economic theory

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Academic and Political Free Speech?

A few things along the same lines:

Something that really bugs me at the moment here in the US is the absolutely stupid idea that freedom of speech and the possession of lots of money are somehow entangled. Put differently: how come the Supreme Court – Supreme at what I wonder? – allowed the flood gates of money to continue to pour into the American political process and not then wonder how much corruption and distortion that flood would create?

Isn’t it obvious?

I suppose not to someone cloistered for years in the American legal profession and positioning continually for promotion to the top.

It is absurd to think that wealthy people and big businesses spend all that money on elections and then don’t expect something in return. I mean really absurd. You have to go to great and other-worldly lengths to deny basic human instincts in order to convince yourself that a big political donor is giving away gobs of cash because they simply want us all to have great elections. Social conscience is not, I think, a key driver of someone like a David Koch. Nor a Paul Singer who made this totally ridiculous statement [which I saw in Krugman’s blog] about inflation:

“Check out London, Manhattan, Aspen and East Hampton real estate prices, as well as high-end art prices, to see what the leading edge of hyperinflation could look like.”

Yes. That’s right. We have much higher inflation than the government is reporting. All you have to do is check what’s going on in the high-end art and luxury real estate markets. Singer just gave a Republican candidate for president, Marco Rubio, $1 million. Singer is also someone who makes a living buying distressed third world debt and then enforcing payment through the US legal system rather than negotiating default terms. Nice guy. Big political donor.

So if we get enough big money people throwing cash at elections we get administrations and central bankers who obsess about inflation even if there isn’t any. And who does that obsession benefit? Rich people who own assets that might otherwise depreciate in value if there was actually some inflation.

Freedom of speech is very nice if you can afford to have any.

Then there’s the ridiculous nature of our current election. In particular there’s the silly spectacle of our Republican party candidates throwing a collective hissy fit because the moderators in the last so-called debate asked tough questions and weren’t totally even handed in allotting equal time to everyone. Even before the arguments began, the first candidate, Ted Cruz, stopped everything in its tracks by sidetracking everyone with a rant about the liberal media and its anti-GOP bias.

Setting aside that our media goes over and above board to try to maintain a balance, a balance undeserved by the severely right wing tilt in our national political conversation,  the danger of this extreme anti-media attack is that it will stifle free speech. Which is, of course, what Ted Cruz wants.

Cruz, as you all know, represents the very far right in American politics. He is well known for his extreme views and for pandering to the most fervent of the far right’s instincts. He is disliked by pretty much anyone who cares about civility in politics, but that simply makes him something of a cult hero out on the far right.

What concerns me most is the reaction of the GOP establishment. They rallied to protect their candidates and have excommunicated one of our major TV networks, NBC, for being too tough on them, until further notice. Thus the Republicans, in bending over to accommodate the wilder fringes of their party, have eroded the public’s ability to hear even vaguely unbiased reporting. This from a party that runs around chattering on endlessly about the primacy of the constitution and the way in which the bureaucrats of the government threaten everything in it. Especially free speech.

Whilst I don’t think the analogy is a worthy one – yet – the slide into a situation where demagogues can convince far right voters that free speech is a danger to, well free speech, reminds me more than little of Weimar Germany. Actually the rise of right wing populism combined with a parallel rise in the dictates for compromise and fact based argument, smacks more than a little of the 1930’s.

Let’s hope I am being hyperbolic.

Then there’s economics.

Hidden behind the undeserved and benign mask of academic freedom there has been a steady stripping away of real freedom in the economics profession. Nowadays the entire enterprise is riddled through with an ideological bias towards so-called free market doctrine, that, setting aside the technicalities, is simply an effort to justify various aspects of modern capitalism and to sanitize that system of any odor attaching to its political and power motivated origins.

I am actually, as you may know, a big fan of capitalism. That is to say I like the idea of people being able to go around and trying to make money. As long as they actually add social value I like it. But I am also unabashed in my belief that capitalism is not socially benign unless forced to be. And that force has to be strident, constant, and able to offset the constant attempts of the wealthy to distort society ever further inter own favor.

But nowhere in the mainstream economics profession is there much evidence that capitalism can ever be anything but wonderful. Economics, thus, is an enabler of an ideological vantage point and not an impartial critic. Any claim it makes to being scientific founders at the first moment on this particular rock.

Or, at least, that is true of the majority of economics.

This would not be a problem to society at large – who cares about economics professors anyway? – were it left at that. Economics could toddle along as a sort of attachment to a political party, popping up every so often to explain to the masses why it is that social programs are unaffordable and that lower taxes are a great deal for us all – even those who don’t earn enough to pay taxes. Economics would then be simply the applied mathematics of transactional efficiency devoid of all moral or social content. Except that it would continue to claim its efficiency as being socially beneficial. But that’s another argument.

What’s this go to do with the freedom of speech?

Because of the persistent inflow of corporate and wealth donor money into our colleges. That’s what. Just as in politics where money distorts freedom and creates an institutional bias towards certain classes within society, so too in academia. Money from big business has added to the pressure to stifle academic freedom and ensure that economics research is ideologically acceptable to the business community. This may be true outside of economics, but I have no knowledge if that’s the case.

In practical terms this means eliminating from the curriculum anything that might appear critical of red-meat capitalism, free markets and their like. The result of all this pressure is that very few opportunities now exist for anyone to learn anything but the ‘straight and narrow’ version of economics we generally refer to as ‘mainstream’. Thinking outside that box is not just frowned upon or discouraged, it is banned. It is banned by eliminating jobs for anyone who dares to be too critical. And it is banned by the elimination of entire departments when necessary.

So much for academic freedom here in the US.

And there you have it.

I woke up this Monday morning and slid straight into a fit of near despair over the apparent slide from actual, real, freedom of speech.

As I said earlier: lets’ hope I am being hyperbolic.

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Strategy and Structure

Yes, I know, Chandler already wrote a famous book about it. But he was talking about something else. He was talking about strategy as structure. Hmm. Come to think about it he was right.

We have discussed the problem of expectations here many times, and it was recently argued that modern economics has a problem because it assumes that expectations are formed in the face of reality. That is to say expectations are consequent to a proper understanding of that reality.

This is wrong.

Expectations are formed as a consequence of an understanding of reality, but also with an understanding that reality is inherently uncertain and thus unknowable. Given this level of uncertainty the resultant expectations are simply ‘hopes’ or ‘wishes’. They do not represent reality accurately, but, rather, they represent hoped-for reality.

In business terms these ‘hoped-for’ realities are called strategic plans. They provide a basis for action because reality, given its uncertainty, provides no basis for action. The uncertainty would prevent concrete action that requires much of timeframe to be taken. A strategy provides an alternative view of reality, one within which actions can be taken with confidence. This confidence is, of course, limited by the degree with which the strategy is assumed to match whatever reality unfolds as it is played out.

So an expectation is, in truth, an educated guess about the future. It does not reflect reality, but is an attempt to shape it.

Add all the expectations together as they are acted upon and an actual reality starts to emerge. In business, for instance, strategic plans might call for a certain amount of investment on the understanding that the returns on that investment via sales of product justify its upfront cost. As the plans start to be acted upon investment takes place and is reflected in the information of a subsequent time period. This then becomes the new reality business needs to take into account as it adjusts its plans.

Thus there is a constant feedback between expectations and the subsequent reality they are expectations of. Indeed, to a large degree, expectations are fulfilled as the reality they aspire to predict. But the relationship between expectation and future reality can never be one-for-one: inaccuracies are inevitable because different people have different attitudes towards exactly the same piece of information, people react differently, they have different understanding of their own goals and intentions that others don’t have, and so on. In other words no expectation will match future reality perfectly unless by dumb luck. Adjustment will always be required. And each adjustment introduces more probability for further error. So expectations and reality are constantly diverging and then being nudged back towards each other as the future is revealed in the present.

The economy is a product of intentions. It is not an accident. Nor is it a product of something like a natural law. It is an intended phenomenon. Even if its actuality is not what was intended. The divergence between the intention and the reality is simply a definition of our inherent incapability of predicting accurately within such a vastly complex system as an economy.

Now there is a great deal of path dependence in all of this. Strategies cannot ignore the past because the past provides the basis of resources, capabilities, and intelligence upon which they are built. So, whilst the future is not predicted by the past, it is certainly influenced by it. This is why many economists have been able to ignore the fundamental issues raised by uncertainty: path dependence creates the illusion that the future is, indeed, predictable from the past. It is also why these economists almost always fail to predict the economy well: they fail to acknowledge that the accumulated difference between intention and actuality may represent a systemic bias in the ay expectations were formed.

This is what happened before the last crisis. Expectations throughout the system rather than offsetting and thus limiting the divergence from actuality as it unfolded, were biased in one way. They thus added to the divergence and did not limit it. Since too many plans assumed a certain and agreeable set of facts, when those ‘facts’ turned out to be errors the accumulated difference was sufficient to cause what some people call a ‘tail’ event: one that occurs only very infrequently and which is thus often assumed to be unpredictable. But such events are predictable, they always lurk within the realm of possibility, albeit in emote parts. The reason we often fail to predict such events is precisely rooted in our failure to understand that expectations are educated guesses that shape future reality rather than being, as some economists would claim, exact representations of that future.

The notion that our economic future is an intentional consequence of our inherently inaccurate guesswork and is thus irrevocably error prone doesn’t sit well in some circles. In business, however, it is taken as fact. Which is why business seeks to influence that future in order to limit the degree of potential error. And it is why business loves structure: structure adds certainty by providing reliable reference points to guide planning.

Which brings me back to our modern economy and its apparent hyperactive and disruptive mode of action. As the plethora of new start-up businesses rise and fade with apparent increasing speed many commentators focus on this relentless Schumpterian creation and destruction. They fail to notice that this acceleration is taking place within the context of a parallel increase in structure which mitigates the destructive consequences of all that so-called creation.

The increase in structure is apparent in the rise of a group of dominant businesses and institutions that have the ability to dictate and thus make predictable much of the ‘playing field’ upon which those start-ups play. They set the technical standards, they provide the infrastructure, they make up the rules, they institute monopolies in some areas, and they create what are called product ecologies in which the minnows can flourish. As the speed of innovation has increased, so too has the formation of these new structures, often having been the product of some recent innovation themselves.

The banking industry, the venture capital suppliers, various technical standard groups, government activity such as changes in the relevant law to protect patents, and so on, are all sources of such structure: they are the institutional framework within which expectations are formed. They all limit the degree with which expectation can diverge from future reality. They thus encourage activity: the less the divergence the higher the degree of confidence in those expectations.

Now we might think that our much discussed access to ever greater amounts of information would move the economy more towards the so-called perfect information world assumed in much of economic theory. But it doesn’t.

This is because in order to survive all business must retain an information advantage over consumers. If information is perfectly available to all then there is not function for business to perform, since the perfection of information implies that transferrence to consumers of a sufficiency in production. Why, then, would they tolerate the intermediate presence of a production process whose space absorbs value that otherwise flow to the consumer?

Economics elides this conundrum by pushing the creative process off to one side, encasing it in a black box, portraying it as a ‘production function’ and pretending that the only relevance of information is that conveyed by price. By so doing economics frees itself to pretend that the perfection of information would only make transacting more efficient, as if transacting were the total sum of all economic activity. It isn’t: creativity and consumption sit on either side of transacting and compete to divvy up the value represented throughout the entire circle encompassing creation through to consumption.

And it is the asymmetry of information in the real economy that allows value to flow through that circle. Businesses actually compete with their customers for information in order to protect their ability to extract value from creation. So perfecting information would stop the economy dead in its tracks. It would not make it more efficient.

Imperfect information ought not just be the rule in economics, it is the reason economies exist in the first place.

Chandler’s whole thesis, from this point of view, was built upon the  realizition of the relationship between strategy and structure. He thus had a better understanding of what expectations actually are than economists who make extravagant claims for them. He also presaged the idea that businesses are simply hoards of information. After all, what is a business structure other than a set of ideas being acted upon? And what are ideas other than information?

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Operating Space – First Cut

 

It has become impossible, apparently, for anyone to do a sober analysis of the torrent of fads that collectively are known as the start-ups of Silicon Valley. Instead we are given a fast paced – it has to be fast paced nowadays for fear of being disrupted five minutes later – and inevitably glowing surface-skim of the impact all these fads will have on the economy.

All we know is that the change will be total. Absolutely total.

Right.

It seems like an age ago, but there was a time when I was deeply interested in the impact that the internet and related technologies would have on business. I thought about the problem for a long time. Indeed it was the reason I re-connected with economics because I, rather foolishly in retrospect, assumed that economics would be a good source of knowledge about the fundamentals of business.

I began with the question: “why do firms exist?”.

And there I ended.

I ran into what I now call the ‘Coase Conundrum’, which is simply that economists go on endlessly about the perfection of markets and then sidestep the rather awkward issue of the presence of huge business firms lumbering about the economic landscape doing whatever they can to despoil all that perfection. The firms succeed. They proliferate. They trample the tender attributes of markets so thoroughly that the economist’s analysis looks not only quaint, but absurd when set against reality.

As Coase so neatly put it: if markets are what economists say they are, then firms cannot exist – at least not as they do. The economists have, naturally, persisted in getting around this conundrum by ignoring it and setting the extensive task of production within a stone age relic called a ‘production function’. This absurdity serves its purpose and insulates economics from  having to deal with the great economic process of creativity. After all production is a creative process. Literally. We create things from other things.

A production function vastly simplifies creativity. It eliminates any role for brainpower, thinking, innovation, or any other category of the application of knowledge, and leaps straight to the raw materials. It posits inputs as being labor, land, and capital.

Think about those three things. Labor, land, and capital. How simple. And how utterly misleading. Not one of them can be distilled into a single attribute. They are all immensely diverse categories of other stuff. Is labor really just brute force or muscle power? In which case it is better thought of as energy doing work. Is land another word for raw materials like coal or iron? In which case why not specify raw materials? Land, after all has long been associated with power and hierarchy, so why isn’t power a component of production? We all know that control is an essential ingredient of the capitalist economy, so why not admit it? And capital? Enough said: the great controversy over capital and its diversity serves us well as an indicator of the true devotion to rigor in economics. There isn’t much. Because capital is such a broad and diverse category the very notion of a single ‘capital’ has no meaning – unless we specify exactly which sub-category we are talking about – but that’s too hard to do in our usual equations. So economics ignores the problem and plods ahead with its rigor-less singularity.

One consequence of this mess is that economics has a frightful time accounting for growth. After all growth is a dynamic outcome of creativity. Since production functions are so littered with ambiguity and poor definition of the real inputs – raw materials, energy to do work, and the knowledge to extract products from a combination of work and raw materials – economics cannot track economic growth very well at all. It has to fudge. Which it does well. When it comes to the production side of an economy economics is nothing but a big brilliant fudge.

Which gets us back to breathlessness.

Because economics cannot account for the existence or function of business firms, it cannot account for the kind of change that seems to be underway as a result of the rise of digital rather than analog processes.

My original stab at an explanation went something like this:

Firms exist to concentrate and exploit information. They thus try to inhibit the perfection of the market. They do this by using their power to assert rights over information: copyrights and patents are viciously defended from encroachment and the laws are changed periodically – under pressure from business – to prolong the ability to extract excess profit from the defense of such information. Put more bluntly: business are in competition with their customers for the information used in production. Customers would ‘prefer’ to use that information directly and thus dispense with the obvious costs of having a business from act as an intermediary.

Set that aside for a moment.

Information is used to create product. Information is found everywhere in business: in the design of products, in the design of production processes, in the design of plant and equipment, in the know-how of employees and managers, and so on. Information is the lifeblood of business. It is safe to say that without information business is hard if not impossible to conduct.

Which is why businesses go to great lengths to store, protect, and develop it. Businesses can be thought of as giant stores which stand out on a landscape of much less concentrated information.

So, far from the immense landscape of flat and equally available information posited by economics, our actual landscape is punctuated and characterized by a great lumpiness. The neat and easily theorized symmetry upon which economics rests does not exist. Indeed, I would argue that it was the breaking of that symmetry and the consequent accumulation of asymmetries of various kinds that allowed the rise of our modern economies.

So what about this breathlessness?

If information is the key to business, then its movement from an analog expression to a digital expression must have implications for the way in which business can be – or will be – conducted. In a digital world the storage of information becomes much more simple. So does the transport and analysis of that information. So, therefore, does the extraction of value from creation. The pace of innovation thus ought to accelerate. Which it has. We live in an age of creativity. Indeed so much is being created that we now realize that much of what can be created is rather banal.

But, there’s a downside to this.

Firms are centers of information. They are hoards of information. In a digital world it becomes much more difficult to protect that hoard. It dissipates more easily. It is more tractable to emulation and thus propagation. Information, as we know, is not used up during production. It persists and can be copied. This allows more easy competition and replication. This implies that the life span of businesses ought to shorten. Which is what, I think we are beginning to detect in the reality of places like Silicon Valley.

A more digital world is thus, inevitably, a world of much less stability and of greater operating  risk.

Which gets us back to that competition between business and its customers. One of my ways to describe all this was to posit the existence of what I call ‘operating space’.

In older economies the space occupied by resources and resources owners was largely coterminous with that of the space occupied by consumption: there was a far greater self-sufficiency. As the division of labor fragmented this older economy and subsequent the pace of creative change accelerated we needed a space in which to to produce. This intermediate space enclosed all the emerging production processes or operations of business in what was becoming a much more come world. Hence my term ‘operating space’.

So business firms occupy this operating space which separates the two older resource and consumption spaces. Indeed it is a burden upon them since it adds cost to manage and protect that operating space and thus diminishes the value each of the others can claim for itself.

Because the activities within operating space are adding value via creativity and the production of novelty unaccessible in the two older spaces, the loss of value by the cost of creating operating space was more than offset by its value added.

Thus operating space was tolerable: as long as it added more than it cost society would benefit.

Th emergence of digital forms of storing and using information have begun to erode this balance. Operating space needs to become much smaller in order to continue to add benefit. The rise of readily accessed, deployed, and used, information is undermining the logic of operating space. Business needs to be compressed to take up less space. It has to be leaner, less intrusive, and more productive. It cannot rely on its older ability to hoard information. Not, at least, as well as in the past. So it has to rely on greater creativity to justify its existence.

One way to reduce operating space is to disassemble the logical sequence of operations needed to in production. Some of those operations can be outsourced into the consumption space. In other words businesses can involve customers on the creation of the product or service. We have seen a rapid growth of this kind of activity: the automation of many service tasks is an example (self service check-out; ATM machines and so on). Theses a way business can offload expensive aspects of operating space onto customers whilst maintaining possession of the core of value creation.

Now this core is under attack also.

An obvious example would be three-D printing, where a customer with appropriate access to information and resources can produce an ever growing variety of products previously attainable only via traditional business processes.

So to recapitulate: in older more self-sufficient economies the need for a large and expensive operating space was minimal. It became both more necessary and more easily justified as the division of labor and information proliferated. Modern business grew as a method for storing, protecting, and using this information. Businesses thus sought to defeat the perfection of the market – and continue to do so, which is why textbook economics is an inaccurate portrayal of real economies.

But the transfer of analog methods to their digital counterparts is eroding the size of the allowable operating space an economy will tolerate. This is a threat to the organization of business as we know it.

Does it imply that the perfect markets posited by economics will be revealed as operating space shrinks under the cost pressure released by digitization?

That we can talk about in the future.

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I Don’t Care About the You-Know-What Prize

Every year around this time many of you get seriously vexed over the award of something the we know as the sort-of-Nobel prize in economics. And every year I get swept up in the hubbub.

Not this year.

I have decided to ignore the entire thing. Who cares? I don’t. Nor should you.

Nor do I care any more whether economics is a science of not. Who cares? I don’t. Nor should you.

We have wasted a whole lot of time arguing, discussing, and otherwise pondering whether economics deserves its singular status within the social sciences. It doesn’t. So let’s move on.

Now I realize I am not giving you all a lot of evidence to support my case here. I ought, to be truly rigorous about this, to present a series of examples and reality checks upon which to base my case. But am not going to that. No. Not at all. I am simply going to assert that economics is basically libertarian ideology wrapped up in mathematics to disguise its lack of content and its right wing intent. It can’t hold a proverbial candle to sociology or psychology when it comes to explaining real people’s behavior. So there. I said it.

And I can do this proudly.

Why?

Because I learned a thing or two from economics!

Who needs evidence? Not when you can just assert stuff. People are rational. Economists say so. And if you complain about it, they just say that people behave as if they’re rational so that’s as good as being rational. So there. Take that psychology! All you need are incentives. Really. That’s it. You can motivate anyone by holding cash or starvation in front of them. Understanding humans is so easy. I don’t understand why we even need psychologists. Economists figured out how people behave decades ago. Did I mention they’re rational?

Really rational. Honest. Well not honest, because honesty is suspect. It isn’t incentive based enough. Always. Enough.

Oh. And markets fix absolutely everything. I mean that. And governments just muck things up.

I don’t mean to patronize you all, but anyone who thinks that programs to help the poor actually help anyone is being foolish. You need incentives. Lots of incentives. Like starvation. All this welfare stuff is just going to diminish efficiency. And efficiency is absolutely the only goal humans have ever had. Ever. Pareto said so. Well sort of. He denied it later, but that’s when he’d gone soft.

My hero Tom Sargent – he’s just one of my heroes – said it back in 2007:

 “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”

Now that’s patronizing grandeur I can admire. All you silly liberal people ought stop helping people and get a few more incentives out there. Like starvation. Or cash.

Anyway, back the sort-of-Nobel prize. Angus Deaton clearly deserves a big prize. He comes from Scotland, which had an enlightenment, and works in America where all the economists live. So we know he’s clever, and he needs a prize to keep up with his neighbors. All American economists get the Nobel prize. I think. It looks that way. If they live in Chicago. Or know where Chicago is. It’s in America. All economists know that.

Angus gets the prize because:

“Prof. Deaton unquestionably deserves a prize for his work to better understand consumption, poverty, and welfare in developing countries, particularly when economic inequality is under the microscope.”

To better understand consumption, poverty, and welfare …

It would be churlish to mention the split infinitive. So don’t. The key is that economists are giving themselves prizes for better understanding consumption, poverty, and welfare. These are things we need to know a lot more about. After all economists have been talking about them for the best part of two hundred and fifty years. So it would be good to better understand them. Just in case all that time they’ve been talking drivel. It helps to better understand the central topics of your subject.

Except for people. We don’t need to better understand them at all. Economists have them figured out completely.

No. Really.

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Beating Dead Horse?

I am not sure I understand the point of Alexander Kaufman’s column in the Huffington Post. In it he takes Paul Krugman to task for being repetitive and talking about just there things: austerity is bad, inflation fears are overblown, and Keynes was right.

Well now.

Whether or not we have disagreements with Krugman – and I know many of you do – those disagreements pale in comparison with those we all have with the arguments of the people Krugman is targeting in his columns. Yes Krugman can be annoying with his emphasis on his version of the Hicks version of Keynes. But if it serves to get a vital message across to a public largely unaware of the internecine struggles within economics, so what? I don’t care. Nor should you.

And if he sounds repetitive, then we should ponder the reason: far too policy makers are still stubbornly clinging to disproven theories. Yes, disproven. So are far too many academics.

Policy makers, I think, may be less culpable because they are trapped within the political whirl that constrains rapid movement. That is, by the way, as far as I would go. Professional ethics have to come into play sometime. In a profession unique for its disavowal for the adoption of any formal ethical standards – the market will sort out the unethical? – we have to rely on the personal standards of the people involved in policy making. We thus remove from the public’s arsenal one very important weapon in ensuring that the economics profession serves it well.

And we are left with a more public version of the academic bun fight that characterizes economics more generally.

Economics doesn’t exist in any coherent form. It is simply a long established and ongoing discussion about various ideas many of which have been kicking around for centuries. Indeed many of the profession’s core ideas were established long before our contemporary economy emerged, and sometimes they have to be bashed into shape to remain relevant.

Given the enormous egos involved it is thus hardly surprising that economists whose ideas have suffered defeat in the real world don’t abandon them, but simply crank up the volume and shout loudly about those ideas they don’t like.

Worse, since economics supports many and often diametrically opposed narratives, and since we appear to be stuck in a long war of deep ideological significance, it cannot shock anyone that the many sides of economics are played and replayed many times. These the repetition that Krugman is accused of.

I have often used World War I trench warfare metaphorically when talking about economics. The entire enterprise seems stuck in trenches lobbing diatribe back and forth determinedly with no side going much ground if any at all.

But perhaps a better version would be that economic ideas are part of the ammunition being flung across the field from trench to trench. Economics is just one aspect of the great ideological battle. And economists are driven, not by a sense of science, but by their own ideological perspectives.

Thus the quaint libertarian refrain: “markets good, governments bad”. Or the willingness of the Marxists to see the world in terms of a teleological historical narrative despite the modern emergence of democracy and the apparent error at the center of their vision.

Pragmatists will always be squeezed from either side by their more zealous peers. They don’t, after all, subscribe as deeply to the various utopias that so motivate the zealots, and they can be called craven for daring to change their minds periodically. I put Krugman in this more pragmatic category. He seems quite comfortable with slipping from idea to idea depending on the circumstances. That’s his strength. Quite a few people don’t like it because it smacks of a lack of ideal or principle. But flexibility is a principle. One that I quite like.

So when someone like Krugman gets stuck in a rut and appears to be repetitive in his commentary, I think it quite likely that it is because the context for his thinking remains similarly stuck.

And so it is.

Even after all these years since the great crisis, and even after the evident failure of so much policy, we are still mired in the same debate.

 

It is juvenile to think that we need to stop saying the same things just because the public might get tired of listening. What else are we supposed to do?

When we are stuck in the trenches we have to keep slogging away. Because to stop is be defeated. Yes I would prefer more movement and progress. But given the stubborn and committed nature of our opponents all we can do is match their stubbornness with ours.

And so it goes.

Austerity is still wrong. Inflation fears are still overblown. And Keynes is still right.

So why not keep repeating that?

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