Niall Ferguson is undoubtedly an expert. As the bio on his Newsweek column points out, he’s “a professor of history at Harvard University. He is also a senior research fellow at Jesus College, Oxford University, and a senior fellow at the Hoover Institution.” His latest column (1/23/12) is about the need to sell the public on the policies recommended by experts:
To the kind of people who spend their careers inside elite institutions, the technocratic turn is welcome. Decisions about economic policy, they reason, are too difficult to be entrusted to the people’s elected representatives…. But there’s a catch. The sacrifices we need to make are bound to be painful: just look what Greece and Italy are going through now. Yet people can tolerate job losses, spending cuts and tax hikes if they believe that a payoff will come in the foreseeable future. How to persuade them of that? The only way is through political leadership.
Ferguson’s column concludes:
American voters want competent government. But they also need to be convinced to swallow the bitter medicine that competent government sometimes prescribes. In austerity-stricken Europe, too, the populists are waiting in the wings, ready to deliver rabble-rousing rants. Perhaps 2012 will turn out to be their year after all.
The problem with all this is that “painful” austerity policies are not actually “the sacrifices we need to make”; the decision to make people in Europe “swallow the bitter medicine” has actually made the situation there worse–as an IMF report acknowledged the day after Ferguson’s column appeared (Economist, 1/24/12). The “bitter medicine” prescribed by the Conservative-led government in Ferguson’s native Britain has recently succeeded in making the economic crisis there worse than the Great Depression–no small achievement.
That’s the problem with technocratic government–you have to be careful which experts you listen to.
The economic consensus of 30 years ago claimed it had solved the problem of crises for once and for all. The answers, it claimed, had been provided by a ‘revolution’ in economics which occurred with the publication, in January 1936, of John Maynard Keynes’ General Theory of Employment, Interest and Money. Before that, it was admitted, economics had had a great yawning hole in the middle of it. Its ‘microeconomic’ descriptions of how the market ‘worked’ as people bought and sold could provide no explanation of slumps. Keynes had filled this hole, it was said, by providing a ‘macroeconomic’ account of how the economy as a whole worked and how government intervention in the market could avoid slumps.
…Then, suddenly, in the mid-1970s this ‘Keynesian’ orthodoxy fell apart. The advanced Western economies were all afflicted by recessionsÂand far from providing governments with a means to avoid them, the methods preached by Keynes seemed only to produce inflation alongside unemployment. Keynesianism suddenly ceased to be fashionable, and was replaced by ‘new classical’ economic theories based on the previously fringe ideas of Milton Friedman and Friedrich von Hayek.
Yet the policies of Friedman and Hayek have been no more capable of stabilising the capitalist system than have those of Keynes. Governments that took them to heart, like the Thatcher governments in Britain, were unable to prevent either inflation or further recessions. As a result, the Hayekian and monetarist economists quarrel openly among themselves. Yet the social democratic parties which used to insist it was so easy to reform the system using ‘Keynesian methods’ have no alternative to the Hayekian and monetarist prescriptions. They declare ‘Keynesian’ reform to be impossible because of ‘globalisation’ and embrace the ‘infallibility of the market’ just as, in theory and in practice, the failures of the market are to be seen more clearly than ever…
There is a crisis in bourgeois economics in the sense that it cannot begin to explain what has gone wrong with the system in the last quarter century or how to put it back on the right track. It is caught between, on the one hand, providing bland apologies for the market of the sort which are to be found in the textbooks or the reports of the IMF and the World Bank, or, on the other hand, of pointing to faults in the system to which it freely admits it has no answers.
http://www.marxists.org/archive/harman/1996/06/bourgecon.htm
This sounds a lot like a doctor asking you to listen to your doctor’s advice when you are skeptical about the prescription of leeches for your burst appendix…
What we need is highly educated men and women with real world experience and successful track records holding office. We need Theory and Practice people guiding our governments. Read the financial section of your news paper everyday and see just how brilliant the experts are now and were in the past. We have college educated people living under bridges because our leaders took advice from ivory tower guys like this.
I agree with Naureckas, the experts showcased by our betters as the “wise men” worth listening to sounds like the West’s economic version of Lysenkoism. Bad fiscal policies that favor a small, ruling group at the obvious expense of majorities, then generating excuses and rationalizations after the fact won’t do. Sorry.
I however disagree with sverdlov’s assessment. The US injected two inflationary variables into the world: The costly VietNam war which had to be paid off with inflated, printed money, backed by nothing more than the full faith and credit of the People of the United States. The other was Nixon’s repudiation of the gold standard. Talk about two world and economy-shattering events!
Once governments and debtors start manipulating their currency in such a shameless manner, expect serious inflationary results. A third independent factor was that the previous Axis countries re-tooled and re-industrialized and ceased to be major importers of American exports. . Hence, the US had to limit its post-WW2 economic expectations and live within its means. Sadly the poor economic judgment exercised by America’s leadership has been borne by its people. Keynesianism never failed. Rather the failure falls on the laps of America’s so-called “leaders.”
And by the way, austerity means *everyone* sacrifices in proportion to their means, such as the upper crust Brits did during the Blitz and beyond, for King and Country.
Pardon me for displaying my class warrior credentials but it seems that this new call for austerity asks that only the already suffering classes answer “the call.” The rest, the “austerity-invokers”, expect to sit this one out on their 7 and 8 figure bonuses and relax in their comfortable yachts and GS’s… What rank hypocrisy! It must be desperation time when they send out credentialed academicians, the new sacerdotal caste, to spread the message.
The “bitter medicine” prescribed by our politicians seldom reaches the lips – or pocketbooks – of the elite who back them and often worsens the condition of the rest of us.
“Niall Ferguson is undoubtedly an expert……in his own mind.”
fixed
The Bretton Woods Agreement of 1944, with its system of fixed exchange rates between currencies and support for countries that ran into balance of payments difficulties, together with the Marshall Plan (1947-50) for the economic reconstruction of Europe which followed it, laid the foundations for a quarter century of capitalist expansion the like of which had not been seen. Neither before nor since has there been a period where the global economy has grown as rapidly and the living standards of the working class, at least in the major capitalist countries, advanced as much.
But the Bretton Woods system did not overcome the essential contradictions of the capitalist economy. In fact, the very economic expansion it helped to produce brought them to the surface and eventually led to the demise of the regulated post-war order.
It is necessary to emphasise this point in the face of claims by proponents of Keynesian regulation that there can be a return to the stability of the post-war period and the social reformist policies which accompanied it, if only agreement can be reached on some kind of revived Bretton Woods Agreement. The advocates of this program, however, never examine why the original system collapsed.
The history of this breakdown involves two interconnected processesâ┚¬”Âthe development of an increasingly global system of production and finance, and the relative decline of the US within the Bretton Woods order and its move towards a new regime based on the free movement of capital in order to maintain its position of global hegemony…
http://wsws.org/articles/2001/aug2001/bw-a16.shtml
This is really the moment of truth for the future of Western democracy, or republics, however you see it. The equation is a clever one, that poverty should diffuse throughout a global world and not be an issue while it drives down the living standards and the “responsibility to others standards globally”. I hope the people of the world are not so stupid to fall or stand for this. Unless something is done the poor people will knock wages down all over the world, tax revenues and social programs that countries need. This current set of constraints has been dropped on our backs like the third world debt in South America and Africa. It’s time to start creating some standards in the West for citizenship and then support those standards in the third world when they can dump their dictators, thus using the hopes of people rather then their fears of bombs to accomplish liberating some of these countries.
What on earth are you talking about, Brux? I mean this:”Unless something is done the poor people will knock wages down all over the world, tax revenues and social programs that countries need.” Huh?
TimN, if you want to be spoon-fed the basics of Globalization you are asking the wrong person the wrong way.
Answer TimN’s point, Brux. He’s asking how it is that you seem to be blaming the poor for “knocking down wages all over the world”. How do the rich, the (mostly) conservative politicians, and the chattering class of academics and corporate punditry escape blame? Exactly how are the poor doing this “knocking down” of living standards? By taking whatever jobs at microscopic wages that are imported into their nations by Western business interests through “overseas investments”, interests that fire workers in their home countries?
Spoon-feed us all of this “basics of Globalization”, sourced from the right person the right way, a basics that sees the poor (rather than the rich and their tools in corporate media and in the halls of state) as “knocking down wages all over the world”.
The injustice that brought us this recession needs addressing! I suggest those who carry water for the 1% should be extremely careful not to be mistaken, as a master, when the correction occurs.
Jerry who/what is the 1% you are threatening?And what can this 1% do to get off your shitlist?I wanna go after the 6%.Not the 5 and not the 4…..just the 6th percentile.I think they are the evil doers.
Whaddya expect? Ferguson is a servant of wealth … otherwise he wouldn’t be working for corporate media.