Year: 2006

There have been many reflections on JK Galbraith and his impact on economics over the last few days, of course. They provide some insights into how the course of the economic mainstream is guided, and the role of politics and culture in that guidance.

From this morning’s Globe and Mail appreciation on page B1, B4 (not from the obituary).

But for the last 30 years of his life, Mr. Galbraith was increasingly a voice in the wilderness, as the conventional wisdom grew ever more skeptical of the ability of government to intervene constructively in the economy, and ever more confident in the marketplace.

In a similar vein, here is Brad DeLong in his review of the Galbraith biography [J. Bradford DeLong (2005), "Sisyphus as Social Democrat: The Life and Legacy of John Kenneth Galbraith," Foreign Affairs 84:3 (May/June) ]

The right-wing claim that the most efficient
economy is one in which the gales of perfect competition scour the land
is, in Galbraith’s view, nonsense. Modern industrial and
post-industrial production is a large-scale process, large-scale
processes require planning, and planning requires stability — which
means that the gales of the market must be calmed.

This
political vision, however, has been in retreat since the early 1980s.
Nobody wants to hear about the importance of Big Government, Big
Bureaucracy, or Big Labor (which hardly even exists). Galbraith’s
economic views have undergone an even more distressing eclipse. Among
economists (excluding economic historians), the 70-year-olds have read
Galbraith and think he is very important; the 50-year-olds have read
Galbraith and know that the 70-year-olds think he is important but are
not sure why; and the 30-year-olds have not even read him.

…

What has survived throughout is the American
myth of rugged individualism, and it is this that Parker’s political
story neglects. The power of this myth has meant that the United States
is not, and never will be, a European-style social democracy. People
may come together for barn raisings, but America is still the land of
upward mobility and opportunity, where the most common questions are,
I’ve done it, so why haven’t you? and Doesn’t this social solidarity
stuff mean that I’ve got to pull more than my share of the weight? In
spirit, it is still a nation of upwardly mobile immigrants blessed with
an abundance of resources (free land) and an absence of government
constraints (free labor).

Galbraith
would say, sardonically, that this national self-image is just another
fraudulent piece of conventional wisdom — nurtured by the delusional,
who cannot see reality, and the rich, who see it all too well but know
that such delusions make them richer and more powerful. And Galbraith
would be more than half right. But this self-image is also a very
powerful social fact, and this more than anything else explains his
waning influence on U.S. politics. It is not that the Democratic
establishment has lost its nerve or been seduced by law firms and
lobbyists; it is that the old Horatio Alger myth has proved
extraordinarily durable.

Amartya Sen, not talking about Galbraith, said some of the same things about the way that economics has changed in the last 30 years:

There was a time — not very long ago – when every young economict "knew" in what respect the market systems had serious limitations: all the textbooks repeated the same list of "defects."  The intellectual rejection of the market mechanism often led to radical proposals for altogether different methods of organizing the world (sometimes involving a powerful bureaucracy and unimagined fiscal burdens), without serious examination of the possibility that the proposed alternatives might involve even bigger failures than the markets were expected to produce. There was, often enough, rather little interest in the new and additional problems that the alternative arrangements may create.

The intellectual climate has changed quite dramatically over the last few decades, and the tables are now turned. The virtues of the market mechanism are now standardly assumed to be so pervasive that qualifications seem unimportant. Any pointer to the defects of the market mechanism appears to be, in the present mood, strangely old-fashioned and contrary to contemporary culture (like playing an old 78 rpm record with music from the 1920s). One set of prejudices has given way to anoother–opposite–set of preconceptions. Yesterday’s unexamined faith has become today’s heresy, and yesterday’s heresy is now the new superstition. [Development as Freedom, p 111].

The role of myth, political outlook, and cultural climate is clear. One would think that in a discipline claiming to be objective that there would be a real effort to challenge its own assumptions, but such efforts appear to an outsider to be peripheral. Until such time as they are central, economics remains unscientific.

Author of one of my favourite books of all time, and one of the clearest and most original thinkers I’ve ever read. A real loss.

Link: CBC News: Urban thinker Jane Jacobs dies.

Toronto-based urban critic and author Jane Jacobs died Tuesday morning.

• RELATED: Remembering Jane Jacobs

Jane Jacobs, shown in 2004, influenced a generation of urban planners with her critiques about North American urban renewal policies. (Adrian Wyld/CP)

Jacobs, author of The Death and Life of Great American Cities, and most recently, Dark Age Ahead, was 89.

Her powerful critiques about the urban renewal policies of North
American cities have influenced thinking about urban planning for a
generation.

Born May 4, 1916, in Scranton, Penn., Jacobs had made her home in Canada since the late 1960s.

Educated at Columbia University, she met her husband, architect
Robert Jacobs, at the Office of War Information in New York, where she
began writing during the war.

Known for protesting sprawl

The strong themes of her writing and activism included opposition to
expressways, including the Spadina Expressway in Toronto, and the
support of neighbourhoods. Jacobs has been arrested twice while
protesting urban plans she believed to be destructive.

She also explored these ideas in books such as The Economy of Cities, Cities and the Wealth of Nations and Systems of Survival: A Dialogue on the Moral Foundations of Commerce and Politics.

The Death and Life of Great American Cities, published in
1961, questioned the sprawling suburbs that characterized urban
planning, saying they were killing inner cities and discouraging the
economic vitality that springs organically from neighbourhoods.

Inspired ‘Ideas That Matter’ gathering

Jacobs settled in Toronto in 1969. There she supported developments
such as the St. Lawrence neighbourhood, an inner-city development for
people of all income levels.

In 1997, the City of Toronto sponsored a conference entitled Jane
Jacobs: Ideas That Matter, which led to a book of the same name.

Her most recent book, Dark Age Ahead is "a grave warning to a
society losing its memory," jurists said in awarding her the $15,000
Shaughnessy Cohen Prize for Political Writing in 2005.

"In spare, exquisite prose, Jane Jacobs alerts us to the dangers
facing the family, higher education, science and technology, the
professions, and fiscal accountability. Drawing on history, geography,
and anthropology, this book reflects a lifetime of study and
observation, offering us lessons to avoid decline," the jury said.

Dark Age Ahead finds comparisons between our current North American
culture and European culture before the fall of the Roman Empire and
the subsequent Dark Ages.

Interviewed by Canadian Press when she won the Shaughnessy Cohen
Prize, Jacobs said, "People really know themselves that the dark age is
ahead. They’re worried, and they haven’t articulated it, but they feel
it."

"I think it’s late but we don’t need to go down the drain," she said. "But we will if we aren’t aware. It’s a cautionary book."

So far as I know, there is only one person in history who can legitimately claim to have saved the world. We only found out about him in 2002, and still seem to know very little about him (here is the little that Wikipedia has to say – no birth date, no indication when he died, even the rank is not clear).

He was some kind of second-in-command on a submarine during the Cuba
missile crisis and made the call not to launch a nuclear torpedo when it
seemed like perhaps the US had attacked them with depth charges.

It is wonderful that the person who can make this singular claim was so unlike the usual idea of a hero. Not a "visionary leader", not at the pinnacle of a career, not a Dirty Harry/Rambo go-get-em type. Basically he was a civil servant doing his job, calming someone down (in this case the captain), and advising caution and wait-and-see.

How very non-heroic for a hero.

Update: perhaps Stanislav Petrov can make the same claim.

Following up a fine article on why the BBC should make video games, I came across the McDonald’s Video game, which looks like an enjoyably subversive pastime.

Via Mark Thoma, an unbelievably arrogant article by Patrick Moore, a founder of Greenpeace. He is now in favour of nuclear power. I don’t mind that, even though I don’t agree with him — changing your mind is not a bad thing. But something about his article really pisses me off, and it’s the conceit of the man. Look at these excerpts:

In the early 1970s when I helped found Greenpeace, I believed that
nuclear energy was synonymous with nuclear holocaust, as did most of my
compatriots. … Thirty years on, my views have changed, and the rest of the
environmental movement needs to update its views, too…

Here we go. Because he has changed his mind, Moore is now absolutely certain that everyone else needs to change their mind too. There is no modesty here; no asking the question: if I was wrong then, why should anyone listen to me now? no asking the question: if I was wrong then, might I be wrong now? No. Mr. Moore is as certain in his position now as he was then, insisting that everyone else needs to listen to him. Sorry. No can do.

I
don’t want to underestimate the very real dangers of nuclear technology in the
hands of rogue states, we cannot simply ban every technology that is dangerous….

Some years ago I took part in hearings on nuclear power in Ontario where thoughtful people from both sides took part. I was asked, by a member of the Ontario nuclear industry, exactly this question. I answered that it was a non-question. The statement is true of course, but that doesn’t mean you adopt every technology despite its dangers. You look at each case and make a decision. In fact, most of the arguments that Moore makes now in favour of nuclear energy are exactly the same as the ones being made then. For example, regarding Three Mile Island:

What nobody noticed at the time, though, was that Three Mile Island was in
fact a success story: The concrete containment structure did just what it was
designed to do — prevent radiation from escaping … And although the reactor
itself was crippled, there was no injury or death…

See what I mean? Just because Patrick Moore didn’t notice that Three Mile Island was a success story, he assumes no one else did either. Well, people did, on both sides of the debate. And some of us who opposed nuclear power then knew that it was kind of a success story, and wrestled with that, and decided that we still opposed nuclear power. But Moore apparently wasn’t among those wrestling with that problem, because he doesn’t listen to other people, he just tells them what to think,

And I am not alone among seasoned environmental
activists in changing my mind on this subject. On occasion, such opinions have been met with excommunicationfrom the
anti-nuclear priesthood…

This is Mr. Moore trying to maintain for himself the position of rebel-with-a-cause. Not only was he a rebel then (an outspoken, independent-minded activist) but he’s a rebel now, against the people he was then a part of. But now he calls Friends of the Earth "the anti-nuclear priesthood" as if they are some kind of power centre. Give him a year or two and he’ll be railing against political correctness.

There are signs of a new willingness to listen, though, even among the
staunchest anti-nuclear campaigners. …  nuclear is, by elimination, the
only viable substitute for coal. It’s that simple.

Oh come on. Here is that certainty again, that arrogant "if I can’t think of alternatives, then no one else can either" black-and-white thinking. He is so certain of his own opinions that they are now obvious. Until he changes his mind, and then his new position is obvious too.

Let me be absolutely clear. It’s not the mind changing I object to. When it comes to that, I am firmly of the John Maynard Keynes school of thought (in response to a question about what he does when he gets new information, he answered "When the facts change, I change my mind. What do you do, sir?") And it’s not the support for nuclear power that I object to, even though I don’t agree. Many thoughtful people are in favour of nuclear power. It’s the self-importance of his simple-minded thought that gets my blood pressure up.

And happy Easter to you too.

Link: Economist’s View: Global Warming and Nuclear Power.

1. That global warming is a big deal. It’s because of listening to the radio in the mid ’70’s and hearing all those stories from experts about how there wouldn’t be any oil in 1990. They made sense at the time, global warming makes sense now. But I don’t really believe it.
2. That open source software is new and different. What puts me off is the hype about the whole Cathedral and Bazaar, Coase’s Penguin, Sand Pile & Power Laws, Economics of Networks, and Long Tail thing. It’s all what I think of as "Wired Thinking" (after the magazine) — it’s not entirely without merit, and it’s not completely stupid, but it has no sense of history and so it’s not nearly as smart or original or new as it thinks it is. Speaking of which….
3. That quantum computing will ever amount to anything. Anything that features the word "entanglement" so prominently is more new age than physics. The EPR thought experiments were dreamed up 70 years ago. Nothing interesting came out of them in the first 60, so why should anything interesting come out of them now? This is a field driven by its cool-sounding name (remember "quantum chaos" anyone?), and it’s just possible enough that it could be important, complicated enough that it can be portrayed as cutting edge to likely patrons and smart-but-impressionable graduate students, and far enough out to be not easily disproved.  Speaking of which…
4. That nanotechnology is new. Come on people, it’s just chemistry and engineering. All that talk of "self-assembly" is just a new word for "chemical reaction" but it sounds oh-so-edgy. Get over it.
5. That the world is flat (in the Thomas Friedman sense of the world). This one really should not need saying. It’s clearly a case of what Daniel Davies calls "globollocks" but it seems to be taken as obviously true by a big section of the business community. ‘Nuff said.
6. (Because no one expects the Spanish Inquisition). That whole idea of memes. Yes, I enjoyed Dawkin’s Selfish Gene, Dennett’s Consciousness Explained and Blackmore’s Consciousness, An Introduction. But I just don’t see what the idea of a meme adds to any discussion about anything at all. Really.

Why do I think I’m entering the "grumpy old bastard" phase of my life? Anyone else got any things they don’t believe?