Challenge Question for V2 of Truth Bowl (the ad hoc version)
You are a professor of philosophy at a large university. You’ve just received a panicky phone call from your former schoolmate Pat, the chair of humanities at a struggling liberal arts college out East. You vaguely remember hearing the school brought in an investment banker alum as president to pull off a turnaround. Pat informs you that said banker has invited a controversial book author to campus as a publicity stunt, and in one hour Pat is expected to face that author in some sort of debate.
Pat (and you) have never read the book or heard the author speak. However, many of your peers consider him a right-wing reactionary with the ear of Trump, who wants to abolish modern education and replace universities with some sort of theocratic communes. Previous invitations for him to speak at major universities have been rescinded due to outraged protests by students and faculties. That’s probably why this college president jumped at the chance to gain notoriety as the first school to host the author — and didn’t tell anyone until the last minute.
Several colleagues have urged Pat to quit and boycott the event, since it feels like a setup; better to be a martyr than risk legitimizing someone who seems both willing and able to destroy everything they stand for.
There isn’t much time. The only background material you have to go on is one relatively balanced book review.
What advice would you give Pat?
Options include (but are not limited to):
– Directly engaging with / critiquing the ideas of the author
– Proposing a debate format that would ensure Pat’s views get a fair hearing, despite the lack of preparation (Pat has enough authority to dictate the format, but not enough to escape the debate )
– Providing a clear rationale why it is Pat’s moral duty to boycott the event
On Monday, I was on Leonard Lopate’s WNYC radio show talking about my recent article on John Maynard Keynes. (The piece is no longer behind a firewall. You can read it here, and listen to the interview here.) At the end of the show, Leonard asked me an interesting question: Has the financial crisis and Great Recession produced any big new economic ideas? My immediate response was that it hasn’t, or, if it has, I wasn’t aware of them. After the show, I thought about the question a bit more.
I still think the answer is no. There is nothing to compare with Keynesianism or Monetarism or even the so-called Washington Consensus of the nineteen-eighties and nineteen-nineties. Certainly, there is no new Keynes. But I do think that some important ideas have been discovered—or, rather, rediscovered. Here are six of them, together with some tips for further reading, one of which is rather self-serving:
1. Finance matters. This lesson might seem obvious to the man in the street, but many economists somehow managed to forget it. Two who didn’t were Hyman Minsky and Wynne Godley, both of who were associated with the Levy Institute for Economics at Bard College. Minksy’s now-famous “Financial Instability Hypothesis” can be found here, and one of Godley’s warnings about excessive household debt can be found here. (It is from 1999!)
2. Credit busts are different from ordinary recessions. On this, the most widely quoted work is Carmen Reinhart and Ken Rogoff’s historical survey, “This Time is Different: Eight Centuries of Financial Folly,” which details how debt overhang in the public and private sectors tends to produce “lost decades.” For an old but still very readable account of how debt overhang can create deep recessions, I would recommend Irving Fisher’s famous essay from 1933. For something more recent, I recommend this essay by Ray Dalio, the head of Bridgewater Associates, the world’s biggest hedge fund.
3. Positive feedback and multiple equilibria have to be taken seriously. With the rise of rational expectations theory, the idea that financial markets and entire economies can spiral into bad outcomes—and for no very good reason—was relegated to a mathematical curiosity: so called “sunspots.” Now, the notion is back, and for good reason. It appears to describe the world pretty well.
The role positive feedback played in amplifying the credit crisis of 2008 has been studied extensively, and this article by Princeton’s Markus Brunnermeier provides a good survey. Turning to what is happening in Europe, Paul De Grauwe, of the Brussels-based Center for European Policy Studies, and <a href=”http://krugman.blogs.nytimes.com/2011/08/08/wonking-out-about-the-euro-crisis-very-wonkish/ Read the rest of this entry »
There is no need, however, for Israel to wait on the PM’s panel. The process of reform can be undertaken immediately, and on a non-partisan basis. At this very moment, a viable right-left social justice bloc already exists in the Knesset. It would be composed of the major opposition parties Kadima and Labor, along with large sections of the Likud and the religious parties.
Because of their small size and multi-party system, Israel would have a much easier time forming a Radical Centrist political movement than most other countries. But who will step up and make it happen? Read the rest of this entry »
Fiscal Reform From the Radical Center
October 20, 2010
It’s crazy, I know, but imagine that U.S. political leaders after the midterm election called a truce in the partisan tong wars to work out a compromise solution to the nation’s fiscal dilemmas. The result would probably look a lot like a new fiscal reform blueprinted rawn up by two canny policy veterans, Bill Galston and Maya MacGuineas.
Americans Elect, which is inviting the public to a virtual primary, faces daunting hurdles. But dissatisfaction with the partisan gridlock in Washington creates a favorable political climate.
With the dysfunction of Washington on full display as the nation inches toward defaulting on its debt, a coalition of American centrists has launched a bold gambit to nominate a third-party ticket for the 2012 presidential election.