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The Corruption of Economics

    In time that happy glow of mutuality turned to ashes. After JFK, with his influential economist Walter Heller, the flame burned low; later leaders stumbled in the dark. They relied too simple-mindedly on demand management through fiscal and monetary policy, carrying them well beyond their power to stimulate supply. Thus they lurched into Stagflation: double-digit inflation and recession conjoined. They blamed the war, then the Arabs. They scolded the public, and they called for sacrifices, as leaders always do when they lack ideas. "You must mature and face the facts of life," they lectured. "There is no way to stop inflation except unemployment. Whichever evil you choose, don't blame us, we told you so."[8] Faced with that, the voters exercised a third choice: they retired the patrons of those new dismal scientists.

    Before Keynes there was another great reconciler, Henry George. In 1879, George electrified the world by identifying a cause of the boom/slump cycle, identifying a cause of inadequate demand for labour, and, best of all, following through with a plausible, practicable remedy. Like Keynes and Laffer after him, he turned people on by saying "Forget the bitter trade-offs; we can have it all."

    Henry George came out of a raw, naive new colony, California, as a scrappy marginal journalist. Yet his ideas exploded through the sophisticated metropolitan world as though into a vacuum. His book sales were in the millions. Seven short years after publishing Progress and Poverty in remote California he nearly took over as Mayor of New York City, the financial and intellectual capital of the nation. He thumped also-ran Theodore Roosevelt, and lost to the Tammany candidate (Abram S. Hewitt) only by being counted out (Barker, pp.480-81; Myers, pp.356-58; Miller, p.11). Three more years and he was a major influence in sophisticated Britain. In 1889, incredibly, he became "adviser and field-general in land reform strategy" to the Radical wing of the Liberal Party in Britain, where he was not even a citizen. "It was inevitable that, when (Joseph) Chamberlain bowed out, George should become the Radical philosopher" (Lawrence, pp.105-06). It also happened that when Chamberlain bowed out, the Radical wing became the Liberal Party. It adopted a land-tax plank after 1891 (The "famous Newcastle Programme"), and came to carry George's (muted) policies forward under successive Liberal Governments of Campbell-Bannerman, Asquith, and Lloyd George.

    How could a marginal man come out of nowhere and make such an impact? The economic gurus of the day, even as today, were in a scolding mode, blaming unemployment on faulty character traits and genes, and demanding austerity. They were not intellectually armed to refute him or befuddle his listeners. He had studied the classical economists, and used their tools to dissect the system. Neo-classical economics arose in part to fill the void, to squeeze out such radical notions, and be sure nothing like the Georgist phenomenon could recur.




'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Thu Feb 28th, 2013 at 06:30:26 AM EST
[ Parent ]
Re-reading section I - C at your link reaffirms just why it was so essential for the Tycoons of the late 19th century to spare no expense in creating an alternate economic theory in the terms of which what George was saying would be incomprehensible. J.D. Rockefeller was right in saying that his contributions to what became The University of Chicago were the best investment he ever made. It was the investment, along with that made by Morgan in Columbia, etc. that propagated a form of economics that was completely non-threatening to the wealthy, no matter how feeble its analytic and predictive power. And Gaffney's work is a quarter of a century old.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 28th, 2013 at 04:57:12 PM EST
[ Parent ]
we bin 'ad, mate... that's the long and the short of it.


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Thu Feb 28th, 2013 at 07:01:00 PM EST
[ Parent ]
Got an political-economy focused on taking wealth from the producers of wealth to give to parasites and an academic discipline built to obscure the nub of the issue, as the Schalkenbach Foundation puts it:

In today's troubled economy, too many people are unemployed, most have to work hard just to make ends meet, and a few monopolize the lion's share of the benefits.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Sat Mar 2nd, 2013 at 06:41:02 PM EST
[ Parent ]

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