America’s amazing success since 1980: Why Krugman is wrong*

(*But not in the post I link to; rather in the dozens of other posts where he ridicules the idea that tax cuts for the rich, deregulation and privatization produce prosperity.)

Suppose you had gotten a room full of economists together in 1980, and made the following predictions:

1.  Over the next 28 years the US would grow as fast as Japan, and faster than Europe (in GDP per capita, PPP.)

2.  Over the next 28 years Britain would overtake Germany and France in GDP per capita.

And you said you were making these predictions because you thought Thatcher and Reagan’s policies would be a success.  Your predictions (and the rationale) would have been met with laughter.  Indeed around that time most of the top British economists signed a petition asserting that Thatcher’s policies would fail. For those of you not old enough to remember 1980, let me explain why.  Labour rule of Britain had reduced their economy to a shambles.  The government ran the big manufacturing corporations and labor unions were running wild.  They had 83% MTRs, 98% on capital.  There was garbage piling up in the streets of London.  Britain had been the sick man of Europe for decades, growing far more slowly than Germany, France and Italy.  The US wasn’t doing as badly, but certainly wasn’t doing that well either.  We had also been growing much more slowly than Europe and Japan.  Unlike Britain, we were still richer than most other developed countries, so this convergence was viewed as partly inevitable (the catch-up from WWII), and partly reflecting the superior economic model of the Germans and Japanese.

Now let’s look at what actually happened over the next 28 years.  All GDP per capita data are from the World Bank, and are normalized as a fraction of US GDP/person:

Country       1980        1994      2008

USA              1.000      1.000    1.000

Australia      .841        .770      .837

Canada        .905        .818      .843

Britain         .688         .705      .765

France         .780        .730      .713

Germany     .803        .812       .763

Italy             .756        .754      .675

Sweden       .868        .777      .794

Switz.          1.146      .987       .915

Asia

HK                .547      .845        .948

Japan          .732      .815         .736

Singapore   .577      .899       1.064

Latin America

Argentina     .395     .300       .309

Chile            .210     .251        .311

Note that four countries gained significantly on the US, two were roughly stable (Australia, Japan) and the rest regressed.  The four that gained were Chile, Britain, Hong Kong and Singapore.  Of course lots of poor countries gained on the US, but that’s to be expected.  But I will show that the performance of every single country on the list is consistent with my view that the neoliberal reforms after 1980 helped growth, and inconsistent with Krugman’s view that they did not.

Krugman makes the basic mistake of just looking at time series evidence, and only two data points:  US growth before and after 1980.  Growth has been slower, but that’s true almost everywhere.  What is important is that the neoliberal reforms in America have helped arrest our relative decline.  The few countries that continued to gain on us were either more aggressive reformers (Chile and Britain), or were developing countries that adopted the world’s most capitalist model. (According to every survey I have seen HK and Singapore are the top two in economic freedom.)

Australia:  A traditionally rich country whose commodity export model started to sputter in the 1970s.  They did major free market reforms (under a left wing government).  Reforms continued when the conservatives took power.  After 1994 they reversed their relative decline.

Japan:  Just the opposite of Australia.  Their free market export model did very well in the post war years, and didn’t hit a wall until about 1990.  After that their economy was unable to find domestic growth sectors, as their dysfunctional government refused to reform their statist domestic economy.

HK and Singapore:  Both are in the process of becoming much richer than the US.  Some of that is due to their status as city-states.  But in modern developed economies the rural populations are small and not that poor, so I think in time people will recognize that Singapore’s success is more than just demographics.

Chile and Argentina:  Chile is the most famous Latin American example of neoliberal reforms.  Note how in 1980 they were barely half as rich as their neighbor Argentina, and are now a bit richer.  Almost every serious development economist attributes their relative success to their neoliberal reforms.  BTW, there was a severe recession in Chile in 1974-75, but rapid growth from 1975-80.  In addition, they were much poorer than Argentina in 1970 as well, so the starting date doesn’t explain much.

Canada:  Similar to Australia, except that they were not as statist as Australia in the earlier period, and their reforms occurred in the 1990s when they began dramatically shrinking the size of government as a share of GDP.  The 1990s reforms worked as their relative decline to the US was reversed, and they started catching up after 1994.

France and Germany:  Did some reforms, but much less than Britain.  They suffered a decline relative to both Britain and the US.  I think the 1980 German numbers include the East, but can’t be certain.  I do know that Germany’s relative decline increased after 1994, by which time the East German incomes had definitely been incorporated in the data.

Italy:  Did even less reforms than Germany and France, and has a more statist model.  Fell far behind Britain.

Sweden:  Had a bad recession in the early 1990s and had suffered decades of relative decline.  Did major cuts in MTRs, privatization and deregulation during the 1990s, and its relative performance improved after those reforms.

Switzerland: Is the glass half full or half empty?  Switzerland has always been regarded as one of the most capitalist countries in Western Europe, but has also been among the least aggressive countries in terms of neoliberal reforms.  That pattern would predict high levels of GDP/person, but relative decline vis-a-vis the US.  And that is exactly what has occurred.  They rested on their laurels and slipped quite a few notches down the Heritage and Fraser rankings.  I suppose the highly democratic system allowed them to avoid the worst socialist excesses of the 20th century, but also prevented them from reforming as fast as more dictatorial forms of democracy, such as the UK.   

So there you are, all these countries support my hypothesis that neoliberal reforms lead to faster growth in real income, relative to the unreformed alternative.

There are two kinds of economists.  Those who read the Economist (or FT) every week, and have a pretty good sense of what is going on in the world, and who know why some countries are doing better than others.  And those who are lost in their ivory tower doing arcane research.  The latter group is often much more highly skilled than I am, and come up with more important new ideas than I ever will.  But when talking to this group I often find they are totally oblivious to the neoliberal revolution of the past 30 years.  (BTW, this isn’t a jab at the left, most of the guys I am thinking of are right-wingers.)

You can’t just take a single data point to evaluate a complex phenomenon.  “Eh, you say there’s a neoliberal revolution?  OK, let me check to see whether most countries grew faster or slower after 1980.  That should settle the argument.”  Actually it doesn’t.  The neoliberal revolution occurred precisely because growth was slowing almost everywhere in the 1970s and 1980s, and after 1980 growth slowed the most in those countries that reformed the least.

PS.  I don’t mean to suggest the left doesn’t have any counterarguments.  Reasonable progressives would admit than some of the reforms were sensible (cutting MTRs below 90%, privatizing British steel and autos, abolishing the CAB, etc.)  And they’d also point to the fact that leisure has increased faster in Europe and thus the hourly real wage numbers look somewhat better vis-a-vis the US.  And then I’d respond that the French productivity numbers are inflated by the fact that their labor market keeps many of the least productive people unemployed (teens and immigrants.)  And they’d respond by pointing to our large prison population.  The debate never ends.  But Krugman was using simple real income numbers in his recent post.  And by that criterion the results are clear—neoliberal reforms produce higher levels of GDP per capita.

HT:  James, Marcus

Update:  Several commenters mentioned median income rather than GDP/person.  The median income data does show slower growth than GDP/capita, partly because of increasing inequality, but partly because of statistical problems with the data (health benefits are excluded, etc.)  I believe consumption data is far superior to median real income, and that shows Americans doing much better.  Will Wilkinson has posted on this.  The consumption data also show a much smaller increase in inequality.  But I was primarily interested in international comparisons, for which all I had was GDP data in PPP terms.  The point was that countries that did more reforms did better than those that did fewer reforms.  I am not denying that growth in US living standards slowed after 1973, rather I am arguing that it would have slowed more had we not reformed our economy.


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158 Responses to “America’s amazing success since 1980: Why Krugman is wrong*”

  1. Gravatar of Rob (2) Rob (2)
    23. May 2010 at 07:26

    Good, timely topic! Arguably India belongs on the list, no? It still has a “mixed model,” to be sure, but, judged by it’s own historical standards, the liberalization of the early 90′s was dramatic, and the results across a range of measures have been impressive.

  2. Gravatar of James James
    23. May 2010 at 08:54

    “Indeed around that time most of the top British economists signed a petition asserting that Thatcher’s policies would fail.”

    As someone too young to remember 1980, this sounds incredible. But there is evidence- the Institute for Economic Affairs has a whole publication about that petition:
    http://www.iea.org.uk/files/upld-publication310pdf

    Perhaps the most ridiculous part of the letter is that it emphasized how most of those who had recently been in charge of national economic policy signed on. Clearly their performance was not anything to be proud of, and this was the whole reason for a drastic reform. Perhaps the wrong drastic reform was being picked but these guys should not have been credible anymore.

    Thanks for a very short but informative take on the last 30 years of economic history in the developed world.

  3. Gravatar of scott sumner scott sumner
    23. May 2010 at 09:07

    Rob, Yes, Both India and China have done much better after the reforms. I focused on developed countries as they are more similar to the US.

    James, Thanks for digging up that letter. I will provide a link.

  4. Gravatar of James James
    23. May 2010 at 09:13

    Krugman was right about one thing though, economies have survived and thrived despite policies like 90% MTR’s, which without data free-market types like me would guess to be total economy-crippling disasters.

  5. Gravatar of John John
    23. May 2010 at 09:32

    As someone without much dog in this fight, I do feel though like median real wages are a better measure of ‘success’ than GDP. People shouldn’t really care about GDP growth unless it improves their real wages, and it seems to me that by that measure, Krugman is right that most would by far consider the past 30 years to be much worse than the 30 years prior.

    I’m not defending Krugman’s point (seems like apples and oranges, postwar era vs. postCarter era), but I do prefer his metric. Does your international comparison stack up on wages as well as GDP?

  6. Gravatar of JeffreyY JeffreyY
    23. May 2010 at 10:04

    +1 to John’s point. You and Krugman are talking past each other if you only look at GDP and he looks at real median income.

  7. Gravatar of TonyD TonyD
    23. May 2010 at 10:27

    Another +1 to John’s point.

    I consider GDP to be, in many ways, a fiction manipulated by Corporations for their benefit — often in light of tax and stock price considerations.

  8. Gravatar of Snorri Godhi Snorri Godhi
    23. May 2010 at 10:31

    “Krugman was right about one thing though, economies have survived and thrived despite policies like 90% MTR’s, which without data free-market types like me would guess to be total economy-crippling disasters.”

    It should be made clear that those are TOP MTRs: the MTRs faced by the average taxpayer were much lower. The reason they could nominally impose 90% MTRs on the highest incomes might be simply that nobody had to pay them: the rich could simply take up residence in the Channel Islands, Monaco, or Switzerland; not to mention all sorts of tax dodges.

  9. Gravatar of Jason Jason
    23. May 2010 at 10:32

    “The neoliberal revolution occurred precisely because growth was slowing almost everywhere in the 1970s and 1980s, and after 1980 growth slowed the most in those countries that reformed the least.”

    Growth still hasn’t gotten back to the same level. Why not? We’ve had tremendous technological advances: computers, internet, cell phones, etc.

    I wonder if opening up markets is like increasing competition in a particular market, where the price (ideally) quickly falls to the marginal cost of producing the good — thus profits head towards (almost) zero. In this case, we open up trade and globalization means that our GDP per capita falls because other countries have lower GDP per capita. Another way, being a manufacturing country isn’t as profitable as it used to be, so we switch to more information technology which still maintains some education barriers to entry (and the US has a pretty good post-secondary system.)

    I actually thought this was part of the (unacknowledged) liberal goal in our support of free markets. It is a giant transfer of wealth from the US to other countries, bringing up their living standards at the cost of reducing our own. Sort of like foreign aid, but at levels that would not be politically feasible. I mean 1% of GDP growth??! No way!

    But that could also mean that since our GDP per capita didn’t fall as far relative to other countries we might have some economic rent we are sitting on, or barriers to entry. Maybe we are just deluded think it is our awesome business model. Farm subsidies aren’t big enough by themselves. Our rule of law probably adds a pretty good price premium. Unlike other countries (except England), we’ve almost completely eliminated unions (probably explains Krugman’s point about median wages). What else?

  10. Gravatar of scott sumner scott sumner
    23. May 2010 at 10:40

    James, That is correct. And I do find that puzzling. On the other hand it doesn’t really give the left any policy implications. Those rates raised very little revenue–the government collects much more from the rich at 35% MTRs than they did at 90% MTRs. So unless you want to punish the rich out of spite, we are better off with rates much lower than 90%. Even the Nordic countries have cut their top rates sharply.

    To me the big issue (which I will address soon) is capital taxation. Nordic countries tax capital very lightly.

    John You are wrong, his metric is annual income, not hourly wages.

    Jeffrey, I am not disputing that real wage growth slowed after 1980 in the US. I am arguing that it would have slowed even more w/o economic reforms. The real wage data is far inferior to the GDP/person data, as it excludes health care benefits, etc. Consumption has done far better than real wages, which tells you something.

    TonyD, Again, the consumption data says you are wrong.

  11. Gravatar of Sean Sean
    23. May 2010 at 10:47

    JeffreyY, I somewhat agree with you and John, and yet would go one further: You need to chart median cost to employers for employees rather than income. GDP is crude but takes other benefits provided to people via the government and employers. Even in the US, using pure wages is misleading, as wage’s portion of total compensation has steadily reduced (http://www.kff.org/insurance/snapshot/images/marketplace101309fig2_1.gif).

    Therefore I think using median income would actually be worse than just using GDP per capita.

  12. Gravatar of q q
    23. May 2010 at 11:05

    1) a question about the data. do these use fx rates at the end of 2008?

    2) getting back to the main point of krugman’s post, he’s using median annual cpi-adjusted income per household and not gdp per capita as his metric. he can show you data that shows that the growth in the economy in the last decade has benefitted a very small number of people; that, and not any mean gdp measure, is what he takes issue with. he sees lowering of taxes on the rich as part of this. if you want to say he is ‘wrong’ then you have to address this. pulling up statistics about mean gdp does not address this in any way.

  13. Gravatar of Joe Joe
    23. May 2010 at 11:24

    Concerning median income growth.

    Krugman does this all the time, he argues that median family income growth stalled after all the tax cuts and deregulation. The problem he neglects is that in the 70s the median family started decreasing in size.

    From Carpe Diem,http://mjperry.blogspot.com/2008/08/adjusted-for-household-size-real-income.html

    A comparison of real median income in 1967 of $38,771 per household to income of $50,233 per household in 2007 (29.6% higher) doesn’t take into account the significant 22% decline in average household size over this period, from 3.28 persons per household in 1967 to an all-time low of 2.56 persons per household in 2007 (Census data here for income, here for average household size), see top chart above.

    When adjusted for household size, real median income per household member reached an all-time high of $19,546 in 2007 (see bottom chart above), 65.6% higher than the $11,820 income per household member in 1967, and more than 2 times the unadjusted increase per household of 29.6% reported above.

    Lost in all of the discussions and media reports about stagnating wages, income inequality, and the decline of the middle-class, we have this amazing statistical reality: In just a little more than one generation, real median income per household member has increased by a factor of almost 2/3!

    ———-

    Unless I’ve misunderstood the statistics, it look like we’ve had tremendous income growth!

  14. Gravatar of johnleemk johnleemk
    23. May 2010 at 11:25

    Scott, I think the other commenters might be mistaking “median family income” for real wages. But they’re right that it isn’t the same as per capita GDP, which is more or less average income per person.

    In any case, as interesting as the data you and Krugman have presented is, focusing too much on it obscures the broader point. Krugman asserts that the US prospered when MTRs were high and stagnated afterwards. You assert that the “socialist” countries stagnated when MTRs were high, and prospered afterwards.

    It looks to me like both of you are right — nitpicking over the different metrics you’ve used to represent prosperity is really just nitpicking. if you somehow found the median family/household incomes for your countries, I think your point would still hold, just as Krugman’s point would hold if you look at the trends in per capita GDP for the US instead of median family income.

    The additional point you’re making is that economic growth everywhere slowed after the 1970s, and you assert that neoliberal reforms have made growth slow less for countries like the US and UK. This is also interesting, and it looks to me like this point would stand even if you used data on median family incomes. I don’t see any reason to expect median family income trends to deviate significantly from the trends for per capita national income.

    Folks, it is true that national income distributions are not perfectly normal, and so the mean and median will differ. But (and unfortunately I have to do this from memory right now) I don’t think they tend to differ significantly unless there are serious issues with the country (I imagine North Korea has a highly imbalanced distribution of national income). I only remember this because it is so striking — the median Detroiter is about twice as rich as the median Malaysian. Detroit, of all places!

    And TonyD, I think your point would be more salient if you had said you believe it is the powerful who manipulate GDP figures. Corporations tend to not have much of a dog in the fight for GDP. (Of all things for them to be fighting over…)

  15. Gravatar of happyjuggler0 happyjuggler0
    23. May 2010 at 11:28

    q,

    How exactly do cuts in the tax rates for high income earners explain increases in pretax incomes for high income earners? Sounds to me like an admission that lowering marginal tax rates induced highly skilled workers to work more.

    Also, how exactly do cuts in the tax rates for high income earners explain stagnant incomes for those in lower tax brackets?

    Blaming “tax cuts for the rich” on lower pretax incomes for everyone else may make a tiny bit of sense, until you actually stop and think about it. At that point, it makes no sense at all. It is like saying that if Scott digs a well on his property in MA and brings up water and drinks it, that that action somehow makes it rain less here in CA. Where is the cause and effect mechanism?

  16. Gravatar of scott sumner scott sumner
    23. May 2010 at 11:47

    Jason, You said:

    “Growth still hasn’t gotten back to the same level. Why not? We’ve had tremendous technological advances: computers, internet, cell phones, etc.”

    This is a common misconception. In 1927 Lindburgh flew a primitive airplane over the Atlantic. By 1968 we had the Boeing 747. (In 1969 the moon landing.) In the next 42 years commercial airplanes hardly advanced at all. We’ve had lots of progress in electronics, but the bulk of our economy had its rapid productivity growth in the 100 years after electrification, internal combustion engines, and indoor plumbing. After 1970s these sectors leveled off. That’s why growth slowed sharply after 1973.

    q, FX rates don’t matter, I am using PPP figures.

    I answered your other point in my update.

    Joe, Yes, I forgot to mention the family size issue. If the young and old are increasingly in their own homes (due to affluence) then of course the median numbers will seem to decline. Those median stats are really flawed.

    johnleemk, No, I don’t think we are both right. I say the neoliberal reforms helped and he doesn’t seem to think so. Indeed he seems to think they made things worse. I have the data that you would need to address the question (comparing countries that reformed fast with those who did little reform), and he has a single observation (the US) which proves almost nothing.

    happyjuggler0, I agree, even the Nordic countries have sharply slashed their top rates. The debate’s basically over on 90% tax rates.

  17. Gravatar of scott sumner scott sumner
    23. May 2010 at 11:50

    Snorri, I agree, and they also found loopholes.

    Sean, I agree.

  18. Gravatar of johnleemk johnleemk
    23. May 2010 at 11:53

    Scott, sorry I wasn’t clear. I didn’t mean to discuss your overall inferences — I was just trying to restate the basic points you and he made, and suggest that both points are consistent with the data.

    Regardless of what inferences anyone might draw, I think nobody disputes that growth in the US slowed after neoliberal reforms, and that growth in “socialist” countries picked up after neoliberal reforms. I don’t think it matters whether we look at per capita income or median household income — the trends should be the same. Some commenters seemed to be implying that had you used median household income, you would have seen quite different trends, which seems very unlikely to me.

    The exact causal mechanisms and overall conclusions to draw from these facts are what is in dispute. Krugman concludes neoliberalism doesn’t work; you conclude it does.

  19. Gravatar of Joe Joe
    23. May 2010 at 12:51

    I also would like to mention that all economic talk of income and economic growth doesn’t factor in the sheer material prosperity that western society, especially the US has experienced since the 70s.

    Any area of consumer goods, clothing, food, housing quality and size, transportation, communications, electronics, entertainment…. every of our life has gotten dramatically cheaper, higher quality, safer, bigger, cleaner, etc.

    If you guys are interested, the Heritage foundation has a great study on their website called “The Plague of Poverty.” They compare the material standards of living in all these mentioned area to previous generations and the EU. In almost every area of material life the average american in the bottom 20% quintile lives better than a middle class European today and like a king compared to someone from 50 years ago.

    In other words, whatever the growth of the economy and income has been for anybody, we get 100 times more bang for the buck than we did in the poster war “golden age,” but this is something very difficult to realize.

  20. Gravatar of Lorenzo from Oz Lorenzo from Oz
    23. May 2010 at 13:17

    Thank you for doing this. When I originally read Krugman’s “Reagan, Reagan, Reagan” piece my immediate reaction was that the US had greatly increased its relative performance.

    For Australia to hold ground is actually a considerable improvement in our relative performance. From 1913 to 1980, we lost ground relative to the US quite markedly, given our per capita GDP was higher than the US’s in 1913 (as it had been since the US Civil War). A mixture of poor choice of policy regime (trade protection and wage arbitration) and no longer having such a small population to live off such a large resource base.

  21. Gravatar of marcus nunes marcus nunes
    23. May 2010 at 13:27

    An interesting comparison on the power of “neoliberal” reforms is to see what happened to Venezuela and Norway (GDP-PC relative to US). Both are oil rich but Norway did not have North Sea oil until the late 70´s, so did not profit from the first oil shock.
    Norway Venezuela
    2,008 93 2,008 34
    1,979 77 1,973 64
    1,950 57 1,950 78

  22. Gravatar of xnavyguy77 xnavyguy77
    23. May 2010 at 20:16

    Median household income and GDP/capita are NOT the same: elementary statistics says that the latter is skewed by a small percentage of high earners.

    According to the US census data (http://www.census.gov/hhes/www/income/histinc/h08a.html), the inflation adjusted median income, in 2006 dollars, increased from 41k-45k in the 80s, to 43-49k in the 90s and 44-48k in 00s. This is hardly a big increase. Add to this that the 70s stagflation had many exogenous causes (high oil prices, wars, etc), and that the GDP increase was accompanied by a huge debt/GDP increase and it appears that Krugman is right (though I do not believe he’s right about government’s role in fixing the economy, but that’s another issue).

    Another important point: Reagan is often credited for “drastically lowering the taxes” in the 80s, but he CORRECTLY only marginally lowered the tax revenue and just made the tax less progressive (see Bruce Bartlett’s take at http://www.capitalgainsandgames.com/blog/bruce-bartlett/1632/reagans-tax-increases). Even this marginal tax decrease increased the public debt by 200% in the 80s alone and private debt-to-GDP by 30%!

    In summary, adjusted for debt and inflation there is little evidence of the “amazing success” of the neoliberal policies even in the 80s. Of course, their wildly excessive credit taking produced massive bubbles and produced G.W. Bush administration. Neither of the above makes an honest supply side economists very proud.

    I do give Reagan credit for making the tax code much simpler and more efficient though: hardly anybody paid the 90% MTR in pre-Reagan years as there were many many more tax deductions than today (mortgage deduction is the only remaining relic). The tax code was so complicated, it was even hard to determine the real MTR, which was about 50-60% for most high earners.

  23. Gravatar of Quotes of a vital, nay historic importance « Freethinking Economist Quotes of a vital, nay historic importance « Freethinking Economist
    24. May 2010 at 02:11

    [...] Sumner has a Why Krugman is Wrong post: But I will show that the performance of every single country on the list is consistent with my [...]

  24. Gravatar of Scott Sumer Gems « feed on my links Scott Sumer Gems « feed on my links
    24. May 2010 at 05:08

    [...] he breaks apart Krugman’s attack against the Reagan-era tax cuts (btw, I hate these kinds of characterizations [...]

  25. Gravatar of Sumner defends neoliberalism Sumner defends neoliberalism
    24. May 2010 at 05:30

    [...] post by Scott Sumner (HT: David Henderson). It opens: Suppose you had gotten a room full of economists together in 1980, [...]

  26. Gravatar of scott sumner scott sumner
    24. May 2010 at 05:43

    johnleemk, You said;

    “Regardless of what inferences anyone might draw, I think nobody disputes that growth in the US slowed after neoliberal reforms, and that growth in “socialist” countries picked up after neoliberal reforms.”

    I dispute this. My point is that growth slowed almost everywhere after 1980, for reasons that had nothing to do with reforms. With a few exceptions like China, almost every first second and third world country grew considerably slower after 1980 than before. My point is that everywhere the reforms occurred, growth was faster than it would have been without the reforms. The US is not a separate case, but rather is just like all the others. I think that even in the UK growth may have slowed a bit in absolute terms, but nothing like France Germany and Italy. Hence it gained in relative terms.

    You said:

    “I don’t think it matters whether we look at per capita income or median household income — the trends should be the same. Some commenters seemed to be implying that had you used median household income, you would have seen quite different trends, which seems very unlikely to me.”

    I agree. I’d like to see a comparison between Britain and France using medium income, or a comparison between Chile and Argentina. The difference might be smaller, but the more neoliberal country would probably still do better. I don’t know where to get such data (in PPP terms.)

    Joe, I completely agree. For instance the average low income American lives in a house bigger than the average middle income European. Low income people have specific problems like health care coverage–which aren’t a general problem of low living standards, but reflect our absurdly over-regulated and expensive health care system.

    Thanks Lorenzo.

    marcus, Those data are amazing. Was Venezuela really at 78% of US levels in 1950? That’s an Argentine-like decline.

    xnavyguy77, You need to reread my post. No where did I claim that US living standards rose more rapidly since 1980. Indeed in my next post I argue that growth slowed substantially after 1973–so you are beating a dead horse. Neither median income nor GDP/person are ideal. You’d like to see median consumption. That would show much more growth than median income.

    The cuts in top rates didn’t make the tax code less progressive, as the rich actually now pay a higher share of income taxes. The increase in payroll taxes did increase regressivity.

    Actually almost all of the neoliberal reforms were supported by Democrats:

    1. Top rate cut to 28%
    2. Deregulate transport, communications, energy, banking
    3. Nafta and tariff cut agreements
    4. Welfare reform

    So Krugman is completely wrong in his premise that this was some sort of right wing plot. It was a LIBERAL agenda.

  27. Gravatar of muirgeo muirgeo
    24. May 2010 at 06:58

    Amazing success? Aren’t we in the middle of a global economic meltdown with all the power and wealth concentrated amongst a small elite group of finaciers, bankers and speculators who add nothing to the economy but control its levers and leave us, the productive class, subservient to their whim? That’s the success you are talking about? Wow I never knew serfdom could look so good.

  28. Gravatar of Doc Merlin Doc Merlin
    24. May 2010 at 08:36

    @muirgeo:
    The meldown is a mild speedbump compared to the growth since 1980.

  29. Gravatar of Patrick Patrick
    24. May 2010 at 09:24

    Australia is an interesting example.

    It’s true there was a great deal of economic reform in the 80s including floating the dollar, breaking union power, privatising utilities, decentralising wage bargaining etc.

    But, having said that, the political centre in Australia is basically in the same place as the US Democratic party and in some ways is even to the left of it. For instance, all political parties in Australia believe in universal health care and a social safety net that doesn’t expire. And, unlike the US, Australia is prepared to tax the population at a level that balances the budget. The financial crisis also showed that Australian policy makers take a Keynesian approach to the business cycle – Australia’s fiscal stimulus was large and it came quickly – there was none of the hand wringing we saw in the US.

    From my perspective the reforms of the 80′s were vital to Australia’s prosperity, but when I look at the US I think the legacy of the 80s is more ambiguous. Reagan cut taxes too much and the US has been paying the price ever since.

  30. Gravatar of Recomendaciones « intelib Recomendaciones « intelib
    24. May 2010 at 11:38

    [...] America’s amazing success since 1980: Why Krugman is wrong, by Scott Sumner [...]

  31. Gravatar of muirgeo muirgeo
    24. May 2010 at 12:33

    I’ll take the pre-80′s post war growth anytime…especially since if I’m a middle class person and not some one in the top 0.01% of income earners.

    http://krugman.blogs.nytimes.com/2010/05/22/down-the-memory-hole/

    And especially since this Neoliberal Market castrophe ain’t near over yet.

    Have you guys noted your policies seem to be follwed by economic depressions 30 years out? Even Jimmy Carter can’t keep up with such.

    No… the data on your preferred policies is still coming in with whole countries balancing on bankrutcy.

  32. Gravatar of NY Citizen NY Citizen
    24. May 2010 at 12:43

    Fiscal sanity, responsibility, and growth are the pillars of America’s success. We must continue to stress this in all aspects of life, private and public. As such, we must support candidates who will then bring our message to Washington.

    Read below and visit Brumberg2010.com for more information.

    REPUBLICAN RYAN BRUMBERG ANNOUNCES BID FOR CONGRESS IN NEW YORK’S 14TH CONGRESSIONAL DISTRICT—CHALLENGES DEMOCRATIC INCUMBENT

    New York, NY–-Ryan Brumberg has resigned his position as a Management Consultant at McKinsey & Company to challenge incumbent Rep. Carolyn Maloney for New York’s 14th Congressional District. Socially liberal and fiscally conservative, Mr. Brumberg is the new breed of the Republican Party.
    Mr. Brumberg outlined his philosophy: “History has repeatedly shown that despite good intentions; corporate bailouts, massive stimulus spending, and heavy corporate regulation will weaken the economic recovery, increase deficits, and drive the country towards bankruptcy. Innovation and private industry, not government and bureaucracy, create sustainable jobs.” In challenging Democratic Representative Maloney, candidate Brumberg has pledged to bring a fact-based approach to the nation’s most pressing problems. Brumberg elaborated: “The problems facing our economy and finances are too severe to allow ideology—Democratic or Republican—to guide our national decisions. Government needs to be smarter. America should continue to be the envy of the world, and New York the envy of America.” Mr. Brumberg’s campaign officially kicked off Thursday night, April 29th, at a fundraising celebration hosted by supporters of Brumberg for Congress. Brumberg has already raised approximately 50% per cent as much campaign funds in the past three weeks, as the prior three Republican candidates raised in the past three elections combined. A lifelong New Yorker, Ryan Brumberg grew up just outside of the city. He has deep roots in Manhattan’s East Side, where his family has lived for more than 60 years. He graduated Phi Beta Kappa from Columbia University, with top honors from Stanford Law School, and then returned home to New York City to join McKinsey & Company.

  33. Gravatar of Doc Merlin Doc Merlin
    24. May 2010 at 13:19

    @muirgeo

    Did you even read Scott’s posts?
    Scott already answered Krugman’s post.

    ‘I’ll take the pre-80’s post war growth anytime…especially since if I’m a middle class person and not some one in the top 0.01% of income earners’

    1. Countries which didn’t adopt the neoliberal reforms had even slower growth than the ones who did.
    2. We (the US) had neoliberal reforms in the 80′s and early 90′s but since then its been quite the opposite.
    3. Sweden and Denmark on the other hand have pushed forwards with neolibral reforms with full force and done very well by it.

    ‘Have you guys noted your policies seem to be follwed by economic depressions 30 years out? Even Jimmy Carter can’t keep up with such.’

    With the exception of the brief intermission of the Coolidge administration, US policy in the 30 years before the great depression was the opposite of neoliberal.

  34. Gravatar of NiccoloA NiccoloA
    24. May 2010 at 13:33

    Thank you, Dr. Sumner.

    You give us closeted neo-liberals a sword to fight with. :-)

  35. Gravatar of Doc Merlin Doc Merlin
    24. May 2010 at 13:49

    Also, forgot to mention

    @muirgeo:

    The neoliberal policies in the early 80′s were just a continuation of Kennedy’s policies. He was the real reformer who started the ball rolling. He cut the top marginal tax rate from where it was at 91%. He started deregulation, etc.

  36. Gravatar of Matt Matt
    24. May 2010 at 14:13

    I think it is worth noting the top 0.01 percent may have gotten a disproportionate share of the growth due to the moral hazard of banking along with deregulation. Much of the meteoric growth of the top 0.01 percent has come in the financial industry since deregulation started in 1981 and it seems like much of those profits came from putting low-interest liabilities into high-interest, risky assets. I’m a pretty diehard libertarian, but it’s hard for me to shake that conclusion. If we’re not willing to deal with 19th century panics again, then we need to couple much stricter financial regulation with implicit government guarantees.

    There is also the two parts of the American economy where America does have the European socialist mentality, education and health care. Unsurprisingly, America also does the worst in these two areas. Health care is a horrible combination of socialist entitlement and for-profit actors, as health care providers can multiply revenue at will with the end consumer paying virtually nothing. Education in America is generally run like a Soviet department, with little accountability for actually teaching students in many districts.

    That being said, I agree in general with Scott. Most people who visit Europe don’t go off the beaten track to see the effects of long-term unemployment and (relative) poverty. Europeans live in smaller houses, own fewer cars, drive smaller, less expensive and older cars, have fewer appliances, smaller TV’s, etc. It may seem quite vain to put it in those banal material terms, but it’s true that Europe’s statist policies have hurt their standard of living.

  37. Gravatar of Healthcare Economist Healthcare Economist
    24. May 2010 at 15:44

    I am curious if these results are robust to choosing a different start date…say 1975 or 1985.

  38. Gravatar of Roland Buck Roland Buck
    24. May 2010 at 18:25

    A more direct comparison is the performance of the Clinton era with both the Reagan era and the Bush Jr. era. Of the three the Clinton era is by far the best, and Clinton raised the taxes on the upper income groups. The Bush Jr. is by far the worst, and he gave huge tax cuts to the haves and have mores.

  39. Gravatar of Mikko Sandt Mikko Sandt
    24. May 2010 at 19:34

    Am I missing something, or aren’t European median income statistics also skewed due to the same reason as French productivity statistics, that many of the least productive simply don’t show up in income statistics because they collect welfare checks while as in the US they’d take McJobs and would therefore show up in statistics?

  40. Gravatar of Assorted Links « Mostly Economics Assorted Links « Mostly Economics
    25. May 2010 at 01:25

    [...] Sumner once again criticises Krugman. In this post Krugman questions free market orthodoxy. Sumner looks at a [...]

  41. Gravatar of muirgeo muirgeo
    25. May 2010 at 05:41

    Some one else check and see if his numbers even look accurate. Doesn’t look like it to me.

    1980 data;

    http://www.nationmaster.com/graph/eco_gdp_per_cap_ppp_cur_int-per-capita-ppp-current-international&date=1980

    2008 data;

    http://www.nationmaster.com/graph/eco_gdp_ppp_percap-economy-gdp-ppp-per-capita

  42. Gravatar of JoeyO JoeyO
    25. May 2010 at 06:45

    Well, I must say. This is amazing. This is a…what…scholar? Incredible. Puerile nonsense.

    How can someone…we see so much of it these days…gather information and come up with conclusions that can be…I won’t even say battered down…merely pushed over with the slightest touch. And I am not even referring to the “think” tanks who research their conclusions after they make them.

    I love the way this guy Sumner just tosses off casual comment. Like, we haven’t had commercial airliner development in the last 30 years. Well, of course, we did have the Concorde and discovered that development along those lines bumped up against a little thing called physics and a thing called opinion among citizens of heavily populated areas. Otherwise we would be flying from New York to LA in less than three hours.

    It might also have something to do with the fact that we now spend every other dollar (Sumner likes this, I’m sure) on military contractors. I can tell you that those planes fly at peak efficiency. Just not with you in them.

    Wages have gone down since 1980, because of monetary and economic…blah, blah. Give me a break. Wages have gone down since 1980 because of political pressure on unions and on workers in general from corporations who sponsor politicians who will do their bidding.

    Requires no complex economic formula to explain it. Very simple. You work for the wages I tell you to or I get someone else who will. In over half union organizing in the last 20 years has been stopped with threats of closing down a plant. That’s a statistic you can look up if you want to be totally accurate. By the way, did you notice how the minimum wage did, as the Sumner-style economists predicted, cause the Great Recession. All those cats going from five bucks an hour to five-and-a-quarter just tossed the economy into a cocked hat.

    Politicians who write laws that encourage sending jobs overseas, closing plants, creating union-busting rules and granting tax breaks for companies making $40 billion and paying zero caused wage reductions–that is why wages are depressed.

    I don’t know how many tax breaks Sumner gets. He may need my tax accountant, but no one with a brain and a pencil pays 35%. Cheney paid 21% on the last tax return I saw.

    Sumner just doesn’t know very much. 58% of equity in Sweden is in the hands of the top 1% as compared to 63% here. So what is the difference between Sweden and the U.S. that allows them an incomparably better lifestyle for the average person while having basically the same “capitalist” infrastructure?

    Guys like Sumner here in the U.S. Ideologues who have never started a business, made it succeed, sold it and started another. (Now that is real economics.)

    And it’s not just these Republican nit-wit Neocons and tea baggers with their crazy theories that never work but simply waste more time and more money. (Our money…yours and mine.) Thank Neocons for the $6 trillion additional debt of the last 8 years piled onto the $5.6 trillion we were carrying before that.

    Don’t read Freidman or for God’s sake Laffer, or listen to Greespan. Read Geoffrey Crowther. There is a point at which the incremental income of societies must be turned to productivity instead of yachts. That is done with tax incentives.

    Contrary to popular opinion people do not flee the country to tax havens any more in periods of high taxation than they do in periods of low taxation. High taxation, done properly means only deferred income, and at a potentially greater return. No, the situation of tax exiles has more to do with character than economics.

  43. Gravatar of scott sumner scott sumner
    25. May 2010 at 08:14

    Muirgeo, You said;

    “I’ll take the pre-80’s post war growth anytime…especially since if I’m a middle class person and not some one in the top 0.01% of income earners.”

    So would I, see my next post.

    Regarding the PPP numbers, I used the World bank, and even provided the link. I doubt the conclusions would be different using your numbers. The UK still jumps ahead of the others.

    Earlier I did a study of the 32 developed countries with incomes above $20,000. Greece was the least neoliberal on the list. Is Greece your model?

    Patrick, I agree with you except for the Keynesianism. Australia did well recently because they had a much easier monetary policy resulting in much higher NGDP growth. Plus they export commodities to China.

    Thanks Doc.

    Thanks NiccoloA.

    Matt, I completely agree; our banking system combines deregulation with moral hazard, which is bad, and our health care system is a mess.

    HealthCare Economist; The World Bank doesn’t have data before 1980. 1985 wouldn’t change much. In the earlier decades Europe grew faster, as they recovered from WWII.

    Roland, Clinton did three supply-side policies:

    1. Freer trade
    2. Welfare reform
    3. Lower taxes on capital

    and one anti-supply-side:

    1. Higher MTRs.

    Clinton shrank government and Bush expanded it. I agree with you that Clinton did better, and would love to go back to US government policies circa 2000. Obama doesn’t seem to be going back though, does he?

    Mikko, No, the unemployed are included in GDP/person.

    JoeyO, You said;

    Well, I must say. This is amazing. This is a…what…scholar? Incredible. Puerile nonsense.

    How can someone…we see so much of it these days…gather information and come up with conclusions that can be…I won’t even say battered down…merely pushed over with the slightest touch. And I am not even referring to the “think” tanks who research their conclusions after they make them.

    I love the way this guy Sumner just tosses off casual comment. Like, we haven’t had commercial airliner development in the last 30 years. Well, of course, we did have the Concorde”

    I gave up on your tirade right there. The Concorde was developed almost 40 years ago, and in any case it supports my argument, which was also based on the laws of physics.

  44. Gravatar of Mentiras deslavadas sobre o crescimento | Paul Krugman Mentiras deslavadas sobre o crescimento | Paul Krugman
    25. May 2010 at 11:42

    [...] Sumner diz que estou equivocado em relação aos impostos, à regulação e ao crescimento, pois, apesar de o crescimento americano [...]

  45. Gravatar of Es gibt zwei Arten von Ökonomen … « Aus dem Hollerbusch Es gibt zwei Arten von Ökonomen … « Aus dem Hollerbusch
    25. May 2010 at 12:33

    [...] gibt zwei Arten von Ökonomen … by Aus dem Hollerbusch on 25. Mai 2010 Ein wunderbares Zitat vom US-Ökonomen Scott Sumner: There are two kinds of economists. Those who read the Economist (or FT) every week, and have a [...]

  46. Gravatar of Josh S Josh S
    25. May 2010 at 13:36

    I always wonder what Krugman was doing in the 1970s. I have yet to meet a single person who remembers the 1970s as good years compared the 1980s and 1990s.

  47. Gravatar of AYC AYC
    25. May 2010 at 20:03

    Scott, you mention increased consumption (more than once) as a positive indicator, without mentioning the fact that this is due to increased DEBT. How else do you explain increased consumption with stagnated wages? Excellent post otherwise…

  48. Gravatar of ssumner ssumner
    26. May 2010 at 09:05

    Josh, Yes, he overlooks how bad it was by focusing on GDP growth, which was temporarily and artifically propped up by rising inflation. But I do agree with Krugman that recent decades have not seen the amazing rise of living standards of 1920-73.

    AYC, I don’t think debt was the key factor, although it may have played a role. The real wage data is highly flawed by changes in family structure, non-wage benefits like health care, capital income, off the books income (for those on welfare), government benefits, and a host of other factors. We’ve also added many more immigrants than 1945-1973, which also distorts the comparison. Ideally you’d compare their current wages to how they did earlier in Mexico.

    Debt is now being reduced. My prediction is that 5 or 10 years out the consumption number since 1980 will continue to look much better than real wages, despite lower debt levels.

  49. Gravatar of U.S. Growth Since the 1980s U.S. Growth Since the 1980s
    26. May 2010 at 10:44

    [...] together, this pair of outstanding posts by Scott Sumner and Reihan Salam seems to me a pretty decisive rebuttal to Krugman’s preferred narrative [...]

  50. Gravatar of Chris Chris
    26. May 2010 at 12:02

    I guess by “A slightly off-center perspective on monetary problems” what is really meant is “completely lacking any vestige of a moral compass” or possibly “propaganda for the masses to help perpetuate the one sided class war against the non-rich”. Note that the author mentions that their was a recession in Chile in 1974-75 without mentioning that it was Nixon who “made Chile’s economy scream”. This recession was part of the US orchestrated overthrow of a democratically elected leader. Furthermore, the author, just like all the neoliberals, “forget” to mention that the people of Chile did not want those reforms. They did not want those reforms so badly that the US installed dictator, Pinochet, had to murder them by the tens of thousands to instill enough Stalinist fear into them to make them submit to them. This is beside the point to neoliberals; they know whats best for us and they have no moral problem with murdering whole families to get their way even though no one wants their “reforms”. Regardless, the author also “forgets” to mention that the copper mines, a huge part of the Chilean economy, were not privatized for fear that if that part of the economy were to be lost to the speculators the same way as many other sectors, the regime would lose its financial base and fall. Another indicator of the falsity of the Chilean “miracle” is that poverty in Chile has only recently returned to its number in 1970 of about 20%. The only group in all these countries, I will submit, who have done better in the past 30 years are the top 10-20%. Everyone else is worse off. Even in China where 100 million are making a middle class wage of $3000/year (!), they are living under an oppressive government (capitalists and neoliberals like tyranny – see Chile above) which makes them live in filth and pollution with no chance of a better life for them or their children (most of the children of Chinese workers are denied an education – what would they need that for?). This is the kind of world the author is trying to trick you into believing in. By the time you figure out he was lying to you all along you and your kids will be slaves to a dictator who will abduct you in the middle of the night in front of your family and drop you out of the open door of a helicopter into the ocean so that your body will not be recovered and your family will be unable to collect any life insurance (see Chile above).

  51. Gravatar of ssumner ssumner
    27. May 2010 at 06:51

    Chris, Here’s the difference between people like me and the left. I walk up and down the halls of any college, and see posters of Che on office walls. Che was of course just as brutal and bloodthirsty a torturer and murderer as Pinochet, even if he didn’t kill as many people. But I never recall seeing pictures of Pinochet on the walls of fellow libertarians. Indeed, like Milton Friedman, I think Pinochet was “dispicable.” I wish the left had the same values. BTW, Pinochet had little to do with the economic reforms. He was a statist like other dictators in Latin America, who only gave the Chicago boys a chance because his own polices were failing in 1974-75.

    Last I looked Chile had been a democracy for more than 20 years. Please let me know when the Chilean people vote to eliminate those hated neoliberals reforms.

    Chinese workers with no future? Hmmm, haven’t the Chinese poor just seen the largest improvement in living standards in human history in the past 30 years? And doesn’t that correlate with the onset of economic reforms? I’m sure my wife, who suffered under Mao, would be amused by your view that things in China aren’t getting better. Perhaps you prefer the model across the border in North Korea, which has yet to allow market reforms, and where people are starving.

    Obviously any huge poor country like China (or India) will have vast problems. They should treat their rural residents better–as Yasheng Huang has pointed out they need more free market reforms to do so. But I have been there six times since 1994. I’ve seen urban and rural areas, and believe me, living stadards are rising fast.

  52. Gravatar of Chris Chris
    27. May 2010 at 10:48

    See ssumner, you prove my point right off the bat. You are just an ideologue with no capability for empathy for anyone but yourself. Assuming you actually saw a poster of Che that was sanctioned by the college, which I very much doubt, you took one instance of a Che poster and applied it to all colleges everywhere. If the Che poster was not sanctioned by the college then you have no point at all. Maybe whoever put up that poster liked it because it was a pop culture icon. My point is that it is a stupid assumption…just like assuming that China’s working poor are doing well.

    I am sure when you and your wife go to China that your first stop is the sweatshop district. Considering that she married a rich American (poor Americans haven’t been to China six times) it is pretty easy to assume that she probably came from some means herself which is probably who you associate with when you go there, not the working poor who live in their own filth. FYI, the bulk of the working poor are from the countryside. If you knew anything about China other than sipping margaritas along the great wall you would know that people from the countryside who work in the factory towns are worse off than illegal aliens are here. They cannot get official housing, get redress of grievances or send their kids to school because they are in the cities, not in the countryside where their papers say they belong. I understand why you like neoliberal economics ssumner; It works for you and you really don’t give a crap about anyone but yourself. The other 90% of us do care however. We don’t want to live in your slave society.

    I simply don’t believe that you actually think Milton Friedman thought poorly of Pinochet. If that is so why did he go there? Usually when you don’t like a government you don’t get into bed with them. Yes, he said that he didn’t like Pinochet but, and you may not be able to assimilate this, maybe he was lying. Maybe the stench of proximity to Pinochet was so awful that he was afraid it would stain his own legacy so he needed to try to wash it off any way he could. Regardless, Friedman could not have done his reforms without holding the populace hostage at gunpoint while he let rich people like you run roughshod over the economy. By the way, may I suggest you re-run your numbers from 1974-1989, the actual running time of the regime, I think the numbers will come out quite a bit different (which I suspect is why you used a broader run time which includes time when the Chilean people, not Milton Friedman, had a say in their own economy).

  53. Gravatar of Good Government vs. Less Government « The Baseline Scenario Good Government vs. Less Government « The Baseline Scenario
    27. May 2010 at 19:29

    [...] a controversy raged in the blogosphere about whether neo-liberalism has been a bane or a boon for the world economy. [...]

  54. Gravatar of less government or good government? « the Pierian muse less government or good government? « the Pierian muse
    28. May 2010 at 06:07

    [...] less regulation is always good. A debate on this issue has surged again in the blogosphere, with an assertion that, when properly interpreted, a recent study known as the Heritage Index suggests that [...]

  55. Gravatar of ssumner ssumner
    28. May 2010 at 06:14

    Chris, I see Che posters all over, and run into leftists who like Che all the time.

    You know nothing about my wife (whose background in China was much more deprived than an American who grew up in a poor household), and I have traveled all over China, and seen both urban and rural poor. There is a lot of “filth” but much less than in 1994 when I first visited. The reforms are helping a lot.

    If you read earlier posts in my blog, you’d know I was critical of Chinese policy toward migrant workers and rural people. But as bad as it is, it is far better than under Mao, when millions were starving. Of course in those days the American left had a rosy view of Mao. You may not be old enough to remember, but I do.

    You said;

    “I simply don’t believe that you actually think Milton Friedman thought poorly of Pinochet. If that is so why did he go there? Usually when you don’t like a government you don’t get into bed with them.”

    If not, why did he call him “dispicable?” Friedman visited China when it was still a rigidly communist country. I suppose you think Milton Friedman was also a communist. I would have met with Hitler, if he had asked for my opinion. I doubt Friedman went to bed with Pinochet.

    Statsguy, Nice post, Here is the comment I left on the other blog:

    Nice post Statsguy, I mostly agree. It is widely known that richer countries tend to have much bigger governments than poorer countries. Among really poor countries few people pay income taxes, and its hard to collect a lot of revenue. Of course there are exceptions–Brazil has a pretty big government. It’s also true, FWIW, that among rich countries the very richest (Singapore, HK, USA, Australia, Canada, Switzerland, etc) tend to have somewhat smaller governments than the next tier. Norway is an exception.) My hunch is that the same civic-mindedness that helps countries set up what you call “good government” also tends to lead countries to set up big welfare states (think Denmark.) I think in time the Singapore approach to social insurance will be shown to be better, but depsite my right wing reputation, I regard Denmark and Sweden as highly successful countries.

  56. Gravatar of Chris Chris
    28. May 2010 at 11:16

    ssumner, I never claimed to know your wife, nice straw man argument there, typical. The only thing I expressed was she had the opportunity to meet a rich American which is not likely the case for 95%+ of Chinese and the ones for which it is more likely are those with some means which would give them that opportunity. I still seriously doubt you have spent much time with the poor in China. Break it down for me. What percentage of your total time in country was spent with people who work 16 hours a day 7 days a week like they were in that Microsoft factory that was recently exposed? Also, in your estimation of progress in China I think you make the usual mistake that many economists make; they forget about the externalities. How many people in China suffer and or die due to pollution? How many more are born with birth defects so that there can be an extra billionaire in the world? 77% of the river water in China is unsuitable for drinking, a good subset of that is not even suitable for irrigating crops. Where do you think that will lead? Do you care? I doubt it.

    Wow, Friedman called Pinochet despicable. Did he scowl when he said that too? I guess you didn’t really bother to read my previous post. Maybe Friedman lied to protect is reputation? Lots of neoliberals do it. Turn on Fox News for 5 minutes and you will see. One more thing I am having trouble tracking down. I have done some research on Milton Friedman saying the Chile dictatorship is “despicable” but I have not seen anywhere where Friedman actually says this. All I have is a dozen apologists and a few hundred blog replies parroting what they want to believe. It is possible he actually said this but proof would be nice don’t you think? Since you have been apologizing for Friedman for a long time maybe you could provide a link to a Friedman article or a video where he said this?

    The Che posters thing really gives away how superficial your thought processes can be. The thought that a stupid poster leads you to worldview altering conclusions is just so lame it hurts. Do you want me to judge neoliberalism by some of the tea party posters I have seen? I didn’t think so. You should rely less on personal anecdotes to form conclusions. It would be my guess you made your mind up before you ever saw a poster but now use them to justify your preconceived belief. That is a typical right wing authoritarian trait. Are you a Glenn Beck fan? Like Beck and most wingers you are delusional about the left in America. Either that or you are intentionally lying. The left NEVER revered Mao, similarly the left never revered Che. There are always exceptions but as a group this is a fact. Che is a pop icon, he has a somewhat compelling story and he was an abysmal failure as a revolutionary. The left divorced communism after Stalin made a non-aggression pact with Hitler in 1939 and proceeded to divide up Poland. Just in case you don’t remember Mao didn’t take power until 1949. I know you wingers don’t want to give that revisionist meme up but those are the facts.

    Most on the left, as you probably know but call them communists anyway, argue for a mixed economy because that is what works best for the majority of citizens in a country. You try to pass off the country with the highest GDP per capita as the ideal when what you should be measuring is which country has the most satisfied citizens that agree that their country provides a good life for them and a future for their children. For the record you will find social democracies have the highest citizen satisfaction rates in the world. Countries like Sweden, Denmark, Finland and Norway lead the world in this category. They also have much better income equality that most countries. I am sure this concept of equality and life satisfaction for others makes no sense to you at all. I know all you wingers care about is your own satisfaction and your own future and couldn’t care less about the rest of us. One look at Wall Street bears this out in a New York minute. Sometimes I wonder why you agree to be part of a country at all. Isn’t being part of a country collectivist?

  57. Gravatar of alxr alxr
    28. May 2010 at 11:34

    Real wages, adjusted for inflation, of the male u.s. worker have been flat since the early 1970′s. Growth in family income has been almost completely from a second wage earner.

    The URL for the federal reserve study that asserts this escapes me and I do not have time to retrieve at this moment. I will be happy to post this evening.

    If American males as a group have suddenly(?) become unable to improve their economic lot perhaps the growth in GDP may have benefited another group of the U.S. economy.

    I believe that manufacturing wages have declined or at least the number of manufacturing jobs decreased compared to the total work force.

    Where I live in the U.S. the higher paying lower than semi-skilled type jobs, i.e. machine operator have appeared to decline overall. At least that has been the experience in my younger sons cohort, he is 25, locally.

    I would like to see a discussion of real wages for individuals who’s ability to acquire work skills is constrained by their intellectual functioning. I.Q. overall 90 to let’s say 105.

    Rick

  58. Gravatar of ssumner ssumner
    28. May 2010 at 12:49

    Chris, I am afraid your attacks aren’t going anywhere because you are relying on emotion, not logic.

    You yourself claim to support a mixed economy. China moved from a rigid communist system where living conditions were extremely low (it was poorer than India in 1979) to a mixed economy. By your own logic that should be an improvement.

    You seem unaware that China had lower living standards in the past, or that other countries like India and Bangladesh now have lower living standards, or that life expectancy in China is rising rapidly. Of course China has lots of appalling things one can point do–it is a developing country of more than a billion people! But living conditions are rising fast. I’ve seen it with my own eyes (the countryside looks much better off) and I see it in the data. Read some books like Country Driving if you don’t believe me. The author knows China far better than you or I. Nick Kristoff says the same thing. He travels in China a lot and is certainly no right-winger. Another well known liberal–Joe Stiglitz–considers China an economic success story. Your are just spinning your wheels pointing out problems–of course there are problems.

    You seem unaware that I know everything about Denmark that you mention, and once did a post pointing out that Denmark has the happiest people and the most equal system in the world. Of course many on the left don’t know that it also has the freest markets in the world–check out my post “The Great Danes” if you want to learn more about Denmark.

    Here is a piece from a long article that totally demolishes Naomi Klein’s book. (It has the Friedman comment about Pinochet.) The claims she makes about China (such that they sped up economic reforms after 1989) are laughable to anyone who has a passing knowledge of China. But I’ve heard the book was well received on the left. The review is from Norberg:

    “Discussing Friedman’s proposal to reduce inflation through sweeping market reforms, Klein writes, “Friedman predicted that the speed, suddenness and scope of the economic shifts would provoke psychological reactions in the public that ‘facilitate the adjustment.’ ” This gives the impression that Friedman wanted to disorient people through pain in order to push through his reforms. But the quote in its entirety shows that Friedman had something very different in mind. If a government chooses to attack inflation in this way, he wrote, “it should be announced publicly in great detail….The more fully the public is informed, the more will its reactions facilitate the adjustment.” In other words, if voters are not ignorant and not disoriented, but fully informed of the reform steps, they will facilitate the adjustment by changing their saving, consuming, and bargaining behavior. Friedman’s view was the opposite of what Klein claims.
    Not content to misrepresent Friedman’s opinions, Klein blames him for various crimes committed around the world. Most notably, she links him to Augusto Pinochet’s brutal military dictatorship in Chile in the 1970s, writing that Friedman acted as “adviser to the Chilean dictator.”
    In fact, Friedman never worked as an adviser to, and never accepted a penny from, the Chilean regime. He even turned down two honorary degrees from Chilean universities that received government funding, because he did not want to be seen as endorsing a dictatorship he considered “terrible” and “despicable.” He did spend six days in Chile in March 1975 to give public lectures, at the invitation of a private foundation. When he was there he met with Pinochet for about 45 minutes and wrote him a letter afterward, arguing for a plan to end hyperinflation and liberalize the economy. He gave the same kind of advice to communist dictatorships as well, including the Soviet Union, China, and Yugoslavia.
    Klein twists this relationship beyond recognition, claiming Pinochet’s 1973 coup was executed to allow free market economists (“the Chicago Boys,” as the economists from Friedman’s University of Chicago were called) to enact their reforms. This false link is crucial for giving the impression that the Friedmanites have blood on their hands, since the most violent period of the regime came right after the coup. But Friedman’s visit, which Klein claims started the real transformation, came two years later. Klein insists on having it both ways.
    The reality was that Chile’s military officials were initially in charge of the economy. They were corporatist and paternalist, and they opposed the Chicago Boys’ ideas. The air force controlled social policy, for example, and it blocked market reforms until 1979. It wasn’t until this approach led to runaway inflation that Pinochet belatedly threw his weight behind liberalization and gave civilians ministerial positions. Their success in fighting inflation impressed Pinochet, so they were given a larger role.
    Klein could have used the real chronology to attack Friedman for visiting a dictatorship that tortured its opponents-a commonly heard criticism of the economist-but that’s not enough for her. To find support for her central thesis that economic liberalism requires violence, she has to make it look like torture and violence were the direct outcome of Friedman’s ideas.”

    There is lots more if you go to this website.

    http://reason.com/archives/2008/09/26/defaming-milton-friedman/

    Warning, There’s not much left of Klein after Norberg gets done with her.

    alxr, The real wage data has been widely criticized, but I don’t doubt that male factory workers have done much more poorly that the overall population. In a post I did called “BU Dorms” we had a long discussion in the comments, and I seem to recall in some follow-up posts. I don’t have time to repeat my arguments every time. But here’s sonmething to consider:

    Imagine a typical American worker in a Iowa meatpacking plant in 1975. Then go thirty years later–the real wage has fallen sharply. But also consider the following. The typical worker in the plant will now be a Mexican immigrant. The guy may be retired by now, and his son may have gone to college. If you are using median wages (not average, which you must be) then the earnings of the college educated don’t even figure in the numbers, because most Americans never graduated from college. So the son’s better off, the American worker is retired, the Mexican is better off than Mexico, but the data shows we are worse off. Obviously this is just one example, but you need to consider all sorts of factors like higher fringe benefits (health care) and changing demographics, etc. Median numbers are extremely misleading because most American imagine the median worker is the head of a big family, and in fact he isn’t. I’ve been in all 5 declines at one point or another in my life. When I made less than $10,000 from age 18-26, I was probablty in the “poor category” but that was very misleading because I was a student worker. I know middle to upper middle class retired people who work a few hours so that they aren’t just sitting around at home. The income isn’t high, but it gets counted as a “family” just like I was counted as a “family” when I made $5000 as a student worker. All I am saying is that it is complicated. The data show Americans of all classes have much higher consumption bundles than in 1973, which conflicts with the income data. I am 55 and when I go to shopping malls in Arizona that are full of Hispanics, and also drive through the neighborhoods where they live, the country looks much richer than when I was young in 1975. The Hispanics are often living in ranch houses that used to be regarded as middle class homes, but are now regarded as lower class homes. And there are far fewer Americans living in rural southern shacks than when I was young. FWIW, I tend to believe the optimists that say living standards are improving, but I accept your point than men have done worse than women, and unskilled men have done worse than skilled men. (On the other hand women are often having to do two jobs at once–homemaking and outside work, so I don’t mean to suggest they are doing great either.)

  59. Gravatar of webmoneybag.net » Blog Archive » Good Government vs. Less Government webmoneybag.net » Blog Archive » Good Government vs. Less Government
    28. May 2010 at 14:10

    [...] a controversy raged in the blogosphere about whether neo-liberalism has been a bane or a boon for the world economy. [...]

  60. Gravatar of Growth, Government, and Neo-Liberalism « The Center Way Growth, Government, and Neo-Liberalism « The Center Way
    29. May 2010 at 09:41

    [...] Scott Sumner took the other side, sort of, by comparing the US rate of growth to other countries at the same time. His basic argument is that a lot of countries around the world experienced phenomenal growth post-WWII because their populations were engaged in productive labor rather than shooting at each other. Then, he shows global growth slowed considerably in the 1970′s across the board, and the “flattening” that Krugman showed was generally true worldwide, but the US’s growth outpaced virtually every other country in the 1980′s in particular. His basic point is that the US economy was going to slow down anyway with everyone else, and deregulation and reforms of the 1980′s allowed higher growth than would otherwise have happened. [...]

  61. Gravatar of Chris Chris
    1. June 2010 at 07:04

    ssumner, Is that how ideologues deal with people they disagree with? Since you can’t refute facts just chalk my arguments up to your opponent being emotional? Typical. I guess if this was 1938 you would be telling me that Nazi Germany and the USSR were models to be emulated because, unlike the rest of the west at the time, these states were growing. The difference between you and I is that while you believe any growth is good growth, I don’t believe in growth at any cost. China is a neoliberal wet dream. They have created an environment where capitalists have no regulations to speak of. Like rats in a cage they will consume everything until there is nothing left. Right now the rats just haven’t quite finished despoiling their natural capital. When they do, you will right how successful the experiment was by measuring the years before the collapse and rewriting the history of what happened after as the fault of someone or something else.

    By the way, where is the link I asked for (if it exists)? Until you provide proof that Friedman said this I will take it that this is just another right wing myth. All my research turned up were attributions that he had said this without saying when or where.

    I know people in both Chile and Brazil so you can’t push your myths on me about those countries. I know the truth from first hand accounts. The truth is that the economists would have never been able to implement there disastrous, terroristic economic plans without the help of an absolute dictator who only cared about rich people. The reason that this was the case was because people don’t like being made destitute to further the cause of the already rich. Why don’t you tell me how everyone loves the privatized retirement program in Chile. Isn’t that another one of those cherished neoliberal myths? No one likes their private retirement system, that is why the government and military in Chile excluded themselves from it from the beginning. They knew it was just a new way to extract resources from the population for the benefit of a few.

    Denmark has a huge public sector! Neoliberals hate the public sector. Were you somehow unaware of this fact? Neoliberals hate collective bargaining. Are you somehow unaware of this? Denmark has a unionization rate of something like 80%! A successful Denmark is proof that Neoliberalism is false yet you fail to understand that. If you believe that Denmark is successful why do you put your efforts into steering the US towards the China / Chile model? Do you just prefer that almost everyone work twelve hour shifts with no holidays and that industry regularly dump their wastes into the drinking water?

    I’m sorry ssumner, I have read all the Friendman apologist literature. They all say the same things, over and over again. You betray your narrow mindedness by saying Norberg destroys Klein’s arguments. In a debate Klein would pick apart Norberg and all the other apologists and you know it…you just don’t want to believe it. By the way, I seriously doubt you have read more than 5 pages of the Shock Doctrine…you wingers never read the opposition…it makes the cognitive dissonance worse.

    ssumner, Friedman does have blood on his hands. He only distanced himself from Chile when it became obvious that his reputation was going to suffer. If you don’t want to accept it in Chile (which you wouldn’t do even if I turned up a photo of Friendman shooting a union leader), maybe you can take the neoliberal credit for Indonesia, the Phillipenes, Argentina, South Africa, Poland or Russia among others. Neoliberal economics were jammed down each of these countries throats and their people suffered horribly as a result with no long term benefit. You have focused on revising history in only Chile. Naomi Kline established a pattern which you obviously want everyone to forget or not having read the book, knew nothing about. The pattern was the picture she was painting and you missed it (probably because you never read it). She also predicted that Neoliberal economics would come home to roost and that too has come to pass. The Neoliberals on Wall St caused this economic crisis. Their push to deregulate combined with there desire to de-fund the public sector has been a disaster for most of us in the US while it has been another day at the office for the elite.

  62. Gravatar of All linky, no thinky « Blunt Object All linky, no thinky « Blunt Object
    1. June 2010 at 21:31

    [...] growth since the 1980s (Will Wilkinson) Taken together, this pair of outstanding posts by Scott Sumner and Reihan Salam seems to me a pretty decisive rebuttal to Krugman’s preferred narrative about [...]

  63. Gravatar of ssumner ssumner
    2. June 2010 at 05:28

    Chris, There are so many mistakes here I hardly know where to begin.

    1. I do not support “any kind” of growth. Just smart growth.

    2. You never addressed all the mistakes Klein made. Do you think she was correct on the points Norberg raises? If so, on what basis? Surely you aren’t claiming the Chinese government used Tiananmen Square to implement free market reforms? But that’s her claim.

    3. Are you saying Milton Friedman was a communist because he advised communist governments? That seems to be your argument. You seem to be saying that anyone who advises a government, must, ipso facto, support their policies. How about all the leftist intelelctuals who visited Castro? By your logic are they commies?

    4. I know all about Denmark and have done a long post on them. Neoliberalism is free markets combined with social insurance. That’s Denmark.

    5. Neoliberalism was jammed down Russia’s throat? Hmmm, they had 70 ears of Marxism under a totalitarian dictatorship, and then when they finally had an elected President in 1992 they switched to neoliberalsim. I guess you prefer the good old days in Russia, before that horrible neoliberalism was “jammed down their throats” Indeed all the countries you mention in your last paragraph have become much more democratic in recent decades (although obviously flawed democracies). It is no surprise they have also become somewhat more neoliberal. (BTW, none are particularly neoliberal relative to developed countries.)

  64. Gravatar of Do You Remember 1980? Because We Sure Don’t « Around The Sphere Do You Remember 1980? Because We Sure Don’t « Around The Sphere
    2. June 2010 at 10:42

    [...] Scott Sumner: Suppose you had gotten a room full of economists together in 1980, and made the following predictions: [...]

  65. Gravatar of Chris Chris
    2. June 2010 at 13:40

    ssumner, now who is jamming facts down throats. That is awfully hypocritical but very typical of right wing authoritarian sociopaths everywhere so I guess you just fit right into the mold.

    I never said I preferred the previous communist government in Russia. Who were “they” ssumner? When was the vote for neoliberalism? I must have missed that vote. Not that democracy means anything to neoliberals anyway unless by “anything” you might mean “obstacle”. I alluded that to the fact that Russia got a neoliberal experiment imposed on them by the IMF and World Bank. That is a fact you cannot refute. No amount of wishing will make it go away. I really doubt that the Russian citizenry voted to have a good percentage of their jobs go away and to have all forms of a social safety net dry up overnight. Maybe you think they did? I am sure that is what you would want for you and your family…oh, I forgot, you would plan on being among the 1% who did well in the calamity. Who cares about the other 99% right? FYI, by chance I met and talked at length with one of Jeffrey Sachs protege’s not long after having read the Shock Doctrine and he confirmed just about everything I discussed with him in relation to the Shock Doctrine so you will have a really, really tough time pulling the wool over my head in discussions about neoliberalism in the former USSR.

    I didn’t miss the mistakes Klein made because she didn’t make any. Is that simple enough for you. The mistakes you are referring to are fantasies dancing in your head, that is all. All the mistakes that are mentioned by Norberg are nothing more than unanswered accusations. They are made up ones at that. The most compelling arguments against Klein I have seen anywhere just interpret the facts in a different light. For instance, in the Tianamen square example I have seen it argued that although they were implementing neoliberal reforms and the Chinese people were protesting that, the government reaction, rather than being a neoliberal shock doctrine example, was just what the Chinese government does when it meets popular resistance. Once again, you have missed the point of the book (once again probably because you have never read it – your not saying otherwise from previous posts pretty well seals the case). The point is the pattern. Neoliberals are using state power to impose their experiments on people who are completely unwilling. They are so unwilling that they must be slaughtered and oppressed in order to be made to submit to ideas like yours. The saddest part is you defend them. You attempt to rewrite history to market your failed ideology to yet more suckers. It is contemptible.

    Where is my Friedman link or are you just a parroting propagandist? I have asked several times and have not gotten any kind of response. The most likely reason being because Friedman never said that he thought Pinochet was “disgusting”. It just happens to be another right wing myth. The same one Norberg is peddling.

    You conveniently forget to point out that Friendman’s protege’s were working with all the governments in the southern cone after CIA sponsored dictatorships were installed. I don’t remember CIA sponsored dictatorships being installed in the communist bloc so I guess Friedman’s visit there didn’t have quite the same impact.

    Oh, neoliberals love Denmark! My mistake. They love unions and a large, fat public sector. What planet have I been living on? Talk about rewriting the history books. This is getting silly. There is nothing you won’t say. Since the 80′s the whole world has become market based. Saying Denmark is market based says nothing about anything. Yes, the sky is blue, thank you very much for your insightful commentary. Regarding social insurance, don’t you mean PRIVATE social insurance like the failed system they have in Chile? The Danes have PUBLIC social insurance which means they are succeeding while flying in the face of neoliberal ideas. You forgot to mention that. I am sure it was an oversight…not!

  66. Gravatar of Chris Chris
    2. June 2010 at 13:50

    Spherehead, um…all the growth after 1980? What planet are you living on? We had the greatest growth BEFORE 1980! Better yet, middle class people actually were able to take part in that growth instead of being completely excluded like we are today. You have to really work those numbers to get some other result.

    I know first hand about deregulation too. That is why my electric and gas prices here in PA are going up by 30% this year even though energy prices are down. Airlines and railroad deregulation are also stupid examples because they are ridiculously subsidized which I am sure you know but choose to ignore. Finally, yes I can invest in the stock market for pennies…which my $.01 is now only worth $.008 if I invested it in 2000! Great work! We are really getting ahead now! You also forgot the 1987 crash, the S&L loan scandal, the dot com bust and now our very own Depression which we have not seen since the last time markets were deregulated…what a coincidence!

  67. Gravatar of Chris Chris
    3. June 2010 at 04:23

    Spherehead, I forgot deregulation of oil and gas…and I thought it was the OPEC oil embargo that caused the lines at the gas station…You wingers sure know how to re-write the history books (lie) with a straight face don’t you. You are all a bunch of sociopaths. Might I add that you forgot to mention that the Gulf of Mexico is turning into a lake of oil because of deregulation…great work! Facts are just such inconvenient things for you people.

  68. Gravatar of ssumner ssumner
    3. June 2010 at 11:06

    Chris, You said;

    “ssumner, Is that how ideologues deal with people they disagree with? Since you can’t refute facts just chalk my arguments up to your opponent being emotional? Typical.”

    And then you said:

    “ssumner, now who is jamming facts down throats. That is awfully hypocritical but very typical of right wing authoritarian sociopaths everywhere so I guess you just fit right into the mold.”

    And then you said;

    “For instance, in the Tiananmen square example I have seen it argued that although they were implementing neoliberal reforms and the Chinese people were protesting that,”

    If you’ve been reading that the Tiananmen protests were in opposition to neoliberal reforms, you might want seek out information in different places.

    You said;

    “I forgot deregulation of oil and gas…and I thought it was the OPEC oil embargo that caused the lines at the gas station…You wingers sure know how to re-write the history books (lie) with a straight face don’t you.”

    Actually that was the argument of the left. The right said if you remove price controls the lines will go away, and they were right.

    So deregulation caused the oil spill? Why is it that when problems occur in unregulated industries the left blames in on deregulation, and when problems occur in industries that are regulated then the left also blames it on deregulation? Didn’t the Obama people give BP an award for safety at that well?

    You said;

    “You conveniently forget to point out that Friendman’s protege’s were working with all the governments in the southern cone after CIA sponsored dictatorships were installed. I don’t remember CIA sponsored dictatorships being installed in the communist bloc so I guess Friedman’s visit there didn’t have quite the same impact.”

    If the CIA could “sponser” governments, why didn’t they sponser a different one in Iraq? The CIA couldn’t even assassinate Castro, I hardly think they are capable of sponsering governments.

    You said;

    “Regarding social insurance, don’t you mean PRIVATE social insurance like the failed system they have in Chile? The Danes have PUBLIC social insurance which means they are succeeding while flying in the face of neoliberal ideas. You forgot to mention that. I am sure it was an oversight…not!”

    I wasn’t aware that Chile’s system had failed. It makes you wonder why the Swedes are adopting similar pension reforms.

  69. Gravatar of Chris Chris
    4. June 2010 at 05:29

    ssumner, as usual you still haven’t provided me a link that proves Friedman actually called Pinochet’s government “disgusting”. Obviously it is you who have problems with facts. The Tiananmen protests were a reaction to neoliberal reforms that were taking place. I am sure that is not what the revisionists at fascist think tanks like Cato and Heritage and the rest of your sources would say but it still remains a fact regardless. Maybe you should look for some sources outside of the status quo billionaire and corporation funded think tanks?

    That’s funny, it seemed to me the lines went away when the OPEC oil embargo ended. That must just have been a the mother of all coincidences. Meanwhile we had $100+ for a barrel of oil just a few years ago at a time when supplies were not constrained which can be directly attributed the deregulation which allowed speculators to manipulate the oil market. Way to go deregulation! Also, as I mentioned by power and gas prices here in PA are going up by 30% this year because of deregulation. I thought the “efficient” private market was supposed to make the price go down. That is the argument that the corporatists made to get the deregulation. I guess things are “different” now. Strange how that always happens.

    If you don’t understand how the BP oil spill was caused by deregulation then you must have put your head in the sand. Yes, the MMS gave BP an award. That is the same MMS that is the poster boy for regulatory capture. There are inconvenient facts out there that MMS regulators were letting industry employees write their reports in exchange for sex, drugs and money. These are not speculations, these are the results of inspector general investigations. The MMS is currently owned by big oil and you know it and yet you had the audacity to make this particular argument. Your argument is false and you knew it when you typed it.

    Wow, so the CIA hasn’t sponsored dictatorships. How far are you willing to take your revisionism. Let’s see…there was Guatemala in 1954, Nicaragua, Panama, Iran, Vietnam, Cuba (attempted), Haiti, El Salvador, Honduras (recently), Chile, Argentina and Brazil. Did I miss anyone? I am sure that I did. The CIA sponsored coups and/or supported dictatorships in all these countries. In many of these cases it was to make those countries safe for American mult-national corporations. I guess these were all popular uprisings in your fantasy book?

    Regarding Iraq, the reason that the CIA did not sponsor a coup there was because from the beginning of his reign we liked him. Don’t you remember Reagan’s special envoy Don Rumsfeld gladly shaking hands with the guy in 1983? Don’t you remember all the poison gas precursors we were selling him during his war with Iran? You have a conveniently short memory at least when it suits you. By the time he became a bad guy in our book he had been firmly entrenched in an oil rich country for over a decade…that is why the CIA could not overthrow him.t

    That’s funny. I thought we were talking about Denmark! Nice way to try and change the subject. Your argument that Denmark is a neoliberal success story is purely fictional and rather than admit it you tried to change the subject.

    Yes, Chile’s pension system is a failure. Something like 50% of the population won’t get any retirement from the current system. I would call it a failure when half the population will get nothing for retirement. As you probably know, the Chileans are reforming their pension system and that reform includes reintroducing a public system. In addition, the military, police and government kept the old pension system and still have it. If the Chilean pension system was such a astounding success as you would like to make people believe, why haven’t the people with actual power in Chile adopted it? The could at any time since they are the ones with the power and yet they have not. I wonder why.

    The Swedes still have a pay as you go system as you know but decided to omit. They are only marginally experimenting with defined benefit. Once the next economic calamity hits I will be back here telling you “I told you so” and you will be back here either changing the subject or putting lipstick on another pig telling my how the colossal failure is really a success.

  70. Gravatar of scott sumner scott sumner
    5. June 2010 at 10:17

    Chris, You said;

    “The Tiananmen protests were a reaction to neoliberal reforms that were taking place.”

    The reforms in the 1980s occurred in the countryside, and resulted in the largest improvement in living standards of the poor in world history. The reforms were not in the cities. In 1989 the city people were impatient for progress, as they saw the countryside developing faster than they were.

    Read Yasheng Huang if you want to know more about Chinese reforms. Nobody would consider him a Cato guy.

    I did provide you with a link about Friedman you choose not to believe it. I get 50 comments a day, do you think I have time to go to the library an research each link?

    Here’s another fun fact about Friedman. In the 1970s Iran was going to give the UC a big grant to set up a program. The econ department was excited. Then Friedman spoke out. He said we can’t accept money form a dictator like the Shah. That ended the idea. I’m guessing you won’t accept that story either.

    No, you are wrong about the shortages, they ended when price controls were removed. The high prices in 2008 were due to strong demand in the developing countries. That’s how markets work. It is supply and demand. Not supply.

    So deregulation doesn’t work, but regulation doesn’t work either, because they get “captured?”

    George Bush liked Saddam so much he invaded the country? Does that make sense? Why not just have the CIA “sponsor” a more friendly dictator? Why bother invading?

    The Chilean savings rate is now higher than before, and higher than other Latin American countries–I’d call that a success. But I agree it’s far from perfect.

  71. Gravatar of Chris Chris
    7. June 2010 at 05:13

    ssumner, first, you NEVER provided me a link to a source identifying when and where Friedman called Pinochet “disgusting”. You provided a link to someone peddling the same myth as you who also did not make any reference backing up the claim. All that proves is that there are more propagandists than just you out there.

    You said “I get 50 comments a day, do you think I have time to go to the library an research each link?” Yes, I do expect you to back up your comments with facts. What kind of stupid question is that? Yes, you are expected to make your comments based on facts. Can I be any more clear on this point? Do you really expect people who actually think to just accept your rich mans ideology on its face? That says a lot about the way you think. FYI, just because you say something it doesn’t make it true.

    So it was just a coincidence that the lines went away when the OPEC oil embargo ended? What a coincidence! It is a good thing it is just a coincidence because if it wasn’t it would just ruin your argument completely. I am sure that the restriction of oil imports had nothing to do with the gas lines because in neoliberal land restricting supply doesn’t have impacts on the demand side. You just keep peddling that myth, unfortunately we both know that there are people out there who will believe it.

    Regarding the the oil price spike in 2008. There was no oil shortage and you know it! There was plenty of supply at the time. Production was outstripping consumption plain and simple. Speculation in the unregulated derivatives market artificially drove up the price of oil. Everyone who has not stuck their head in the sand knows this.

    Your comment on regulation is superficial and you know it. Regulation only became “captured” when Bush 2 populated the MMS with deregulators the same way he did with the SEC and with similar results…disaster. Neoliberals are a self fulfilling prophecy. They don’t believe in government so when they are put in charge they don’t govern which results in regulatory failure. That is the lesson of the last three decades. Your ideology has brought the greatest country to ever exist on earth to its knees. Your Neoliberal experiment has failed the other 95% of citizens in the US. I would imagine this doesn’t matter to you though because you belong to the other 5% and really don’t care about the rest of us anyway. That’s how sociopaths work.

    I never said George Bush liked Saddam. Yet another straw man argument. You seem to like straw man arguments a lot. Do they actually ever work for you? I guess you are going to completely ignore the fact that Iraq and Saddam were friends with the US in the 80′s. You have to really have a thick set of blinders to not see that. By the time we built Saddam up there was no way just the CIA could tear him down. That is a fact.

    So the savings rate is higher in Chile, so what? More people are in poverty and half the population has exactly $0 for retirement. Those numbers are much worse than 1970. Fewer people were in poverty and Yes, I would say far from perfect is an understatement. I would say much worse off than if they would have stuck with the system they had. The difference between you and I is that if you see a number that goes up you think it vindicates your argument. I look at people. If only a small subset of the population is well served by the government I see it as a failure. Why should anyone work in the interests of a government that does not serve them?

  72. Gravatar of ssumner ssumner
    7. June 2010 at 08:43

    Chris, Why don’t you provide links to ALL the claims you are making in your comments? When you’ve completely done that, then I might take them seriously. But you yourself assert that claims made without links attached are worthless, so I will take you at your word, and treat your claims accordingly.

  73. Gravatar of Help Add Some Cogs to The Machinery of Freedom « Let A Thousand Nations Bloom Help Add Some Cogs to The Machinery of Freedom « Let A Thousand Nations Bloom
    7. June 2010 at 11:34

    [...] wonder if he might change his tune? Education helps of course–something paved the way for the neo-liberal revolution and the original edition was published when there was still a draft. In retrospect, it’s easy [...]

  74. Gravatar of Chris Chris
    8. June 2010 at 04:52

    ssumner, Before changing the subject why don’t you finally provide me the source for Friedman calling Pinochet’s government “disgusting”? I did ask first after all. That said, if there is something I said that you want me to verify for you, let me know and I will send you some links to actual research with actual facts behind them.

  75. Gravatar of Nick Rowe Nick Rowe
    8. June 2010 at 07:38

    A *very* quick Google brought me this:

    ‘“I have nothing good to say about the political regime that Pinochet imposed,” Friedman said in 1991. “It was a terrible political regime. The real miracle of Chile is not how well it has done economically; the real miracle of Chile is that a military junta was willing to go against its principles and support a free-market regime designed by principled believers in a free market….In Chile, the drive for political freedom that was generated by economic freedom and the resulting economic success ultimately resulted in a referendum that introduced political democracy.”’

    http://reason.com/archives/2006/12/15/the-economist-and-the-dictator/1

    “Terrible” is close enough to “disgusting”.

    Let’s not waste any more of Scott’s time.

  76. Gravatar of Nick Rowe Nick Rowe
    8. June 2010 at 08:34

    I taught economics in Cuba for several years in the 1990′s. One of the goals of our program was to give Cuban economists better training so they would change economic policy. I cannot say whether I directly or indirectly succeeded in giving economic policy advice to President Castro’s regime. But I could certainly be accused of trying to do that.

    No big difference in the human rights records of the two regimes as far as I know. Neither were tolerant of political opponents. Pinochet did step down after losing what one must assume was a relatively free referendum. Pinochet had better economic policy, which probably made a big difference to many Chileans, compared to many Cubans.

    Did I do wrong? Perhaps some right-wingers would say so. None have so far.

  77. Gravatar of ssumner ssumner
    8. June 2010 at 14:33

    Thanks for rescuing me Nick, In an earlier reply I told Chris I would have advised Hitler if he had asked me for advice. Interesting that know one asked me the advice I would have given Hitler.

    I didn’t know anyone else was even following this old exchange.

    Chris, I promise you I will look at Klein’s book. But I really think you should look at Yasheng Huang. He is a free market economist who doesn’t like Chinese policy and has tremendous sympathy for the little guy. It’s a combination you might find barely tolerable. And he is very smart.

  78. Gravatar of rob rob
    8. June 2010 at 15:21

    @Nick,

    “Did I do wrong?”

    If you were American it would have been a crime.

    That embargo is sure to work any day now.
    :)

  79. Gravatar of ssumner ssumner
    9. June 2010 at 04:36

    rob, Yes, I hate the embargo too. One of the most idiotic policies we have ever adopted.

  80. Gravatar of Chris Chris
    9. June 2010 at 05:16

    Nick, Thanks for finally getting to the bottom of the quote. You may have had an easy time digging that up but I spent some time looking for it and could not find it. Do you have any other references other than from Stig Ramel? Can you say “conflict of interest”? So the only documented case of Friedman saying something negative about Pinochet was to the head of the Nobel committee? Doesn’t that sound a little suspicious to you? Don’t you think it is possible that Friedman might be trying to scrub his record and give ammunition for Ramel to defend giving Friedman the Nobel? I guess not when you are only looking for evidence to support your case. You found the quote, thanks for that but without any corroboration this evidence of Friedman’s morality is as about as suspect as they come.

    Regarding Cuba, first, I am not a Communist and never will be. I didn’t realize that Castro “disappeared” tens of thousands of citizens in the middle of the night. You are dealing in false equivalency. Castro, although his means were not right, truly endeavored to make his country and its people better off. You cannot say the same for Pinochet. Pinochet endeavored to make some people better off at the expense of the rest…the same thing right wingers have been doing for the last 30 years here in the US. When Castro gained power in 1959 what was the literacy rate? What is it today? Don’t Cubans have similar health outcomes to Americans and aren’t they all covered unlike Americans? I will also mention that they do this on less than $1000 per person compared to $6000+ here in America. If the free market is the magical answer to everything then why is a poor country like Cuba able to relatively compete with the US in health care? Note, spare me the anecdotes. I am not interested in how one person was ill served by any system. What I am talking about the fact that on average Americans and Cubans have similar health care outcomes but Cuba manages to accomplish this on less than on sixth of the budget of the US.

  81. Gravatar of Mattias Mattias
    9. June 2010 at 06:56

    Friedman talked about his involvement in Chile in this interview.

    http://www.pbs.org/wgbh/commandingheights/shared/minitext/int_miltonfriedman.html#10

    I’ll give you one quote:

    “It’s curious. I gave exactly the same lectures in China that I gave in Chile. I have had many demonstrations against me for what I said in Chile. Nobody has made any objections to what I said in China. How come?”

  82. Gravatar of Chris Chris
    10. June 2010 at 06:56

    Mattias, 2000 is a little late. By then it had become obvious that association with Pinochet was toxic. Even Dick Cheney probably disassociates himself with Pinochet now. I have seen the quote you chose in most of the apologist rants, it is nothing new. I have a quote for you too.

    “At that time, for an accidental reason, the only economists in Chile who were not tainted with the connection to Allende were a group that had been trained at the University of Chicago, who got to be known as the Chicago Boys.”

    It was an accident! That goes right down next to “No one could have predicted use of a hijacked plane as a missile” as a standard right wing cop out. The Chicago Boys just happened to be there. What a coincidence!

    That quote was sticking right out there plain as day. Did you even read the article or did you just scan it looking for the evidence that would justify your previously held beliefs?

    You people need to try some critical thinking once in a while. Then again, if you did, you wouldn’t be a right winger anymore…unless you are rich in which case you would continue to be a right winger and would secretly donate money to Heritage and AEI just like the other rich people and corporations do to come up with new historical revisions to justify why we should continue and invigorate policies that make the rich richer and destroy the middle class.

  83. Gravatar of scott sumner scott sumner
    10. June 2010 at 12:00

    Chris, I’ll let you know when I find a quote of Friedman denouncing Pinochet to Naomi Klein. Maybe you’ll believe her.

    You said;

    “Regarding Cuba, first, I am not a Communist and never will be. I didn’t realize that Castro “disappeared” tens of thousands of citizens in the middle of the night. You are dealing in false equivalency. Castro, although his means were not right, truly endeavored to make his country and its people better off. You cannot say the same for Pinochet.”

    Wow, well at least I know where you are coming from. How about those hundreds of thousands of people (mostly poor) who risk their lives crossing shark-infested seas in tiny rafts to leave Cuba? I guess they don’t appreciate everything Castro did for the Cuban people.

    And your view that Castro is not a brutal thug will certainly be a surprise to the families of the many people who have been tortured and murdered by his regime.

    As far as life expectancies, if that’s the criteria why not pick the Hong Kong or Singapore regimes, they live much longer than Cubans, Americans or Europeans? I do agree on one thing, the US wastes an enormous amount of money on health care, with little to show for it.

    Mattias, I notice Chris completely fails to address the issue you raised, which is why Friedman wasn’t criticized for advising communist governments. There is a reason why leftists don’t make that criticism, but they are usually too embarrassed to admit it. The real reason is despite the fact that leftists oppose totalitarian communism, they secretly think it is nowhere near as bad as the Pinochet government (or not so secretly in Chris’s case). They got tired of being called soft on communism, so they now just avoid the subject. In fact, the communist Chinese have a worse human rights record than Pinochet, but many leftists had lots of good things to say about China when their human rights record was especially bad under Mao. That’s a chapter of history that they would just as soon forget.

  84. Gravatar of Chris Chris
    11. June 2010 at 05:57

    Sorry ssumner, I am just more critical than you…maybe that is why you are an anti-middle class and I am pro middle class. I don’t just accept the evidence that supports my ideas the way you do. I try to look at all the evidence. I see you completely ignored my quote about the Chicago Boys being an “accident” which perfectly fits what I just said. You are nothing but a parroting sycophant for a bankrupt ideology that is quickly destroying the greatest civilization in world history all for a few more dollars for a small percentage of people who don’t even need it or use it for productive purposes.

    Wow, that just goes to prove how narrow minded you really are. Yes, people come here from Cuba. Maybe you missed it but millions more risk their lives (all poor) to come here from capitalist Mexico. Were you not aware of that fact? If you are aware of that fact then what is your point?

    You seem to want to think that Cuba, a resource poor island nation, should be able to out compete the US and that its a level playing field. I would put Cuba up against Guatemala or Honduras any day and those countries have the benefit of US aid. Cuba does a lot wrong but they do guarantee a reasonable education and medical attention to all their citizens which is commendable.

    When did I say that Castro was not a brutal thug? There you go making stuff up again! You sure like those straw man arguments don’t you? That is a sure sign of someone with indefensible ideas don’t you know?

    I think you owe me an apology this time. This is your third straw man argument in this thread. I am offended that you have labeled me a Castro apologist. I am not the equivalent of your apologizing for Milton Friedman and his collusion with the brutal dictator Pinochet.

    Yes, we both agree that the capitalist, free market, neoliberal health care system in the US is highly inefficient with sub par outcomes while simultaneously not covering everyone and also bankrupting many people even though they are supposedly covered by insurance. Since we agree on this, are you in the market for another ideology? If not, why not? Neoliberalism and free markets in the health care industry has utterly failed with huge repercussions for our country. How can you blindly follow this superstitious junk with evidence of its failure being so clear?

    Umm, I don’t think I chose life expectancies as a criteria ssumner. Are you taking hallucinogens or something or is it you don’t actually comprehend what you read? That would explain how you could remain so ignorant of the failures of your ideology for so long.

    There you go with the “The left loved Mao” myth again as usual with no evidence to back it up. Notice how ssumner says I “secretly” like communism. ssumner now thinks he is a mind reader just like Joe McCarthy and Glenn Beck. You are now going right over the edge into fantasy territory ssumner. I have completely addressed this issue with you although you choose to ignore it. Friedman went to those communist countries, said a few words and left. The end. Friedman, his ideologues and the multi national corporations set up shop in Chile apparently by “accident”. You are comparing apples and oranges in a deliberately disingenuous argument because you are a blind apologist for Milton Friedman and you don’t have any real defense for his actions so you have to resort to blind accusations and mind reading to try to cobble together a lame defense. Pathetic.

    As I said before, I believe in a mixed, regulated economy that serves citizens not corporations. Corporations exist for the public interest, not the other way around. I also believe in democracy. None of the communist countries fit this model. That is pretty plain isn’t it? If you are a mind reader then what number am I thinking of right now? If you get it right I will reconsider your pathetic lame defense of Milton Friedman. Until that time, I am really feeling sorry for how you need to grasp at straws to keep your version of reality from falling apart.

    Nice job bringing out the “soft on communism” myth. What’s next? The Democrats lost China in ’49? You are a myth machine. Generations of propagandists must be proud at how their work has indoctrinated and shaped someone like you so completely.

  85. Gravatar of ssumner ssumner
    12. June 2010 at 06:43

    Chris, You are the one who defedned Castro and Cuba not me. I never defended Pinochet. Pinochet had little to do with the economic changes in Chile, whereas Castro was heavily involved in everythjing that occurred in Cuba. Migration from Cuba has been quite large as a fraction of the population, and if Cuba shared a land border with the US (like Mexico) would be even larger.

    I never “secretly” said you were a communist sympathizer, I publically said it. Here are your words:

    “I didn’t realize that Castro “disappeared” tens of thousands of citizens in the middle of the night. You are dealing in false equivalency. Castro, although his means were not right, truly endeavored to make his country and its people better off. You cannot say the same for Pinochet. Pinochet endeavored to make some people better off at the expense of the rest…the same thing right wingers have been doing for the last 30 years here in the US. When Castro gained power in 1959 what was the literacy rate? What is it today? Don’t Cubans have similar health outcomes to Americans and aren’t they all covered unlike Americans? I will also mention that they do this on less than $1000 per person compared to $6000+ here in America. If the free market is the magical answer to everything then why is a poor country like Cuba able to relatively compete with the US in health care?”

    You suggest that he wasn’t really that bad on human rights, (when he has been awful.) I don’t try to downplay Pinochet’s human rists abuses, which were also awful. And then you grossly inflate his achivements. Obviously if Cuba did as well as you claim he wouldn’t need to keep his citizens locked up in a giant island prison. Have you thought about the fact that maybe one reason more Mexicans come to the US (in addition to Mexico having a vastly bigger population) is that Mexico is not a giant prison where people are not free to travel outside?

    BTW, Mexico is not a particularly capitalist country, it is very much a mixed economy.

    I don’t know about you, but I am old enough to remember a time when the left had lots of good things to say about Mao. So there’s no point in trying to tell me it didn’t happen. I lived through it and talked to many leftists with those attitudes.

  86. Gravatar of Weekend Reading, at 300 km/h | Invest It Wisely Weekend Reading, at 300 km/h | Invest It Wisely
    13. June 2010 at 07:17

    [...] TheMoneyIllusion believes that Krugman is wrong, again. [...]

  87. Gravatar of Chris Chris
    14. June 2010 at 07:54

    ssumner, I guess if I mention that the USSR was first to put a man in space then I am defending the USSR’s human rights record? That is the equivalent of what you are accusing me in regards to Cuba which is ludicrous. But I guess that is what you need to do to sleep well at night. Everyone who disagrees with you must be a communist sympathizer right?

    “Pinochet had little to do with the economic changes in Chile”??? Talk about historical revisionism! Are you calling slavery trilateral trade too? You should be on that board changing the contents of Texas history books, you would fit in well there. Unbelievable! Without Pinochet oppressing his people Milton Friedman’s failed economic experiment would never have been attempted. I don’t know about you but when I have a voice and I am told that a certain policy is going to reduce most of the population into poverty, I oppose it. Chileans would have as well if they had not know that opposition would have led to being pushed out of a helicopter into the ocean.

    To be clear. You are a Milton Friedman apologist. He worked with Pinochet until it became clear that the blood on his hands was going to hurt his chance for the Nobel so he sent a single letter to the head of the Nobel committee saying a few nasty things about his collaborator.

    FYI – Castro did not “disappear” people like Pinochet did. He was not nearly as bad in regards to mass slaughter as Pinochet period. All I did was point out that fact. For pointing out your false equivalencies you are trying to label me a communist sympathizer? He did put people in prison for resisting his government which is abhorrent. He still has far fewer people in prison as a percentage of the population than the US however so this is not the greatest of talking points for the fascists like you out there. Do you deny that the Cuban people, as a group, are much better off than they were in 1959? Go ahead, deny it. Show me just how blind you really are.

    As I have said several times previously, I believe in a mixed economy and democratic government. I don’t believe in corporate domination of the planet and dictatorship like you do.

    Face it, Mexico is a capitalist country. Haven’t you learned that revisionist history doesn’t work with me? Furthermore, illegal immigration really took off after NAFTA, which had Milton Friedman’s fingerprints all over it. Mexico is just another example of your failed ideology in general and Milton Friedman’s ideas in particular.

    You may be old but you don’t know much. Most of what you know is what you make up yourself to keep your ideology from falling apart. I would guess you believe the Mao mythology the same way you think a Che poster means that all university students are a bunch of leftist revolutionaries. Pathetic.

  88. Gravatar of A look at Faux Economics, increasingly popular but bizarrely wrong « Fabius Maximus A look at Faux Economics, increasingly popular but bizarrely wrong « Fabius Maximus
    14. June 2010 at 16:03

    [...] Sumner (Prof Economics, Bentley U), posted at The Money Illusion, 23 May [...]

  89. Gravatar of Someone Someone
    15. June 2010 at 01:44

    Interesting discussion.

    As a free market supporter I find neo-liberalism severely lacking. A look at the federal register an imperfect measure to be sure, but nevertheless a look at it may dissuade from the mistaken belief that the neo-liberal period was one of massive deregulation. It should also be noted that most of the financial deregulation that did occur was under Carter not Reagan. Someone correctly pointed out above that taxes didn’t change much under Reagan and there was an increase in government debt This was quote was cited in an article in the New Left review no less:

    American financial markets are almost certainly the most highly regulated markets in history, if regulation is measured by volume (number of pages) of rules, probably also if measured by extent of surveillance, and possibly even by vigour of enforcement

    So history is never is clear as one may wish. If one hears someone ardently defending neo-liberalism one should doubt their free market credentials.
    As to Chile the commenter ‘Chris’ is repeating lefist mythology with regards to the late Milton Friedman – See here:

    In fact, Friedman never worked as an adviser to, and never accepted a penny from, the Chilean regime. He even turned down two honorary degrees from Chilean universities that received government funding, because he did not want to be seen as endorsing a dictatorship he considered “terrible” and “despicable.” He did spend six days in Chile in March 1975 to give public lectures, at the invitation of a private foundation. When he was there he met with Pinochet for about 45 minutes and wrote him a letter afterward, arguing for a plan to end hyperinflation and liberalize the economy. He gave the same kind of advice to communist dictatorships as well, including the Soviet Union, China, and Yugoslavia.

    The terrible abuses of Pinochet notwithstanding the economy of Chile was in dire straits under Allende with hyperinflation and a contracting economy in the early seventies (Venezuela at this time is reminiscent of that).

    Chris – You said “Face it Mexico is a capitalist country”. This is true (although it’s economy is far less free than the US and most developed nations) but you also said that you support a mixed economy now that to me entails capitalism in some form, does it not?

  90. Gravatar of Chris Chris
    15. June 2010 at 05:34

    Someone, we have already discussed Chile at length. The mythology is your own. Milton Friedman has already said, and this is a quote, not an apologist cut and paste like your graph, that his Chicago Boys were in Chile by “accident”. That is one heck of a coincidence. That sounds a lot more like trying to polish ones legacy if you ask me but then I am not a blind Milton Friedman apologist.

    Regarding the “terrible” and “despicable” quote; with some help we tracked down this to a letter sent to Stig Ramel, the head of the Nobel committee. This, as far as I can tell, is the only time during the first decade after colluding with Pinochet that Friedman said anything of the sort. Isn’t it interesting at all too you that he said it to the most important person who would decide if Friendman won the Nobel? Friedman was just doing what he could to make sure his association with Pinochet did not endanger his Nobel.

    Chile was being actively undermined economically by the US during Allende and his predecessor. That is a fact. Regardless, the middle class and poor fared much better under those governments than they did under Pinochet. That is another fact. The rich did better under Pinochet for sure but, you see, I don’t care about the rich. The rich always do well no matter what regime is in power with few exceptions. The question is whether the rich are willing to share or are made to share the fruits of civilization with the rest of us.

    You need to read a little farther back in this thread. I have never said I was anti-capitalist, ever. I do believe that free markets don’t work in all situations, healthcare being a prime example. I also believe that regulation of markets and corporations are a necessity. If markets are not regulated you get powerful players rigging the system for their own benefit. This is inevitable without regulation. Also, without regulation of corporations you get the undermining of democracy, oligopolies or monopolies in entire industries. This is also inevitable. I don’t want free markets, except, possibly in new, immature and developing markets where there are a lot of small players and there is a low barrier to market entry. As soon as these markets mature, however, regulation is necessary.

    You are taking the enraged words of my opponents to heart when they call me a “communist sympathizer” for the high crime of not agreeing with their worldview. The lot of you keep spilling out your myths and I keep shooting them down and some people can not handle that.

  91. Gravatar of ssumner ssumner
    15. June 2010 at 06:39

    Chris, You said;

    “ssumner, I guess if I mention that the USSR was first to put a man in space then I am defending the USSR’s human rights record? That is the equivalent of what you are accusing me in regards to Cuba which is ludicrous. But I guess that is what you need to do to sleep well at night. Everyone who disagrees with you must be a communist sympathizer right?”

    I was just using your logic:

    Friedman advised Pinochet, ergo he supported Pinochet

    Freidman advised the Communists, therefore he was a communist

    Chris likes Cuba more than Friedman does, therefore he is even more communist than Friedman.

    Where is my logic false?

    You said;

    “FYI – Castro did not “disappear” people like Pinochet did. He was not nearly as bad in regards to mass slaughter as Pinochet period. All I did was point out that fact.”

    I don’t agree with those facts, nor would most of the several million Cubans who have fled to the US.

    You said;

    “As I have said several times previously, I believe in a mixed economy and democratic government. I don’t believe in corporate domination of the planet and dictatorship like you do”

    Isn’t that what Milton Friedman believed? He said that is what he believed? Or do you know what he secretly believed?

    Someone, I believe that the banking deregulation began under Carter. Interestingly it is Krugman who keeps insisting that Reagan deregulated banking. Indeed all of the major neoliberal reforms were strongly bipartisan, including Reagan’s cutting the top rate to 28%.

    I mentioned that quote about Friedman, and Nick Rowe found another. But Chris thinks they are all lies. He’s convinced Friedman was evil and no facts will change his mind.

    Yes, all countries save North Korea have some capitalism. We are all living in mixed economies.

  92. Gravatar of ssumner ssumner
    15. June 2010 at 06:49

    Chris, Here is another perspective. Can you guess whether it is Pinochet of Castro who is being discussed here:

    “Two former Latin American heads of state have been much in the news lately. One because he passed away, the other because his death seems imminent. The terms “human rights abuses,” along with “murders and tortures” appear consistently in the articles on one, while being almost completely absent from stories about the other.

    One leader jailed more political prisoners as a percentage of population than Hilter and Stalin—and for three times as long. Modern history’s longest-suffering political prisoners languished in the prisons and forced-labor camps established by his regime. According to the Harvard-published “Black Book of Communism,” he executed 14,000 subjects by firing squad. These ranged in age from 16 to 68 and included several women, at least one of them pregnant. According to the scholars and researchers at the Cuba Archive, his regime’s total death toll—from torture, prison beatings, machine gunning of escapees, drownings, etc.—comes to more than 112,000. According to Freedom House, 500,000 Cubans have suffered in his gulag and torture chambers. Today, 47 years after the establishment of the totalitarian police state, political prisoners still languish in his regime’s prisons for quoting Martin Luther King and Gandhi.”

    The link below may be biased, but cites “The Black Book of Communism.” What are your sources for Castro’s not so bad human rights record?

    http://www.humanevents.com/article.php?id=18587

  93. Gravatar of Chris Chris
    16. June 2010 at 04:47

    ssumner, your simplistic logic is false because I never colluded with either government. I didn’t send my disciples down there and set up shop in Chile like Friedman did. Your pathetic comparison does not deserve any more comment than that.

    I am sure you don’t agree that the mass slaughter committed by Pinochet was any worse than what happened in Cuba. What kind of blind apologist would you be if you did?

    As we both know he believed in privatizing as many public services as possible. He wanted the corporations in control of the economy as much was possible and that is exactly what happened. The only major instance where Pinochet did not follow this proscription was in the nationalized copper mines and his choice here was in self preservation. If he had privatized those mines the economy would totally collapsed and his government would fall.

    See, again you make stupid assumptions whose only purpose is to validate your worldview. Without your lame assumptions the rest of your logic just falls apart. I never said that the Democrats were against privatization. Furthermore, although deregulation was begun under Carter, the really damaging policies that led to the half trillion dollar S & L bailout were passed under Reagan. Additionally, it was the lax oversight of Reagan’s regulators that allowed what could have been a small crisis brew into a huge one. Those are facts, you should try using some of them sometime although the reality is you can’t because the facts don’t support your arguments.

    I am amazed at how feel free to rewrite history even when the evidence is just higher up in this thread! I never said they were lies. All I did was point out that Friedman had a conflict of interest when he said these two (count them two!) statements so big that you could drive a truck through it.

    I see you didn’t bother responding to my response to your statement that Pinochet had little to do with the economic changes in Chile. I guess you realized that this position is completely indefensible and hoped to ignore it. It really goes to show how narrow and clouded your thinking really is.

  94. Gravatar of Chris Chris
    16. June 2010 at 06:10

    ssumner, yes, your source is biased as you have admitted. So why are you using it anyway? It makes no sense.

    Also, you have falsely characterized what I have stated about Cuba’s human rights record. I would not say that Cuba’s human record is “not so bad”. I would say that it is not as bad as Pinochet’s record. I went to wikipedia just to get an idea of what some sources are saying about this. The estimates ranged from about 5000-18000 political executions over the last 50 years. Pinochet executed over 50000 in just twenty years and Chile was just a coup, not a revolution. Furthermore, the vast bulk of Chile’s citizenry did worse in every way under Pinochet. In Cuba, on the other hand, the vast majority of its citizens were made better off to at least some degree than under Battista.

    As I have mentioned previously, the US imprisons one quarter of the world’s prison population when the US population is only 6% of the worlds total. You know what they say about people in glass houses? Certainly since the GWT began in 2001 the US has not had a leg to stand on in accusing other countries of human rights abuses. We have murdered the innocent, committed extra judicial killings and imprisoned people and tortured them with little or no evidence on a massive scale. We (assuming that you are also American) unfortunately do not really have the high ground on this issue anymore. Neoliberals like yourself made sure of that with their experiments in Iraq.

  95. Gravatar of ssumner ssumner
    17. June 2010 at 07:40

    Chris, OK, so Wikipedia is the reliable source. Here’s what they say about Pinochet:

    “At the beginning of 1972, he was appointed General Chief of Staff of the Army. In August 1973, he was appointed as Commander-in-Chief of the Chilean Army by president Salvador Allende.[3] On 11 September 1973, Pinochet led a coup d’état which put an end to Allende’s democratically elected government. In December 1974, the military junta appointed Pinochet as President by a joint decree, with which Air Force General Gustavo Leigh disagreed.[4] From the beginning, the government implemented harsh measures against its political opponents.[5] According to various reports and investigations 1,200-3,200 people were killed, 80,000 were interned, and up to 30,000 were tortured by his regime including women and children [6][7][8] Professor Clive Foss, in The Tyrants: 2500 years of Absolute Power and Corruption (Quercus Publishing 2006), estimates that 1,500 Chileans were killed or disappeared during the Pinochet regime. Another 200,000 people went into exile, particularly to Argentina and Peru, and applied for political asylum or received further guerrilla training in camps in Cuba, East Germany and elsewhere;[9] however, some key individuals were followed in their exile by the DINA secret police, in the framework of Operation Condor, which linked military South American governments together against political opponents.”

    Here is the link:

    http://en.wikipedia.org/wiki/Augusto_Pinochet

    It looks like even your own source claims that Castro was far worse in terms of executions, and of course we know that far more people fled Cuba than Chile. I’m obviously not trying to defend Pinochet, but your argument that Castro was better really looks silly. I talked to a liberal economist who visited Chile, and he told me it seems like a developed country. I find your argument that ordinary Cubans are better off that Chileans to be implausible, as do the more than a million Cubans who have fled (and continue to flee) that unfortunate island.

    Pinochet did not favor free market policies. Like most Latin American dictators he favored statism, and after the 1973 coup he instituted statist policies. By 1975 the economy was in such a mess that he turned to the Chicago Boys out of despartion. The free market reforms were their idea, not Pinochet’s.

    Of course both the 1980 and 1982 banking “reforms” were bipartisan. In some respects they made the government even more involved in banking, and in the worst possible way–deposit insurance was raised to $100,000. BTW, the S&L industry was already in deep trouble when Reagan took office in 1981, so it’s silly to blame it all on Reagan’s policies.

    The S&Ls were not bailed out, hundreds went bankrupt. The incompetent and mismanaged government-run insurance company called “FDIC” was bailed out (actually less than $200 billion, not half a trillion.) So it was hardly a failure of the free market.

    By the way, the right-wing source I quote gave estimates of Castro’s executions that are within the range you cite, whereas your estimates on Pinochet are far outside the Wikipedia range of estimates. So who is the more biased?

    Your last paragraph on the US has zero relevance to anything I said. Just because the US has human rights problems (and I agree it does) doesn’t invalidate my criticism of human rights in Chile and Cuba and China.

  96. Gravatar of david glasner david glasner
    17. June 2010 at 11:20

    Scott, I just went back and read this post which was very helpful to me in reminding me of the statement of the 364 economists about Thatcher’s policies. However, I do want to slightly correct your statement that Labor policies had run the British economy into the ground. It was actually both Labor and Conservative policies that had done so, especially in the early 1970s when, after being elected on a free market platform, the Conservative Prime Minister at the time Edward Heath was unwilling to tolerate high unemployment in an attempt to reduce inflation and after, his famous U-turn towards loose monetary policy, Heath borrowed Nixon’s seemingly successful wage and price controls policy to counter inflation. That turned out to be a complete disaster as the unions would not cooperate with wage controls while demanding more draconian price controls. After Heath was defeated for reelection and replaced by his predecessor Harold Wilson. When Wilson retired he was replaced by James Callaghan. Callaghan and his Chancellor of the Exchequer Denis Healey actually began the process of using monetary policy to control inflation, which Thatcher continued. So the turn towards Monetarism had already started in Britain before Thatcher came to power. But before that could work, the semi-dictatorial power of the unions had to be broken, which was Thatcher’s chief accomplishment.

  97. Gravatar of Chris Chris
    18. June 2010 at 11:28

    ssumner, Wikipedia is not a source, at least not in the entry I was looking at. The estimates I stated were from a range of sources that provided minimum and maximum numbers. I am afraid you are mind reading, badly, again. On the other hand, the source you deceptively claim to be Wikipedia happens to be the National Review, a fascist, pro-corporate, warmonger rag of a publication. I don’t think you should speak of others being silly. Remember glass houses? You miss two other important aspects, probably on purpose because they don’t support your argument. First, Cuba was a revolution, Chile was a coup. I have no idea how many of Castro’s killings were in the beginning but I would guess that a lot of them were. If you think about it, Castro could, justifiably, have executed everyone at the Bay of Pigs as a traitor, but he didn’t. That would have been 1600 right there. Considering the number of factions fighting for power in Cuba after Battista fell, I would imagine it would have been bloody. The second point, which I brought up before but you chose to ignore is that Pinochet was in power for less than 20 years while Castro has been in power for over 50 years. We will never know how many Pinochet would have killed if he had stayed in power particularly considering that Chileans got so tired of his Chicago Boys that they rose up and overthrew his government despite his terrorist policies.

    Umm…I never argued that Cubans are better off than Chileans. Do you have a reading comprehension problem? That would go a ways to explain your flawed world view. What I argued was that Castro improved the lot of the vast majority of his countrymen and Pinochet destroyed the lot of all but the elite in his country. That is a fact.

    Don’t give me anecdotes about someone said Chile is developed. If all I did was to stay at a nice hotel in Santiago I would probably say the same thing. Anecdotes are for suckers, that is why people who do not have facts on their side use them so frequently. Furthermore, Chile has had over a decade without Pinochet. With democracy restored and with people having some say in their future, the neoliberal experiment has been inevitably rolled back. It has been rolled back, in fact, so much that today the Chilean people as a whole are doing about as well as they were in 1973 which is much better than they were doing in 1991 when Pinochet was overthrown.

    There you go again…The S&L’s were a manageable problem when Reagan took over. It was his policies that turned the S&L’s into a half trillion dollar bailout. It was Reagan that deregulated the industry which allowed Milken among others to double down on risky investments. Specifically because the S&L’s were in such bad shape there was an incentive to win big that between Reagan’s deregulation than the laziness of his regulators allowed the problem to become a crisis where the taxpayers, once again, would have to come to the rescue of the free market.

    You say it wasn’t a bailout. Where did our half trillion dollars go? You really need to cut down on the semantics. Thinking people see right through them.

    By bipartisan, of course, you mean a few Democrats voted for it. That is such a stupid, trivialized, obsolete way of looking at the world. A better way to look at is in terms of the money party. The Republicans, for the most part are entirely members of the money party. They always side with corporations against the interest of their constituents. Look for what is happening with BP right now for an example. The Democrats are split. As a general rule the DLC wing of the party are also members of the money party. Money party Democrats have nothing to do with the New Deal Democrats who led us out of the Great Depression, led us to victory against the fascists during WWII while Republicans sympathized and materially supported the Nazis, contained Communism, and who led this country to its height.

    Who is more biased? I did say that your “Wikipedia” reference is actually National Review didn’t I? Case closed.

    Umm…yes, it completely invalidates what any of us say from and outsider’s perspective. Why should, for instance, the Chinese care about US criticism of its human rights if we are worse offenders than they are? China, if I am not mistaken, has not invaded another country since 1950. Why should other countries care what the US says about Chinese human rights?

  98. Gravatar of ssumner ssumner
    18. June 2010 at 12:02

    David, Good point. I was thinking of all the statist policies instituted by Labour. Those were the big problem. Inflation in Britain was 8% in 1978, 13% in 1979, and 18% in 1980, so I am not convinced Labour was getting things under control at the time Thatcher was elected. But given time they would have–every country became more neoliberal in the 1980s and 19090s (except N Korea and a couple others.)

  99. Gravatar of ssumner ssumner
    19. June 2010 at 07:58

    Chris; You said:

    “I went to wikipedia just to get an idea of what some sources are saying about this. The estimates ranged from about 5000-18000 political executions over the last 50 years.”

    So I also went to Wikipedia, and you responded:

    “Wikipedia is not a source, at least not in the entry I was looking at.”

    I just can’t win with you. Even when I use your own source you don’t believe me. And you don’t seem to read what I wrote. The 1/2 trillion bailout number is wrong, and in any case the S&Ls were not bailed out at all, a government insurance company called FDIC was bailed out. When you are corrected on errors you should not keep repeating factually inaccurate data.

    Yes, most of Castro’s killings were in the beginning, but that is equally true of Pinochet. You are correct that Pinochet didn’t stay in office nearly as long as Castro. And why is that?

    I’m still waiting for your Pinochet source. Do you have a better one than Wikipedia–which is also unbiased?

  100. Gravatar of Sumner on neoliberalism and growth Sumner on neoliberalism and growth
    21. June 2010 at 08:14

    [...] that he has done, he finds (as do others) that economic freedom is correlated with growth. (See this post and this one at Scott’s blog for [...]

  101. Gravatar of Chris Chris
    21. June 2010 at 08:24

    ssumner, As usual you don’t comprehend the written word well. Wikipedia, many times, makes references to data that is to be found elsewhere. That is what the section at the bottom of the page is for, source attributions. You should make yourself aware of these, they are used a lot in non-right wing ideological publications. If you look at your quote you will see that you took your quote directly from a resource called the “National Review”. They, believe it or not, are a shamelessly pro-corporate, neoliberal propaganda rag of a publication. The page I took my estimations from were from a multitude of organizations that ranged their estimates from the lower and upper bounds I specified. You can’t win with me because I don’t let you get by with ridiculously easy to refute propaganda. It is easy to stand up when the facts are on your side.

    Don’t give me your pathetic semantics. Everyone knows the tax payers bailed out the S&L’s…and it wasn’t the FDIC, it was the RTC so you were wrong on that too. In today’s dollars the bailout was approximately $500 billion and it was necessary because of legislation pushed by Reagan and passed by the Congress that was controlled by Republicans in particular and the money party in general.

    Why has Castro lasted longer than Pinochet? I would say because, despite the terror, most people couldn’t stand their neoliberal economy anymore. The economy in Cuba is nothing to write home about but most people there are provided for enough that their collective need for a new government is too low to actually cause a change in government.

    Again, you don’t seem to understand because understanding would undermine your arguments. When Battista’s government fell in Cuba, Castro was not in control. He was merely the leader of one of many factions fighting for control. In fact, at that time, he was fighting the communist faction. This is called a revolution. Revolutions are bloody. The coup in Chile more or less surgically replaced the democratically elected government of Allende with the dictator Pinochet. Most of the deaths came over the next few years as Pinochet used terror to subdue organized labor and other civic organizations so that his Chicago Boys could implement their economic plans.

    I have not been able to find an unbiased source stating, based on facts, a higher figure than the 3,000 murdered number. I did find a source, however, that points out that the Chilean military did not cooperate in the, Rettig report, which is the report on which the 3000 murdered number was based. A subsequent Chilean truth commission also found that the Rettig report had vastly underestimated the number of tortures and detainments.

    http://www.beyondintractability.org/case_studies/Chilean_Truth_Commission.jsp?nid=5221

    Again, I would point out that there is a big difference between killing or detaining the members of a guerrilla group that is actively attempting to overthrow your government, which was the case in Cuba, as opposed to school teachers, union activists, artists and journalists speaking out or peacefully organizing against your government which was the case in Chile.

    Finally, the economic experiment that started in Chile was extended to the “southern cone” and beyond in South America and elsewhere. The same pattern emerged, dictators backed by the US would implement pro corporatist neoliberal policies and used brutal repression to reduce resistance to those economic policies. This would be followed by the mass impoverishment of the majority for the sake of huge profits for the small elite. Friedman’s reach extends well beyond Chile. Chile is merely the example.

  102. Gravatar of ssumner ssumner
    22. June 2010 at 06:16

    Chris, You said;

    “I have not been able to find an unbiased source stating, based on facts, a higher figure than the 3,000 murdered number.”

    That’s less than in Cuba, so I’ll take that issue as settled.

    No, everyone doesn’t know that the S&Ls were bailed out–100s went bankrupt. The RTC was just an entity set up to handle the bailout. “Everyone knows” FDIC and FSLIC were bailed out. If the insurance companies had been able to handle the losses, there would have been no bailout.

    You said;

    Finally, the economic experiment that started in Chile was extended to the “southern cone” and beyond in South America and elsewhere. The same pattern emerged, dictators backed by the US would implement pro corporatist neoliberal policies and used brutal repression to reduce resistance to those economic policies. This would be followed by the mass impoverishment of the majority for the sake of huge profits for the small elite. Friedman’s reach extends well beyond Chile. Chile is merely the example.”

    Actually, neoliberal reforms were associated with a strong move toward democracy around 1990. Not just the former communist countries, but also places like Argentina and Brazil. (Unfortunately, Argentina didn’t stick with it like Chile did, and of course they stupidly ran deflationary monetary policies.) Dictators tend to run statist policies, because they increase their ability to earn revenues from corruption.

  103. Gravatar of Chris Chris
    22. June 2010 at 09:28

    ssumner, you really need to do something about your attention span. You forgot, already, that Pinochet’s policies were so bad he didn’t last much more than 20 years. Castro has been around about 50 years. Many of the dead victims of Castro’s regime were guerrillas who were, with the help of the US, actively attempting to overthrow his government by force. Many of the victims of Pinochet, were school teachers, artists, union activists and journalists who were peacefully resisting his economic policies. I know you like to compare apples to oranges when it suits you but you are not dealing with some dumb hick from the choir.

    Your semantics are getting tiresome. The US taxpayer spent a half trillion dollars shoring up a Ponzi scheme perpetrated by the capitalist, economic elite. The scheme was made possible by Reagan’s deregulation and lazy, ideologically opposed, Reagan era regulators. Those are facts that you are not allowed to rewrite the history on. Your semantics say it was the FDIC that was bailed out. Why do YOU suppose that came to be? Maybe, here is a suggestion, it is because the S&L’s failed because they made risky speculative bets when they shouldn’t have? Interesting that they were not allowed to make those kinds of bets prior to deregulation. What a coincidence! There sure are a lot of coincidences in your version of history. I wonder why that is?

    Do you really believe the junk you write? You just rewrite history at will. All the dictators in the southern cone worked hand in hand with multinational corporations to attract foreign investment! That was a signature of their policies! The left leaning, democratically elected leaders supported nationalization of natural resource industries and import substitution and protection of infant industries in manufacturing which provided good jobs for their people. The right wing corporatist dictators came in and swept that all away and replaced it with multinational investment.

    Next you are going to tell me that Lula is the neoliberal president of Brazil. Go ahead and hang yourself on that one I dare you. Lula the neoliberal. That’s a new one.

    Tell me the one again about how the OPEC oil embargo (aka restricted supply while demand remains constant, the most basic economics there is) didn’t cause the gas lines in the 70′s. That one, in particular, will remind anyone reading this how much you are willing to divorce yourself from reality in order to maintain you ideology.

  104. Gravatar of ssumner ssumner
    23. June 2010 at 08:54

    So you now agree on Castro killing more people, and that we didn’t spend $500 billion on the bailout, and that the money went to the governemtn run FDIC not the S&Ls, but somehow you keep creating new issues:

    “Tell me the one again about how the OPEC oil embargo (aka restricted supply while demand remains constant, the most basic economics there is) didn’t cause the gas lines in the 70’s. That one, in particular, will remind anyone reading this how much you are willing to divorce yourself from reality in order to maintain you ideology.”

    No, “basic economics” says supply restrictions don’t cause shortages, price controls do.

  105. Gravatar of Chris Chris
    24. June 2010 at 05:21

    ssumner, you are hallucinating. I said that Castro killed more guerrillas and Pinochet killed more school teachers. I am sure your ideology can’t see the difference but everyone else reading these posts can.

    I know logic is your enemy but, again, others reading these posts can understand that the FDIC needed to be bailed out because of what the bankers did with their banks once they were unencumbered with regulation. Once the banks bet and lost it was time for the taxpayer to to come in and socialize the losses. This is exactly what has happened with Sallie Mae and Freddie Mac. The bankers ran the same scam there in the 2000′s that they ran on the S&L’s in the 80′s. First deregulate, second make risky, previously illegal, bets and privatize any profits, finally let taxpayers socialize the losses.

    Again, your ability to remember is pitiful. This is not a new issue. We discussed it above. If you use the find function in your browser and search for OPEC it will take you right to it.

    Let’s try this again just to make sure you are just as delusional as I think you are. If you decrease supply by 10% at a given demand level what you are saying is that this does not cause scarcity?

    I see you dropped your argument regarding your statement “Actually, neoliberal reforms were associated with a strong move toward democracy around 1990. Not just the former communist countries, but also places like Argentina and Brazil.”. I agree that it was a stupid thing for you to say. The reality based description of Brazil, in particular, is the exact opposite of your statement. Neoliberalism in Brazil (and in other places) came with the dictators. When democracy was restored, neoliberalism was rolled back. In Brazil, Lula has followed a distinctly non-neoliberal path and has been greatly rewarded for that decision. For the second time, I dare you to say otherwise.

  106. Gravatar of ssumner ssumner
    25. June 2010 at 12:13

    Chris, You said:

    “ssumner, you are hallucinating. I said that Castro killed more guerrillas and Pinochet killed more school teachers”

    You keep moving the goal posts. I presume you have a source for this.

    FDIC was a federal insurance company. If they failed to properly monitor the banks they were insuring, then that was a failure of government policy, not some sort of mythical free markets, which never existed in banking.

    You said;

    “First deregulate, second make risky, previously illegal, bets and privatize any profits, finally let taxpayers socialize the losses.”

    Right wing economist were making this critique of government policy long before the left even realized there was a problem. The right was opposed to even setting up FDIC and too big too fail.

    You said;

    “Let’s try this again just to make sure you are just as delusional as I think you are. If you decrease supply by 10% at a given demand level what you are saying is that this does not cause scarcity?”

    The term ‘scarcity’ is vague. It does not cause any shortages. It causes higher prices. That’s econ 101.

  107. Gravatar of Chris Chris
    25. June 2010 at 13:21

    ssumner,

    I have lots of sources that state that Pinochet killed innocent civilians of all stripes. Do you really want me to waste my time looking them up? Why don’t you just go read a real book for a change instead? I don’t have any sources regarding efforts by Castro to murder innocent civilians.

    So the capitalist bankers lobby for legislation that allows them to privatize profits and socialize losses and then when that is what happens, that is a failure of the regulators? As usual, you miss the point. There are very few cases of a pure “free market” in any industry, banking include. Free market and regulation are on a relative scale as you should know but maybe you don’t considering your previous statement. There is always some regulation. The point is that there is a lot less regulation now since the free market ideologues got their hooks into the government and our financial problems are the inevitable result of their cynical experiments. It sounds like you would prefer there wasn’t an FDIC and we could all go back to the glorious bank runs of yesteryear? I wouldn’t put it past you.

    You miss the point again. The FDIC worked fine for 50 years before “right wing economists” started advising corporatist legislators to pass legislation that remove crucial regulations that allowed corporations to rob the nation blind. It is amazing to watch right wingers like you first propose legislation which is then enacted and when it fails they have the nerve to blame the government. It is pathetic.

    I think you really do have a reading comprehension problem. I never said ‘scarcity’ caused shortages. I said a decrease in supply at a given demand level causes shortages (scarcity). That is basic economics.

    I see again you are refusing to address your statement “Actually, neoliberal reforms were associated with a strong move toward democracy around 1990. Not just the former communist countries, but also places like Argentina and Brazil”. I guess even you realize now that your statement is blatantly untrue. I understand, I would be embarrassed if I had said that too.

  108. Gravatar of ssumner ssumner
    26. June 2010 at 06:12

    Chris, You said;

    “I don’t have any sources regarding efforts by Castro to murder innocent civilians.”

    That’s a pretty strange defense of your argument that it never happened. What about all the people tortured and murdered by Che? What do your “sources” tell you about that?

    You said;

    “So the capitalist bankers lobby for legislation that allows them to privatize profits and socialize losses and then when that is what happens, that is a failure of the regulators?”

    I don’t get why left-wingers always assume libertarians are pro-business. We aren’t. We oppose having the government intervene in the market in ways that help business. We favor a completely free market with no special favors to business. It’s a given that business in every country in the wrold will lobby governments to make the market less free, to provide all sorts of tax breaks subsidies, barriers to entry, tariffs, etc. If they do that it isn’t a failure of the free market, it is a failure to have a free market. If you want to claim businesses are morally culpable because of their lobbying, I’m fine with that. I am not pro-buisness at all, I’m pro-free market. Which means I oppose all the smae special favors for business that left-wingers oppose. You are debating me as if I am a pro-business conservative, when I am actually a libertarian. A country run by business would be a nightmare.

    Banking deregulation was not a right wing plot. It was enacted under the Carter adminstraction precisely because FDIC wasn’t working, the S%L and banking industry were tettering on the edge of bankruptcy when interest rates hit 20% in 1980. That’s what triggered deregulation–which i agree didn’t work. BTW, they also raised the insurance limit on FDIC from 40,000 to 100,000, a mistake having nothing to do with deregulation.

    You said;

    “I think you really do have a reading comprehension problem. I never said ’scarcity’ caused shortages. I said a decrease in supply at a given demand level causes shortages (scarcity). That is basic economics.”

    First of all, in any intro economic textbook the terms “shortage” and “scarcity” have completely different meanings. They are unrelated. Second, basic economics says that a decrease in supply causes higher prices, not shortages. Shartages are caused by price controls.

    You are wrong about Latin America. The dictators were statists, the neoliberal era came later (to the extent it came at all), with the advent of democracy. Brazil is still a mixed economy but is far more neoliberal than in the 1970s when dictators ruled the country. It’s not even close.

    I find your argument here to be odd. Most leftists exaggerate the extent to which Latin America has become neoliberal. And they blame the current problems in Latin America on neoliberalism. You seems to suggest the opposite, that it was neoliberal in the old days, but not now. I think everyone agrees Latin American is much more democratic than in the old days, although its far from perfect.

  109. Gravatar of Chris Chris
    28. June 2010 at 07:29

    ssumner, I don’t have any sources that say that pigs fly either. Does the fact that I can’t find any sources proving that pigs fly mean that the argument is bad? I think not. The reason there aren’t any sources is because it didn’t happen.

    Che killed some civilians but so did the dictators who he was fighting. I would bet that the US kills more civilians in a year than Che killed in his life.

    Pro free market and pro business are the same thing. At the very least, your ideas have been entirely co-opted by the elite for their own ends. In your world businesses would be allowed to become huge monopolies or collude in oligopolies on an even grander scale than they are now (if that is possible). Without regulation monopolies and other large players would be free to manipulate markets and put up barriers to market entry by new players. Free market policies are a fantasy. The only real question is who controls the market and I side with people, you side with corporations.

    As you know, the heinous banking deregulation did not begin until Reagan was in office. Yes, Carter got the ball rolling but then again, Carter was hardly and FDR or a Johnson. He was well to the right of both of them.

    The FDIC had worked fine for 50 years. There were challenges but you are intentionally making a mountain out of a molehill. Doesn’t the need for you to exaggerate and embellish so much tell you that your ideology is broken?

    You are wrong, as usual, again. You forget that you are not in your little classroom now. This is the real world. What you meant to say is “In a perfect market a decrease in supply with demand held constant leads to higher prices”. Well, golly, we don’t live in a perfect market. This is the real world out here. OPEC specifically decreased supply until the scarce resource (aka oil) had quadrupled in price. You can look it up just about anywhere. That is not a price control, that is a resource control. You couldn’t be more wrong.

    The facts speak for themselves. The dictators were implementing neoliberal economics and rolling back the policies like import substitution that their left wing, democratically elected predecessors had implemented. You can see this in country after country all around the world. Out go the popularly elected leaders, in comes the dictators with loads of multi-national corporate support.

    Yes, ssumner, I was thinking about how neoliberal Brazil was when they raised their already high import duties last year. I don’t think you have any idea what you are talking about. That is the problem with right wingers like you, if history doesn’t fit your ideology you just make up an alternate reality and delude yourself that it is the actual history. People are not falling for that like they used to. People, in general, have more access to information than they used to. Also, we have had over 30 years of neoliberal economics and it has been downhill for everyone except for the elite ever since. No one is willing to believe your failed ideology just like no one is willing to believe communism anymore. Both ideologies have been thrown on the scrap heap of history which is where they belong.

    I think that the leftists you are speaking about are just right wingers who happen to be to the left of you. There is a difference, you just don’t perceive it because it doesn’t suit your interests to do so.

    Think about it. If leftists had a beef with dictators and supported democracy before and after the dictators, why would that be the case if the democratic leaders supported neoliberalism? Your revisionism doesn’t begin to pass the smell test. It make absolutely no sense. The only way I can account for what you said is that what you are really talking about are IMF loans. The dictators, in helping to enrich the elite, engaged in massive deficit spending which the democracies, when put back into power were obliged to honor. In order for relief to be granted, the IMF and World Bank dictated neoliberal reforms. These reforms were implemented under duress. They were not the desired choice, they were the necessary choice. Unfortunately for neoliberalism, South American countries were able to pay off the loans and take back direct control of their economic future. It is about this time that Brazil took off and has never looked back.

  110. Gravatar of ssumner ssumner
    29. June 2010 at 07:54

    Chris, You sadi;

    “ssumner, I don’t have any sources that say that pigs fly either. Does the fact that I can’t find any sources proving that pigs fly mean that the argument is bad? I think not. The reason there aren’t any sources is because it didn’t happen.’

    So anything you don’t have sources for didn’t happen? Ignorance is bliss.

    You said;

    “Pro free market and pro business are the same thing.”

    This is a common error on the left. In fact, almost every industry opposes free markets. They want subsidies, they want barriers to competition like tariff and quotas, they want licensing laws to keep out the competition. Ask the next lawyer you meet whether he wants a free market in law, where anyone could practice.

    You said;

    “You are wrong, as usual, again. You forget that you are not in your little classroom now. This is the real world. What you meant to say is “In a perfect market a decrease in supply with demand held constant leads to higher prices”. Well, golly, we don’t live in a perfect market. This is the real world out here. OPEC specifically decreased supply until the scarce resource (aka oil) had quadrupled in price. You can look it up just about anywhere. That is not a price control, that is a resource control. You couldn’t be more wrong.”

    So can I now assume you agree with me? You no longer think supply reductions cause shortages, but rather agree with me that they cause higher prices?

    As I said, you are completely wrong about Brazil, it is right now more neoliberal than under the generals. It was more of a corporatist state under the generals.

  111. Gravatar of Chris Chris
    30. June 2010 at 09:27

    ssumner, no, since the beginning of civilization it has been observed that you cannot prove a negative. Maybe it is about time you and the rest of the wingnuts caught up with the rest of us.

    That is a common and many times intentional error on the right. What is meant by “free market” is “free” from government interference (regulation). What industries do once they get their way through the promotion of “free market” policies is control that market for the sole benefit of their investors. They can do this by colluding with their competitors through oligopoly or directly through monopoly without needing any form of government assistance therefore directly contradicting your point. Evidence of this is available pretty much across the board. Whenever industries are deregulated investors gain and the public loses. Energy, finance and water are some good industry examples. Free market supporters, for the most part, are cynical and are just looking for ways to promote the interests of investors of select companies. The rest are just plain foolish and are incapable of accepting the mountains of evidence that their ideology is a complete failure.

    No, I don’t agree with you. You don’t have any understanding of the relation of cause and effect or the fact that your little classroom “free market” doesn’t exist anywhere at anytime. There are approximations but the real thing does not exist. There are even shortages when supply is plentiful but when supply is constrained there are more shortages. When shortages do happen, then the price goes up relatively.

    So you think that the generals in Brazil who; enslaved the country to the IMF and World Bank, invited in foreign multinationals by the truckload, broke unions and lowered tariffs, are less neoliberal than Lula who; paid off the IMF, regulated multinationals, supports unions and increased tariffs (again). Your delusional.

    By the way, I happened to watch the documentary “Gasland” on HBO yesterday. Your free market friends have been busy ruining the lives of millions of Americans. I am sure that is ok with you though. The energy company’s investors, many of them foreigners, are making great returns on their investments which is all that matters right?

  112. Gravatar of ssumner ssumner
    1. July 2010 at 14:00

    Chris, You said;

    “ssumner, no, since the beginning of civilization it has been observed that you cannot prove a negative. . . .

    So you think that the generals in Brazil who; enslaved the country to the IMF and World Bank, invited in foreign multinationals by the truckload, broke unions and lowered tariffs, are less neoliberal than Lula who; paid off the IMF, regulated multinationals, supports unions and increased tariffs (again). Your delusional.

    By the way, I happened to watch the documentary “Gasland” on HBO yesterday. Your free market friends have been busy ruining the lives of millions of Americans. I am sure that is ok with you though. The energy company’s investors, many of them foreigners, are making great returns on their investments which is all that matters right?”

    That’s quite a lot. I’ll just claim that stuff you mentioned never happened. And since you say one can’t prove a negative, I won’t provide any evidence. And BTW, I don’t get my information on public policy issues from “HBO specials.”

    You said;

    “That is a common and many times intentional error on the right. What is meant by “free market” is “free” from government interference (regulation). What industries do once they get their way through the promotion of “free market” policies is control that market for the sole benefit of their investors. They can do this by colluding with their competitors through oligopoly or directly through monopoly without needing any form of government assistance therefore directly contradicting your point.”

    Actually, this is false. It is precisely because it is so hard to form cartels that companies almost always ask for government assistence. Without government barriers to entry, cartels almost always fall apart. Even drug cartels fall apart, despite attempts to enforce their rules with machine guns.

    But let’s agree on one thing at least. I think we both agree that Brazil’s current economic model is superior to their model in the 1970s (which I view as statist but you seem to view as neoliberal.)

  113. Gravatar of Doc Merlin Doc Merlin
    1. July 2010 at 15:05

    @Scott:
    I think often times leftists conflate free-market with pro-business to try to paint actual free marketeers as “bad guys.” This poster seems to be doing it in spades.

  114. Gravatar of Scott Sumner Scott Sumner
    2. July 2010 at 05:53

    Doc Merlin, Yes. I agree.

  115. Gravatar of Chris Chris
    2. July 2010 at 05:54

    ssumner, That’s funny. You don’t get any information from a low budget documentary on HBO but you blindly follow the propaganda from the corporate financed National Review. I guess when they were lighting people’s water spigot’s on fire that was just a leftist hoax right?

    Wow, you will make just about anything up without any facts at all won’t you. “It is precisely because it is so hard to form cartels that companies almost always ask for government assistance.” So, Standard Oil and Carnegie, among many, many, many others were just a fluke I guess? They certainly did not need or ask for government assistance in creating their cartels. Oh, and DeBeers. Which “country” imposes barriers with that cartel? Last time I checked South Africa didn’t have much to say about economic policy in the US or most other nations. As usual, despite the obvious facts, you manage to misread history because that is the only way you can maintain your failed ideology.

    I certainly agree that Brazil’s economic model is better than it was previously.

    Doc, free-market and pro-business are synonymous. The differences are semantic which I pointed out previously. Your ideology is bankrupt. Whatever few merits it may have are eviscerated because the corporatists have co-opted the ideology in order to implement their own agenda. Haven’t you ever noticed that the “free marketers” are all for gutting the social safety net but never say a word about the bloated, inefficient military budget? How often do you hear a “free marketer” actually bring up how we need to cut the military budget by 75% which would still leave the US, by far, as the pre-eminent military on Earth? The “free market” ideology is all about taking what little is left and redistributing it to the rich. Your ideology gives all of the rewards to capital and none to labor as if capital could accomplish great things without labor.

    Here lies the greatest evidence of the failure of free market ideology there is. The US reached its economic and cultural peak at the moment that the country was as much the antithesis of your ideology as it has ever been. During the 1950′s and 60′s the top income tax bracket was ~90%! There were large import duties on a range of products. Unions were at their strongest (unfortunately, it seems this made some of them corrupt which was a shame). The middle class was growing and poverty was shrinking and the distribution of income and wealth was as flat as it has ever been. This is at the time of the antithesis of the free market in the US. Since that time the US has become more neoliberal and it has been in decline in lock step with those reforms. The only class since the 1970′s that has prospered have been the rich. The rest of us have been either treading water or have been in decline. Even our vaunted social mobility is now arguably less than it is in Europe. There are no benefits to neoliberal policy unless you are rich. Since I am not rich I will act in accordance with my interests.

  116. Gravatar of Wonks Anonymous Wonks Anonymous
    2. July 2010 at 07:06

    Chris, you are a laugh riot. Keep it up.

  117. Gravatar of ssumner ssumner
    3. July 2010 at 07:27

    Chris, Standard Oil was already facing rapidly increasing competition when it was broken up. There is no evidence that the breakup helped consumers.

    There is a reason every single economic textbook mentions DeBeers–it is the only successful example of a private cartel (which persists) that they can think of.

    I don’t even read the National Review. My complaint about HBO is not about the budget, movies simply aren’t a good place to learn about economic problems. They tend to be biased. My guess is that the HBO special was biased against the gas industry–is that right? I’ve seen lots of documenteries on economic issues, none of them very good. Most have left-wing bias.

    You said;

    “Doc, free-market and pro-business are synonymous.”

    This is beyond silly. Ever since Adam Smith, free market economists have been fighting against corporatism, mercantilism, etc. Every industry seeks barriers to trade, and they often get them. The less a government helps or hinders business, the more free market. The more a government helps or hinders business, the less free market.

    Thr vast majority of cartels have been government sponsored and protected from competition.

  118. Gravatar of Chris Chris
    6. July 2010 at 10:06

    ssumner, Standard Oil was using their power to maintain their market position. That is why the government needed to intervene and break them up. Your revisionist history on this is a joke. If there was competition then Standard Oil would not have needed to have been busted. By definition actors either in a monopoly or oligopoly, by using their market power to maintain their position in the market means that consumers lose. What is the point of monopolistic power if you can’t extract extraordinary profits?

    Who are they? I just listed a bunch of monopolies and here you go saying “they” can only think of one. How many privatized water systems are in the world? They are all monopolies.

    Apparently you to read the National Review. You quoted them. How else would you be able to quote them otherwise?

    I guess that means if HBO does a documentary on the Holocaust then HBO is merely biased against the Nazis?

    The protagonist in the documentary laid out the history of the gas boom over the last 15 years or so including legislation exempting frakking fluids from the Clean Water Act. He then went on a tour of a multitude of homeowners mostly in UT, CO, WY, KS, TX, etc, most of which were or still are salt of the earth Republicans. Some were leadership in towns or even small cities.

    They demonstrated how after the gas drillers arrived their water became contaminated. It showed their cows and pets missing patches of fur. It showed them taking a blowtorch to their water and you could see globs of something becoming plasticized and it showed correspondence with the drillers stating that the water was safe for them and their children to drink. The real winners though were the people lighting the faucets on fire and a valley were, since the drillers came, methane percolates to the surface along a river bed. The documentary asked for comment from a multitude of sources on the gas industry side. Strangely almost none of them accepted the invitation.

    The problem is not that HBO is biased. It is that facts are biased. That is something you wingers never understand. Reality has a liberal bias. You will always take the side of industry and corporations over innocent men, women and children. All you care about is money. As long as you can buy yourself a place far away from the poisonous mess you create you couldn’t care less how many people suffer.

    How is that silly? You always come down on the side of corporations. Even when you don’t it is always nothing but a intellectual demonstration. When it comes down to policy you “free marketers” are always siding with the enemies of people. Just like Milton Friedman and Pinochet, you side with the dictator and the wealthy and drive the rest of us over a cliff.

    You just don’t get it. You are a tool. That is all. Your free market framework is nothing but a tool to provide justification for extracting wealth from the non-rich. Look where free market “principles” get enacted and where they don’t. Look where the push is coming from. It comes from the banks who want to get their hands on everyone’s social security. It comes from energy interests who want to be free to pollute indiscriminately so that they can get a higher profit for their investors.

    Again, more delusion on your part. It is obvious that you think that a free market is better always even though reality shows this not to be the case. As I had mentioned previously the best health insurance systems in the world are not free market oriented. There a numerous glaring examples of why the free market is not the optimal solution in certain industries.

  119. Gravatar of Chris Chris
    6. July 2010 at 10:07

    Wonks,

    I don’t think it is so much that I am funny than it is that you are gay.

  120. Gravatar of Doc Merlin Doc Merlin
    6. July 2010 at 10:31

    “ssumner, Standard Oil was using their power to maintain their market position. That is why the government needed to intervene and break them up. Your revisionist history on this is a joke. If there was competition then Standard Oil would not have needed to have been busted. ”

    Standard Oil was busted because its competitors were able to lobby for it, effectively. It had nothing to do with how effective Standard Oil actually was at maintaining monopoly profits.

    “Doc, free-market and pro-business are synonymous. The differences are semantic which I pointed out previously. Your ideology is bankrupt. Whatever few merits it may have are eviscerated because the corporatists have co-opted the ideology in order to implement their own agenda. ”

    Really now? Why do the corps lobby for more regulation of their competitors? Why does Wallmart try to get minimum wage raised? Corps do whatever they can in their own benefit, and this usually means anti-free market activities, via government intervention, in order to increase profits.

  121. Gravatar of Doc Merlin Doc Merlin
    6. July 2010 at 10:34

    “He then went on a tour of a multitude of homeowners mostly in UT, CO, WY, KS, TX, etc, most of which were or still are salt of the earth Republicans.”

    I live on one of the gas boom areas in TX (we have gas wells all over the place) and I can say that the nonsense you are spouting is malarkey. Seriously, its complete BS. You may have gotten it from HBO but it is a load of hokum.

    Its nothing like what you describe at all.

  122. Gravatar of Chris Chris
    6. July 2010 at 11:59

    Doc,

    Wow, I didn’t realize that you represented everyone who ever had a gas drill site near their house. If the guy doing the documentary could have just come to your house first he wouldn’t have needed to travel so much. Thanks for your brilliant insight since in wing nut land we all know that one anecdote proves everything (as long as it supports fascist ideology anyway).

    Keep drinking that water. Give your kids an extra helping. You are free to blindly believe what the gas industry tells you down there in TX but that doesn’t mean you get to impose your fascist views on us up here in PA. We have not destroyed our environment up here in PA like you have in your state. If PA residents demand clean water you have no right to force us to drink poison. When TX has been sucked dry and all that is left is a barren, polluted wasteland, PA will still be a great place to live. I want my kids to stay healthy. If you care more about BP than you own kids, that is your problem.

  123. Gravatar of Scott Sumner Scott Sumner
    7. July 2010 at 07:57

    Chris, You said;

    “Who are they? I just listed a bunch of monopolies and here you go saying “they” can only think of one. How many privatized water systems are in the world? They are all monopolies.”

    You do know that there is a difference between cartels and monopolies?

    You said;

    “I guess that means if HBO does a documentary on the Holocaust then HBO is merely biased against the Nazis?”

    Yes, the Nazi analogies are always illuminating.

    You said;

    “As I had mentioned previously the best health insurance systems in the world are not free market oriented. There a numerous glaring examples of why the free market is not the optimal solution in certain industries.”

    Obviously, as there are no free market health care systems. But the best system (Singapore) is more free market than the US. In Singapore the government spends only 1.2% of GDP on health care. Most procedures are paid for by the patient. Life expectancy is higher than almost any country in the world.

  124. Gravatar of Chris Chris
    7. July 2010 at 12:38

    ssumner, I misread your statement. The “they” you were referring to were “economic textbooks”. How is it that you think I don’t know the difference between monopoly and oligopoly (cartel) when I have used them correctly in the context of our discussion? Regardless, the differences are semantic from the perspective of the consumer. Both use their market power to extract extraordinary profits. The examples, as I have stated previously are almost endless. All the privatized water systems in the world are monopolies. When the big finance house heads get together and collude that is another example (example: Jefferson County, AL). What do you suppose rich people do when they get together at the country club or exclusive restaurants?

    As usual, you miss the point. I was using an extreme example to illuminate a point…which you missed…as usual. On the other hand maybe you are just trying to change the subject since you have once again put yourself in an indefensible position.

    AAAAANT! Wrong again. The best is Singapore? According to who? Maybe according to the richest people on the planet? What right wing, corporate funded think tank did you dredge that revisionism up from?

    Furthermore, Singapore’s system is mandatory (universal) and uses PRICE CONTROLS. Didn’t you say that you were against price controls? Wasn’t that you? Now here you are advocating for government intervention, forcing everyone to buy in and then dictating what price the market can charge for services. Shouldn’t that mean there are shortages of health care in Singapore like your example of gas lines in the US? Shouldn’t there be lines of ambulances waiting for hours for their critically injured charges to be treated? Shouldn’t the US, with what has been no universal mandate and no price controls be, at least, better than Singapore?

    This is a prime example of you trying to shoehorn your ideology into an example that just doesn’t fit. I am sure there are better examples of private health care in the world. The problem is that they are such abysmal failures that you try to get Singapore to carry your “free market” banner instead. They are not “free market” at all. Their market is 100% regulated. Everyone has to get insurance. Bureaucrats control the price of services (not to mention subsidies). There is so much revisionism here it is almost endless. Even your number for percent of GDP is a revisionism hedged ridiculously lower than I could find.

  125. Gravatar of ssumner ssumner
    8. July 2010 at 07:25

    Chris, I have often stated that I favor universal mandatory health insurance, with the proviso that the system is mostly funded through HSAs. That is the Singapore system. I think they would be better off without price controls, even if they spent a bit more.

    I never cliamed there we no cartels, I said that other than deBeers they tended to fall apart quickly.

  126. Gravatar of Chris Chris
    9. July 2010 at 06:02

    ssumner, you favor mandatory health insurance? How is that “free market”. I thought by free you meant free from regulation. What other kind of free is there? Singapore has HSA’s as part of their system which also includes price controls, subsidies and catastrophic care coverage paid for by the government, oh, and government paid insurance for the poor…very free market…not!

    Let me answer another question I asked you for you. The marginal study that put Singapore on top was run by the NCPA which is funded by a who’s who of fascist plutocrats like Scaife, Koch and the Olin Foundation among others. For whatever reason this same study put UK’s completely government run NHS in as number two although that fact didn’t make the headline in their study which is why you probably didn’t know that. The study also only compared Singapore, Canada, the United States, the United Kingdom, Switzerland, Germany, Australia and South Africa. It is pretty clear that those who funded the study were very selective to make sure countries who would skew their already fuzzy math were not included. For instance none of the top 17 in the WHO rankings were even included in the NCPA study. This study is clearly propaganda meant to be used as a tool by people like you to shoe horn your bankrupt ideology into the real world. The fascists don’t like the WHO studies so they made up one of their own that promotes their interests. The WHO studies have their own problems but they are honest ones and they are run by scientists. The NCPA study is a PR operation designed to promote neoliberal ideology.

    One last point on this, which ironically goes back to a point Krugmann has made in the past. If neoliberal health care is the greatest thing ever, then why are there no good examples of it? Maybe it is for the same reason there are no more (or so few) Communist countries? Because it doesn’t work.

    As I mentioned previously, cartels are not just the ones who come out and declare themselves to the world. You may not believe this but we have laws against collusion in the marketplace. A cartel that declares itself as such is inviting trouble. Informal collusion is the norm. Even when it is found out it can be swept under the rug by lobbyists (lawmakers) or, at worst, be whittled down to an inconsequential fine where no one admits wrongdoing and no one goes to jail. This happens so often it is not worth listing additional examples. You know I am right on this and you should concede the point.

    I see you haven’t bothered to respond to privatized water systems as examples of monopolies so I will suppose you are conceding this point as well. There are long lists of examples of monopolies.

  127. Gravatar of ssumner ssumner
    10. July 2010 at 06:43

    Chris, There are no countries where drugs are 100% legal, that doens’t make throwing people in jail for using drugs a smart policy, so your argument that there is no laissez-faire in health care seems pretty illogical. It doesn’t show that laissez-faire in health care would be bad.

    But it is all a moot point, as I don’t believe in complete laissez-faire. I support some government involvement in health care, just much less than we have now.

    I consider Singapore’s system to be the most neoliberal system among the developed countries, and also the best. I have never read the right-wing study you referred to, so it had no influence on my views. I have a liberal friend who specializes in health economics. I asked him about the Singapore system and he said “yes, it is excellent.” I’m told the Swiss system is also pretty good.

    Of course there are lots of regulated utilities like water and electricity that are monopolies–what is the point? We were debating cartels.

    BTW, why are you so contemptuous of right wing sources? It’s obvious to me that you get your info on Castro, the natural gas industry, etc, from left wing sources. If your right wing source says the highly socialistic UK system is the second best in the world, then why dio you think it is biased. BTW, I’ve used the UK system, and Americans would be appalled by the low quality. The Brits live as long as we do because life expectancy is about life-style, not health care.

  128. Gravatar of TheMoneyIllusion » What’s wrong with Europe? TheMoneyIllusion » What’s wrong with Europe?
    10. July 2010 at 13:24

    [...] told you so;” I did not predict this, nor do I have any explanation.  A few weeks back I did a post arguing that the European countries had stopped gaining on the US after 1980.  My default model [...]

  129. Gravatar of What’s Wrong with Europe? What’s Wrong with Europe?
    11. July 2010 at 15:28

    [...] “I told you so;” I did not predict this, nor do I have any explanation.  A few weeks back I did a post arguing that the European countries had stopped gaining on the US after 1980.  My default model is [...]

  130. Gravatar of Chris Chris
    12. July 2010 at 07:39

    ssumner, once again you have completely missed the point despite my extended effort to explain the concept. The statement was Darwinian. Laisseiz-faire health care systems do not exist because it could not compete with other, more robust, health care systems in the same way the communism is heading for extinction.

    If you want to use the word neoliberal in the same sentence with a highly regulated health care system, that is your business. Maybe, using the same technique, I will call Cuba a capitalist country since there are some elements of capitalism there and they are certainly more capitalist than North Korea.

    So there you have it. You are not free market at all. You are for regulation when it suits YOU. When the general welfare is promoted you are against regulation and when the rich are promoted you are for regulation. Socialism for the rich and capitalism for the masses. Now we have an understanding.

    Why would a liberal be citing the NCPA? This does not pass the smell test.

    We are not debating cartels only. You chose to only respond to oligopoly when I posed the following:

    “That is a common and many times intentional error on the right. What is meant by “free market” is “free” from government interference (regulation). What industries do once they get their way through the promotion of “free market” policies is control that market for the sole benefit of their investors. They can do this by colluding with their competitors through oligopoly or directly through monopoly without needing any form of government assistance therefore directly contradicting your point.”

    The whole point of the statement was that the free market leads almost inevitably to inefficient monopoly or oligopoly. It makes no sense for you to just defend cartels (oligopoly) in this context. Even if you were right, which you are not, about cartels this would lead to the inevitability of monopolies in a free market. Since you have just conceded that inefficient monopolies are a natural product of a free market then my point stands no matter what the outcome of our debate about cartels might be. The free market, contrary to libertarians, needs regulation.

    Not so fast. I know both Britons and foreigners that have used the UK system. They found the system there to be reasonable. Nothing to write home about but adequate. It is certainly better than using the emergency room as your health care system like 40 million Americans here do.

    Oh, also, how many Brits went bankrupt last year due to medical bills?

    I am contemptuous of right wing sources because their only agenda is the betterment of the few at the expense of the many. Facts play no part in their operation. There is an agenda and everything else revolves around it. Their goal is fascism. Their only responsibility is to their investors and most of us are not their investors in any way other than something that could be described as semantic. Corporations, the financiers of right wing sources, are not in any way democratic. They intend to control the government. The government is my only way to implement policies that will create a better future for my family. If corporations control the government they will use government power for their own means to my family’s detriment. That is why I have contempt for right wing sources. They are the enemy of everyone except for the plutocrats who control and profit from the corporations.

  131. Gravatar of ssumner ssumner
    13. July 2010 at 08:42

    Chris, I don’t acccept the view that just because governments adopt a certain policy is is right. Hence I don’t accpet your Darwinian argument. I did understand your argument, which is why I used the war on drugs example. Every country in the world fights the war on drugs, that doesn’t make it right.

    You completely misread my views on economics. I am not a free market ideologue, I am a utilitarian who prefers government involvement where it makes things better.

    There is no point in your comparing the UK and US health care systems, as they are both lousy in my view.

    If you want to compare the UK to Singapore (my prefered system) then we can talk.

    Monopolies are usually created by government barriers. There used to be lots of competition in utilities in the early days, then the government provided exclusive franchises. That’s the main reason why utilities are so monopolistic today.

    Some monopolies are intentionally created to encourage innovation (patents and copyrights), there are good arguments both ways in those cases.

  132. Gravatar of Chris Chris
    14. July 2010 at 07:02

    ssumner, “I am a utilitarian who prefers government involvement where it makes things better.” Better for who exactly? Better for investors at the expense of everyone else would be my guess. As I mentioned before you are for regulation when it suits you.

    I never said that all government adopted policies are right. Where did I say that or is this just another straw man argument? That would be like your fourth straw man argument in this one thread.

    Your war on drugs analogy is not an analogy at all. The war on drugs is mostly a moral argument. The choice of a health care system is very different and has no analogy to the war on drugs.

    I don’t see any point in comparing apples to apples. If we compare Singapore’s health care to another system of my choosing all we are doing is comparing one highly regulated health care system to another. It would only make sense if we were comparing an unregulated health care system to a regulated one.

    “Monopolies are usually created by government barriers.” Isn’t that nice how you can make assumptions without any evidence whatsoever? Utilities are what are known as natural monopolies which you already know but chose to ignore. No artificial barriers are needed. Reality is all that is required. More than one water, sewage, power, gas, railroad or road system doesn’t make any sense and whoever is in control of that one system can command a high price for these essential services if profit is their only motivation.

    Yes there were private utilities in the early days and they were replaced by public utilities because people got tired of being exploited by those private monopolies. If the choice is between one private company providing a service and the government providing the service I will choose the government every time. The government’s responsibility is to see the service delivered efficiently to the citizens. If this doesn’t happen I can vote for a new government. I have some control. The private monopolies’ responsibility is to deliver as much profit to investors as possible, period. If the private monopoly should choose to do anything else the investors have the right by law to fire the company managers. I have no control over a private monopoly supplying an essential service. They have control over me which is unacceptable.

    “Some monopolies are intentionally created to encourage innovation (patents and copyrights), there are good arguments both ways in those cases.”

    I have no idea why you stated this. It has no bearing on our conversation.

  133. Gravatar of ssumner ssumner
    15. July 2010 at 09:59

    Chris, You said;

    “ssumner, “I am a utilitarian who prefers government involvement where it makes things better.” Better for who exactly? Better for investors at the expense of everyone else would be my guess. As I mentioned before you are for regulation when it suits you.
    I never said that all government adopted policies are right.”

    Utilitarians want to maximize aggregate utility. I was referring to your Darwinian argument.

    “I don’t see any point in comparing apples to apples. If we compare Singapore’s health care to another system of my choosing all we are doing is comparing one highly regulated health care system to another. It would only make sense if we were comparing an unregulated health care system to a regulated one.”

    All systems, especially the US, are highly regulated. The point is to find the best system among those highly regulated systems. That is Singapore.

    You said;

    “Yes there were private utilities in the early days and they were replaced by public utilities because people got tired of being exploited by those private monopolies.”

    There was private competition in utilities, and the government created monopolies.

    I was taught that only one utility makes sense. Then economists began to study what really happened in the early days of utilities and it turns out that competition is often more efficient, but was being prevented by exclusive government contracts. When government deregulates Intelligently, not like in California) then service tends to improve. We now have three CATV companies serving my town. It turns out that the early economic models of monopoly were often wrong.

    You mentioned railroads. ICC regulation of railroads is now viewed as being a disaster, and the ICC has been abolished.

  134. Gravatar of Chris Chris
    16. July 2010 at 10:48

    ssumner, come on now. You are just looking for ideological skirts to hide behind. You say you are a utilitarian but all you ever do is spend time promoting neoliberalism. You are not a utilitarian, you are a neoliberal! I think what you really mean by maximizing aggregate utility is maximizing aggregate utility for the people, in your estimation, that matter. That is a big difference which you are unwilling or unable to come to terms with.

    Yes, all health care systems are highly regulated so to say that one is more neoliberal is like saying Cuba is more capitalist than North Korea. It is an unusable comparison which you are attempting to shoehorn into reality to give your neoliberal arguments a fig leaf of credibility and it isn’t working.

    “The point is to find the best system among those highly regulated systems.”

    No, that was not your argument. Your argument, as I understood it, was that from your perspective the best system is the neoliberal one or the “most” neoliberal one. What I am saying is that you are choosing a highly regulated system and calling it neoliberal because that is what gives your bankrupt ideology credibility in the eyes of the uncritical. Singapore’s health care system isn’t neoliberal in any sense of the word. Sorry.

    More historical revisionism. I have no idea where you live but the CATV here has a natural monopoly. There is no way a competitor could create the infrastructure affordably enough to compete with the current company. There isn’t any regulation holding back competition, it is reality that is holding it back.

    I know you don’t like this fact but natural monopolies do exist. For instance, if the road through my neighborhood was a toll road, how exactly would a competitor install a competing toll road? Even if it could be done, why do we need two roads in my neighborhood? This would plainly be an inefficient allocation of resources.

    Of course when deregulation becomes a disaster (like in California) it is only because it was done unintelligently but when regulation fails it is because of the superiority of deregulated markets, not unintelligent regulation. Nice bias you have there. I have news for you. My energy rates are going to spike by a third next year because of deregulation while still regulated customers in neighboring states get to keep their rates low. This is all happening at the same time as the privatized utility company is making huge profits by leaching off the built up capital in the infrastructure by forgoing maintenance and cutting the staff that made the system reliable. My power was out for three days last month. That was the first time that has ever happened in my lifetime. Before this I thought 12 hours was a really long power outage. Now that privatization is here I know I can expect that multiple day outages will become the new normal. Neoliberalism is a failure to everyone except for investors. For investors privatization is a windfall which is all that matters to people like you.

    And yet more historical revisionism…The reason the ICC came into existence was because the railroads were already a monopoly at that time and the railroads were using their market power to extract extraordinary profits. Finally, the ICC has been abolished for 15 years…where are all the competing railroads that should be sprouting up? Given your logic shouldn’t there be new railroads all over the place? Since there aren’t doesn’t that mean that a railroad is a natural monopoly???

  135. Gravatar of johnleemk johnleemk
    16. July 2010 at 11:37

    Scott,

    It is rare to find a blogger who would continue a discussion in the comments for as long as this. This is one of the many reasons I love TheMoneyIllusion.

    Chris,

    “I think what you really mean by maximizing aggregate utility is maximizing aggregate utility for the people, in your estimation, that matter.”

    I consider myself an utilitarian who is often neoliberal too. What you’ve described isn’t how I think. I’ve been reading Scott’s blog since the start — this is probably the most bleeding heart libertarian blog out there. What proof do you have that neoliberals are only interested in the interests of a few? (FWIW, I support redistribution of wealth although I think it’s rarely done in the most efficient way possible. I think we have to be careful about regulation — whether we overregulate or underregulate, concentration of power tends to cause bad results.)

    “Yes, all health care systems are highly regulated so to say that one is more neoliberal is like saying Cuba is more capitalist than North Korea. It is an unusable comparison…”

    Proof by assertion. If there is no tangible difference between healthcare systems, why was the healthcare debate in the US such a big deal? (I am of the opinion that though the law probably worsened things, the status quo ante was almost as unsustainable anyway. In many respects a lot of European countries are more neoliberal than the US, which is probably why they tend to present better models.)

    “Your argument, as I understood it, was that from your perspective the best system is the neoliberal one or the “most” neoliberal one.”

    Scott is saying that the Singaporean system delivers among the best results at much lower cost. It also happens to be one of the most neoliberal systems in the world. That’s why Scott (or at least myself) likes neoliberalism — it often works. But being utilitarian, one can’t be blind to when neoliberalism fails. You’re confusing the reasons why Scott prescribes the Singaporean model.

    FWIW, I and some other commenters who have used the Singaporean healthcare system have been offering our own experiences anecdotally. It’s hard to make a clearcut recommendation because Singapore is so small. Should national governments be running their own hospitals, like Singapore? That’s doubtful (though Scott would say most nation-states need to be broken into smaller entities anyway). But perhaps cities should think about funding their own hospitals.

    Also, FWIW, to my knowledge price controls don’t really exist in Singaporean healthcare — private providers may charge whatever they like. It’s public providers that are constrained by government regulation, for obvious reasons.

    “I know you don’t like this fact but natural monopolies do exist.”

    I think it’s fairly uncontroversial that they exist in some manner. The point Scott is making is that natural monopolies are more rare than commonly thought (and taught).

    If this were not so, why have European countries embarked on privatisation of things like roads, postal services, telecommunications, emergency services, and so forth? (It actually *is* official EU policy to eventually have a free market in postal services, if I’m not mistaken. Sweden already has a free market there.)

  136. Gravatar of ssumner ssumner
    18. July 2010 at 05:25

    Chris, Your inconsistency is mindboggling.

    California had rigid price controls at the retail level and you call that “deregulation.”

    Singapore has some price controls on health care and you are outraged that I call it a neoliberal success. Which is it?

    You assert I am not a utilitarian, without providing a shred of evidence.

    Toll roads are monopolistic competition, as are 90% of other industries.

    You say unregulated health care systems are bad, but still haven’t provided me with an example of one. Then you say since there is no example of unregulated health care, the system must be bad because otherwise our all-wise government would have already installed the system.

    Thanks Johnleemk.

  137. Gravatar of Chris Chris
    19. July 2010 at 05:43

    ssumner, your ignorance is mindboggling. After all the failures in your information and logic that I have pointed out I would figure you would have cut and run by now. That is what wingers usually do when confronted by a critical assessment of their failed ideology, the go back to preaching to the choir.

    Singapore, as you know, or should, has much, much, much more than a “few” price controls. They have a universal mandate, they have subsidies and they have government insurance for their poorest citizens. The government pays something like 80% of basic health care costs! How is that neoliberal? As usual your words don’t live up to reality.

    Aaaaaignt! Wrong again. Toll roads are not monopolistic competition. In monopolistic competition, among other things, the competitors sell products or services that are substitutes for each other. A toll road connecting two destinations are exactly the same thing. That might explain why you don’t really see that in the real world?

    I can’t provide you an example of an unregulated health care system because they don’t exist. The reason they don’t exist is because they are so obviously inefficient that every advanced society on the planet has made the choice to have a regulated system which is my point exactly. The “all-wise” (your word, not mine) government hasn’t chosen a health care system administered by the prison population either. Maybe we should give that a try? In your opinion we should try systems that will obviously not work well just because you like them?

  138. Gravatar of Chris Chris
    19. July 2010 at 06:25

    johnleemk,

    I have no idea where you are coming from. This is a “bleeding heart” blog? I can question your judgment on two counts here. First, I will just declare you wrong that this is the most liberal blog on the internet. It is so not true on its face that it does not require any additional words on my part. Second, “bleeding heart” is a pejorative meant by wingers to deride liberals. All this tells me is that you think that I take my positions based on subjective compassion for the poor, which is entirely not true. This isn’t about compassion, this is about class struggle which has been going on since the dawn of civilization. I would argue that between just before WWII and now represents the only time in history where people other than the rich have had anything more than a temporary say in their futures. I would also argue that the reason for this is because capitalists were scared to death that Communism, which had a lot of popularity with the poor masses, would come in and appropriate all of their property. Part of the “bulwark against communism” was to entice the non rich with some of the fruits of their labor. Now that the threat of Communism has passed I would also argue that this moment in time is eroding away and that neoliberalism is one of the biggest tools which the rich are using to bludgeon the rest of us back into helplessness.

    First, the reason why I don’t like neoliberalism is because it doesn’t do anything for me or the vast majority of people. Go and look. Although you say you don’t like big, monopolistic or colluding type companies, you end up spending all your time supporting the positions of those companies and none of your time on your stated positions that would undercut them. The only time you revisit the non pro business side of your ideology is to parry the solutions by others that would benefit other classes other than the rich. Big companies don’t need your support in promoting their interests, they have thousands of lobbyists and billions of dollars for that. Many of these companies just fleeced the US economy of trillions and are now back to their former status from before the crisis while the rest of us are worse off. What are neoliberals talking about? Cutting Social Security!

    I never said there was no difference between health care systems. You made that up which, in talking with ssumner, seems to be typical here. What I said is that they are all highly regulated. I also said that you took a successful, highly regulated healthcare system and slapped your neoliberal label on it but that, in fact, does not make it neoliberal. What it makes, is you guilty of trying to shoehorn your neoliberal ideology into a sphere where it doesn’t even exist, like capitalism in Cuba. Singapore’s healthcare system is not neolibeal just because you say it is, it is a highly regulated healthcare system which is the opposite of neoliberal.

    Why have European governments pursued privatization? Because they make mistakes too? Isn’t it funny how ssumner puts words in my mouth that I think government is “all knowing” but then you, a person on his side, goes and makes an assertion to that exact effect? Many of these privatization deals are now being repealed after they have failed. Are you not aware of this? Some other transactions of this sort have been the result of corruption as well and now some European politicians are going to prison. Are you not aware of this as well?

  139. Gravatar of johnleemk johnleemk
    20. July 2010 at 03:12

    “First, I will just declare you wrong that this is the most liberal blog on the internet.”

    You clearly didn’t read what I said, since I said this is the most bleeding heart libertarian blog I know of.

    “This isn’t about compassion, this is about class struggle which has been going on since the dawn of civilization. I would argue that between just before WWII and now represents the only time in history where people other than the rich have had anything more than a temporary say in their futures.”

    I actually agree, though I don’t frame my views in the terms of class struggle.

    “Although you say you don’t like big, monopolistic or colluding type companies, you end up spending all your time supporting the positions of those companies and none of your time on your stated positions that would undercut them.”

    The same could be said for leftists who turned a blind eye to the atrocities of the Khmer Rouge, Maoist China or the Soviet Union. The same can even be said now for leftists who turn a blind eye to the Chavez regime (and for the record, although I think Chavez has been terrible for Venezuela, it doesn’t help that most of the right-wing rhetoric against him is about as hysterical as his own rhetoric).

    Yes, neoliberalism often seems aligned with monied interests. But that doesn’t mean there’s a conspiracy going on. Take e.g. protection of private property — everyone favours it to some degree. Does this mean everyone is blindly hewing to the ideology of the wealthy elites? Yes, the elites staunchly oppose the abolition of private property — but so does virtually everyone else, because we know that it would not be to our benefit. Instead, we prefer limited redistribution of private property.

    BTW your point of view is rather myopic in that it ignores the wealthy elites who benefit from a lack of neoliberalism. In the developing world, elites often refuse to accept neoliberal reforms until they either have no choice, or are bought off by a corruption of said reforms. In the former case, you have Suharto having to cave to the IMF — which seemed terrible for Indonesia at the time, but seems to have worked out not so badly after all. In the latter case, you have Nigeria, which lets foreign firms in but doesn’t give a toss about properly regulating them or properly opening up the economy.

    I expect most successful systems, once established, would be favoured by the elites. Why would you oppose something that clearly works? In the UK, the NHS is a political third rail, so the elites don’t countenance its abolition — does that make the NHS a neoliberal policy? Suggesting something is clearly not to the benefit of the common man purely because the elites like it is sophistry.

    “I never said there was no difference between health care systems. You made that up which, in talking with ssumner, seems to be typical here. What I said is that they are all highly regulated.”

    You implied that recommending Singapore’s healthcare system over Cuba’s is meaningless because they are all highly regulated. So what is it? Is there no meaningful difference between healthcare systems, or is there a meaningful difference?

    “I also said that you took a successful, highly regulated healthcare system and slapped your neoliberal label on it but that, in fact, does not make it neoliberal.”

    I don’t care whether it’s neoliberal or not — point is, it works. I actually am not as enamoured of Singapore’s system as Scott is — the Dutch, Swiss or even French models seem just as likely to work for America in my view, and have the advantage of having been tested in countries larger than one island city.

    Ideologies are all relative to one another anyway. I don’t think it’s a point of dispute that healthcare and finance need to be regulated to a much greater degree than other sectors of the economy. The point is, how much regulation do we need? Neoliberals argue not very much. Others say we need a lot more.

    Of the developed countries, Singapore probably has the least regulated healthcare sector. It also has some of the best outcomes and the lowest expenditures as a proportion of GDP. Isn’t it at least remotely plausible that these two facts have something to do with one another? Nobody here is saying “Because Singapore regulates the least, we should abolish all regulations!” We’re saying, “Singapore regulates the least and achieves great outcomes at low cost, why shouldn’t other nations move to a similar regulatory regime?”

    “Many of these privatization deals are now being repealed after they have failed. Are you not aware of this? Some other transactions of this sort have been the result of corruption as well and now some European politicians are going to prison. Are you not aware of this as well?”

    In some countries, yes, but I’m having a hard time seeing any prominent trend against privatisation, especially in Europe. This suggests the Europeans have got the privatisation procedure at least roughly right. The Danish have had private emergency services for almost a century and not thought of abolishing them. The Swedes are happy with 1 out of 4 ambulance calls being served by a private firm, and their free postal market — in fact, school vouchers are a political third rail in Sweden.

    Obviously privatisation is fraught with difficulties. I would contend it is difficult to get privatisation right unless you get your government right first. But when done well, it works out so well that people wouldn’t countenance returning to a regime of government ownership/regulation. I don’t see many calls for re-regulation of the airline or trucking industries in the US — the government there got that right.

  140. Gravatar of Scott Sumner Scott Sumner
    20. July 2010 at 06:08

    Chris, You are simply going around in circles. Do you really want to argue a policy is bad because no government has happened to adopt it? No government allowed women the right to vote a few hundred years ago. Was it obviously a foolish policy to allow women the right to vote a few hundred years ago? Remember that there is progress over time. And I anticipate further progress in health care as governments reduce their role in the health care system. Of course they will always play a small role.

    Last time I looked Singapore’s government spends 1.2% of GDP on health care, vs. over 7% in the US. Which is the more neoliberal system?

    The competitors to toll roads are non-toll roads that go between the same two places.

  141. Gravatar of Scott Sumner Scott Sumner
    20. July 2010 at 06:09

    Johnleemk, Good points.

  142. Gravatar of Chris Chris
    20. July 2010 at 07:26

    johnleemk, You are correct that you did say libertarian but I hope you can forgive that since I have never heard the words “bleeding heart” followed by the word “libertarian” ever before in my life. In my estimation those words are an oxymoron when used together in the first place. There is nothing compassionate, at least on its face, about libertarianism anyway. You can argue that libertarianism is compassionate in the long run through the “efficiency” that it provides to everyone but, you must agree, libertarian ideals have nothing to do with directly helping those being left behind by the system.

    “I actually agree, though I don’t frame my views in the terms of class struggle.”

    Then you have missed the point. If you are engaged in a war, which we are, but you don’t frame your views in terms of that war, you have rendered yourself useless to everyone except the rich. This is exactly what the status quo wants. They want you to put your faith in the “invisible hand” even while that invisible hand is crushing you and the rest of the vast majority of the population. As long as you hold your current view the status quo will have no reason to change their behavior.

    “The same could be said for leftists who turned a blind eye to the atrocities of the Khmer Rouge, Maoist China or the Soviet Union.”

    We have already covered this ground in this thread. The mainstream of the left never lost sight of these atrocious regimes. The Soviet Union was abandoned by the majority of the left in 1939 when the Nazis and the Soviets divided Poland. That is a fact. The mainstream left never supported China or the Khmer Rouge, that is just a figment of your imagination. On the other hand, the right is still trying to justify what happened in Chile, Argentina, Brazil, Guatemala, El Salvador, Indonesia, Nicaragua, Panama, eastern Europe, post Soviet Russia, and most recently in Iraq and Honduras. The right never admits their mistakes. Instead they blame them on the opposition and usurp the oppositions successes as their own. This is all done for the benefit of the few, again and again and again. If you don’t see the pattern then you are blind.

    “although I think Chavez has been terrible for Venezuela”

    Terrible for Venezuela from whose perspective? The data doesn’t lie, the majority of Venezuelans are better off under Chavez, that is indisputable. That is why they have democratically re-elected him over and over again by overwhelming majorities. The rich in Venezuela are doing fine in Venezuela but not as well as they would if the US sponsored coup would have succeeded in 2002. Maybe that is the “terrible” part you are referring to.

    “Yes, neoliberalism often seems aligned with monied interests.”

    Ok, I should just not believe my lying eyes I guess right? I should give up perception and critical thought and join the faith? Good luck with that one. Maybe I should go rob a bank and then argue before the judge that “it just seemed like I was robbing the bank your honor”. I wonder how that would work out for me.

    “ake e.g. protection of private property — everyone favours it to some degree.”

    Exactly! The protection of private property is not a part of the current discussion. The context of the discussion is about the use of neoliberalism by large corporations to dominate decisions on our collective future. They want to combine completely unregulated capital, that’s them, with the cheapest labor possible, that’s us. They want all of the fruits of future productivity to go to them and to take back as much of the productivity labor has captured in the past 60 years or so as is possible. Look at working conditions and wages in China for an example. Many of these jobs were once middle class earning jobs here in the US. Now they are just enough to keep people from open revolt or throwing themselves off of buildings. Those are “fair” wages to our current crop of capitalists. Those are your ideological friends.

    “Instead, we prefer limited redistribution of private property.”

    So do the elites. They prefer limiting redistribution of private property to themselves minus what it takes to keep labor from starving to death. You have to face the fact that you are ideologically inseparable from these people.

    “it doesn’t help that most of the right-wing rhetoric against him is about as hysterical as his own rhetoric”

    Of course his rhetoric is hysterical. He has the greatest nation on the planet constantly working against his interests. How would we feel if we were from a small, poor country and a large malevolent country was colluding with powerful people in our population to overthrow your government by any means necessary? You have no perspective other than your own. You are short sighted.

    “BTW your point of view is rather myopic in that it ignores the wealthy elites who benefit from a lack of neoliberalism. ”

    You just don’t get it. Neoliberalism is an ideological tool that is used by all the elites when it is convenient for them. When it came to reducing regulation in finance, all the bankers were neoliberals, when the market failed to regulate itself as was predicted by the left, the bankers were all for an old fashioned bailout. They didn’t even flinch unless, of course, it was a PR stunt for the cameras to keep ideologues like yourself from noticing what was really going on. Talk about what is going on in Nigeria is nothing but a bright shiny object type of distraction compared to what is really happening and you seem to have taken the bait. I am not surprised.

    “I expect most successful systems, once established, would be favoured by the elites. Why would you oppose something that clearly works?”

    You just don’t get it. Works for who? A successful system that works for elites is a successful system. I am not interested in systems that are only successful for elites. I would have thought you would understand that by now.

    “does that make the NHS a neoliberal policy?”

    Where did that come from? You are making stuff up again. The elites won’t touch the NHS right now because if they do they invite open revolt of the population. The same used to be the case for Social Security in the US. Today the elites see cracks they can exploit to dismantle Social Security and there is a long term plan being executed for that purpose as we speak. It has begun with false arguments about SS going “bankrupt” which is impossible but it doesn’t stop the “scholars” at neoliberal think tanks like Heritage and AEI does it? These disingenuous arguments are part of the softening up process that the elites hope will one day result in the dismantling of Social Security. The same could and will happen to the NHS if the elites ever get their chance and you know it. In fact, you probably welcome it.

    “Suggesting something is clearly not to the benefit of the common man purely because the elites like it is sophistry.”

    Straw man argument. I never said anything to this effect. You are making stuff up again. You should stop.

    “Is there no meaningful difference between healthcare systems, or is there a meaningful difference?”

    Of course there are meaningful differences. BTW, I never tried to compare Cuba’s healthcare system to Singapore’s. You are mixing an analogy I made with a comparison. The differences are between regulated healthcare systems none of which are neoliberal. There are many differences in how you regulate the system that helps determine its success. There are no neoliberal healthcare systems. I would argue that the reason there aren’t any is because they don’t work. I haven’t seen any indication to the contrary.

    “I don’t care whether it’s neoliberal or not — point is, it works”

    That was the whole point of that discussion. According to ssumner Singapore was the neoliberal system or the “most” neoliberal one. My point was that Singapore’s system is not neoliberal, period. Mentioning the word neoliberal in connection with Singapore’s healthcare system is nothing but an attempt by neoliberals to slap their brand on a successful system.

    “I don’t think it’s a point of dispute that healthcare and finance need to be regulated to a much greater degree than other sectors of the economy.”

    Really? I think you need to get out more. I think your neoliberal friends are making precisely this argument in every way possible. They are not blaming deregulation for the financial crisis, they are blaming the little bit of unenforced regulation that continued to exist for it. For example, CRA, Fannie Mae, etc. The force behind neoliberalism in places like CATO, Heritage and AEI are all for privatizing the gains and socializing the losses. That is their reason for existence.

    “Of the developed countries, Singapore probably has the least regulated healthcare sector.”

    There you go again. That is completely subjective and considering that it is a highly regulated system, it is irrelevant. After saying you didn’t care if it is neoliberal as long as it works, here you are in the very same post arguing that it is the “most” neoliberal. For arguments sake I could say that the US healthcare system in the “most” neoliberal. Considering that up to now we have had no universal mandate I would even say I have a strong case. I say since the US regulates the least and has terrible outcomes governments should not choose a similarly neoliberal regulatory regime. You don’t like that argument though do you? It turns your whole argument on its head. That is why neoliberalism only works when you are preaching to the choir. I won’t let you make stuff up to fill the cracks in your ideology.

    “in fact, school vouchers are a political third rail in Sweden.” Really? You don’t go very deep on this do you? I though you liked systems that work. I guess you do…until you don’t. Sweden’s primary school rank has been falling almost in lock step with the voucher system. I would also note that privatized schools, the real goal of neoliberalism, has been a huge failure in the US when those private schools were limited to the same budget as their public counterparts.

    “I don’t see many calls for re-regulation of the airline or trucking industries in the US — the government there got that right.”

    There you go again. I had to knock down ssumner on the same point. Those are both highly subsidized industries. Neither would exist in anything like its current form if it were not for the government! Furthermore, the vast majority of workers in these industries are worse off now than they were in the past, mostly because of the government’s efforts in alliance with big business to suppress union activity. This is in spite of increased government subsidies since deregulation.

    “I don’t see many calls for re-regulation of the airline or trucking industries in the US”

    You think that airline and trucking corporations sucking off the government teat are going to call for re-regulation? What planet do you live on? Maybe you think CNN, a media corporation who sells adds to airlines and trucking companies should call for re-regulation? Wouldn’t that be against their fiduciary responsibility to their stockholders. You are not seeing “many” calls for re-regulation because you are actively not looking in the right places. You won’t seem any calls if the only place you look is CATO, Heritage, AEI and CNN. Might I add that you also don’t hear many calls to eliminate subsidies to the airline and trucking industries. This is mostly not an argument about efficiency, this is an argument about distribution of wealth, as usual, in the direction of the elite and away from everyone else. You “seem” to be on the side of the elite once again. Maybe if you always seem to be on the side of the rich you are actually, in fact, on their side.

  143. Gravatar of ssumner ssumner
    21. July 2010 at 07:58

    Chris, No time for all this. Just one question. Are you saying that the left didn’t object to Stalin murdering millions of his citizens in the 1930s, but suddenly objected when we made a pact with the devil?

    If so, you’d be correct.

    And I lived through the 1960s, and recall plenty of starry-eyed views of Mao. Of course they would make pro-forma statements that the loss of libery was regretable, but they viewed Mao in the 1960s much like they view Castro today. And the right blew the whistle on Pol Pot while the left was still in denial of his crimes.

    Whole books have been written outlining all the left wing intellectuals who were apologists for the tyrants of the 20th century.

    And to compare Mao and Pol Pot to Pinochet is beyond silly, together they murdered 1000 people for every single person Pinochet killed. And which respectable right wingers supported Pinochet?

  144. Gravatar of Chris Chris
    21. July 2010 at 10:48

    ssumner, as you already know, it wasn’t common knowledge during the 1930′s what Stalin was doing inside the USSR. The left could not object to things it did not know about. The first major break with the tenets of Marxism that were known about occurred when the USSR engaged in aggressive war in alliance with the Nazis to divide up Poland. That moment was the end of the Communist party as a powerful force in the US. The left abandoned that party in droves.

    “but suddenly objected when we made a pact with the devil?”

    We knew about Pinochet’s atrocities in real time. You are drawing false equivalencies again, as usual.

    “If so, you’d be correct.”

    Yes, the left did not object because it is really, really hard to object to something you don’t know about. You should try it sometime, it is just about impossible to do.

    Wow, you really saw people who supported Mao and Stalin in the 1960′s? I guess that because you saw a few people that means millions of Americans were just like them because you said so? You can just stop with the anecdotes. I could do the same thing on the opposite side but since I have some modicum of intellectual honesty, I won’t. You won’t find any organized, main stream, left positions of that time or of any other time that justify Mao’s means. That is why you resort to anecdotes. You don’t have any facts, as usual.

    Just to be clear, you may find positive comparisons between Mao and Chang Kai Shek, particularly in the 1950′s, but that is another matter entirely. Left wingers, unlike right wingers, don’t ascribe to “ends justify means” arguments. On the left, this is considered unethical, something that never holds back the right for a minute.

    You will be surprised to learn this but, last time I checked, anyone can write a book. I know this must be a surprise to you but it is true. The right is always churning out books by such prominent “scholars” such as Noah Goldberg, Ann Coulter and Rush Limbaugh. You are a victim of propaganda of the first rank. You probably think that Joe McCarthy was a victim too don’t you?

    “And which respectable right wingers supported Pinochet?”

    I can’t believe you even said that. I thought you would be too embarrassed to go there. Obviously you are just completely uninformed and intellectually lazy because just a mild google search would have brought up a list of the kings of the right wing supporting Pinochet in their own words.

    Since you can’t seem to do any work yourself, here are a “few” places to start.

    Well, let’s start with Milton Friedman. Richard Nixon comes to mind since, without him, Pinochet would have never have attempted the coup in the first place. William F. Buckley (ever heard of him?) , Jeane J. Kirkpatrick, Henry Kissinger, Niall Ferguson, Margaret Thatcher, Reed Irvine, Cliff Kincaid, Paul M. Weyrich, George Will and the editorial page of the Washington Post.

    How is that for a list? I turned this up in 10 minutes and you were completely unaware of any of this? How is this possible? How can you have your head so buried in the sand not to know any of this? It would be funny if it wasn’t so sad.

  145. Gravatar of Scott Sumner Scott Sumner
    23. July 2010 at 06:56

    Chris, There are holocaust deniers today, that doesn’t mean it isn’t widely know that the holocaust occurred. There were many newspaper reports about Stalin’s atrocities in the 1930s. You certainly can’t keep the deaths of millons a secret. If the left was too stupid to know what right wingers knew in the 1930s, that doesn’t reflect well on them. My hunch is that purposely stuck their heads in the sand, and didn’t want to know. Of course the left also initially denied Pol Pot’s crimes; at first they were only reported in right wing publications. And I think you find a fairly similar pattern for Mao, Castro, Ho Chi Minh, etc.

    Since Milton Friedman dispised Pinochet, and you provided no documentation for the rest of the list, I’ll defer judgement. (Nixon and Kissinger were politicians, so I expect the worst from them.) In any case it is absurd to compare a Pinochet to a Mao or Pol Pot. They are in utterly different categories. So it has no bearing on the current discussion. If you want to pick a right-winger who killed millions, pick a Hitler, or someone like that.

    BTW, “Ends justify the means” arguments can be valid. The problem with dictators of both the left and right is that their ends are almost always worse their their means.

  146. Gravatar of More on group assimilation « Entitled to an Opinion More on group assimilation « Entitled to an Opinion
    21. November 2010 at 13:32

    [...] of disaster. To argue from my perspective, Mancur’s perspective seems dated in the 70s as America & Great Britain have made France & Germany look like laggards again, and Australia is also doing much better than he would have expected. The continued success of [...]

  147. Gravatar of Mike Mike
    7. February 2011 at 10:01

    Scott, a significant neoliberal reform agenda was pursued in Australia in the ’80s and early ’90s. But reform slowed significantly, or even stopped, with the change of government in 1996.

  148. Gravatar of ssumner ssumner
    7. February 2011 at 17:05

    Mike, I’m pretty sure there have been some reforms since 1996. Wasn’t there a tax reform?

  149. Gravatar of I wish Obama could time travel back to 1980 … « The Enterprise Blog I wish Obama could time travel back to 1980 … « The Enterprise Blog
    20. April 2012 at 10:59

    [...] I was mulling over this issue, I ran across a great blog post by economist Scott Sumner: Suppose you had gotten a room full of economists together in 1980, and made the following [...]

  150. Gravatar of Jess Jess
    24. April 2012 at 09:12

    I came for TFA, and was pleasantly surprised by the epic troll-battle in the comments. I have never met a left-winger as dumb as this “Chris” persona, so I strongly suspect the trollery is just a pastiche of all the co-op common room stoners to whose crackpot theories the actual author has been subjected over a long life of academic hipsterism.

  151. Gravatar of TheMoneyIllusion » Why do smart people say crazy things? TheMoneyIllusion » Why do smart people say crazy things?
    26. January 2013 at 07:26

    [...] assumed I was trying to explain why some countries are richer than others.  Not so.  I did that elsewhere.  Also, I recently did a NGDP targeting post for FT Alphaville, in case anyone is [...]

  152. Gravatar of Bill Woolsey Bill Woolsey
    26. January 2013 at 11:03

    Scott:

    Pinochet killed leftist activists. Bad.

    Castro killed counter-revolutionary rightists. Good.

    Stalin killed lots of counter-revolutionary rightists. Good.

    Stalin then killed fellow communists, including Trotsky — Bad.

    It is so easy to understand.

  153. Gravatar of Mike Sax Mike Sax
    26. January 2013 at 11:43

    To me what’s interesting is the “bifurcation” between the U.S. on the one hand and Britain and the EU on the other. What correlations can we draw there?

    One obvious one is we haven’t done austerity in the U.S. to nearly the extent in Europe. NOt that the GOP hasn’t wantedit.

    So one reason is Obama who by the way I never argued he was a moderate. My argument has been with liberals who think he’s a moderate or even a conservative.

    When I defended him back in 2011 at the lowest ebb of his popularity it was that he is a liberal at heart.

  154. Gravatar of Mike Sax Mike Sax
    26. January 2013 at 11:51

    For me that AEI comment says it all about why the GOP is in such bad shape these days. They truly are living in a counterreality to the one that most Americans are:

    “Why would the president want to reverse course instead of recommitting America to the successful policies of the past decades?”

    http://www.aei-ideas.org/2012/04/i-wish-obama-could-time-travel-back-to-1980/

    Is this a trick question? Obviously most Americans missed the golden age he’s looking back on so nostalgically. I think the fact that you ignore things like median income is a problem for your analysis Scott.

    You believe that consumption per capita is a better guage which using shows that Ameircans haven’t been doing so bad. Yet most Americans think they’ve been doing pretty bad, certianly over the last 10 years.

    While I know that the Marco establishment is rather cavilier about something as ephemeral as the American people’s own opinon about how the economy is doing-I know “there’s no such thing as public opinion”-it seems to me that if people don’t think they’ve been doing so well, but consumption per capita suggests they’ve been doing fine, then maybe there’s soemthing wrong with the consumption per capita gauge as a better metric.

  155. Gravatar of Mike Sax Mike Sax
    26. January 2013 at 12:18

    Bill it’s easy to understand if you simplify it outrageously.

  156. Gravatar of Mike Sax Mike Sax
    26. January 2013 at 12:31

    Get it while it’s hot

    Sumner, Rush and the AEI mourn the Reagan Revolution http://diaryofarepublicanhater.blogspot.com/2013/01/birds-of-feather-sumner-limbaugh-and-aei.html

  157. Gravatar of Mike Sax Mike Sax
    26. January 2013 at 12:31

    Get it while it’s hot

    Sumner, Rush and the AEI mourn the Reagan Revolution http://diaryofarepublicanhater.blogspot.com/2013/01/birds-of-feather-sumner-limbaugh-and-aei.html

  158. Gravatar of TheMoneyIllusion » One of Thatcher’s legacies TheMoneyIllusion » One of Thatcher’s legacies
    8. April 2013 at 07:24

    [...] to significantly lag behind France in all sorts of economic indicators.  Thatcher’s reforms allowed Britain to catch up to France.  (Indeed by some measures they have edged ahead.)  Of course the economic outcomes [...]

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