangerous, and citizens made uneasy by their erosion were bigots.

These attitudes have fragmented the left’s constituency and made it impossible to rebuild the social solidarity or sense of shared national purpose necessary to support high taxes, robust welfare programs and activist governments.

But the decline of the center-left has larger implications. Most obviously, it has created a space for a populist right whose commitment to liberalism, and even democracy, is questionable. In many European countries, now including Germany, these parties have succeeded in part by attracting groups that have historically supported the center-left, like workers and the uneducated, by forthrightly addressing the economic fears generated by globalization as well as those generated by social and cultural change.

During the postwar period, European politics was dominated by competition between a center-left and center-right that offered real policy differences but agreed on the basic framework of liberal, capitalist democracy. These parties were large enough to form governments, set agendas and get policies enacted. But as the outcome of the recent German elections makes clear, the center-left’s electoral demise has rendered it unable to form stable, coherent governments — which makes it more difficult to solve problems and leaves voters more frustrated with traditional parties and institutions.

This is one part of what has allowed populists to make inroads, as was clear during the German elections, where the far-right Alternative for Germany party promoted itself as the true “alternative” to the status quo. Even many within the Social Democrats acknowledged their party lacked a vision of where it wanted Germany to go.

If the Social Democrats and other center-left parties are unable once again to offer voters solutions to the challenges their countries face, their decline will continue, populism will flourish and democracy will decay.

decline of the center left

The Decline of the Center Left: No Happy Face for the Financial Industry by Dean Baker