Intro: This is Citations Needed with Nima Shirazi and Adam Johnson.
Nima Shirazi: Welcome to Citations Needed, a podcast on the media, power, PR and the history of bullshit. I am Nima Shirazi.
Adam Johnson: I’m Adam Johnson.
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Nima: “Supply and demand.” “It’s just Econ 101.” “Most economists agree…” “There’s always trade offs.” Over and over, media and policymakers spew the same tired recitations meant to convey the seemingly natural, immutable laws of economics. The economy, we’re told, is thriving when business owners and job creators are making record profits, and failing when investments in social programs have simply grown too high — and that’s the way it is and will, and should, always will be.
Adam: These terms, phrases, and sentiments are part of a lexicon of economic euphemisms, clichés, and other forms of business-school speak designed to blur class lines and convince us that our economic system — entirely a result of policy choices largely designed to further enrich the wealthy at any the expense of the broader welfare — is a function of cold, hard science, with rules and principles no more pliable than those of physics or chemistry.
Nima: But why should we be expected to just accept that a news report that “the economy” is on the upswing means the average worker is doing any better, when all evidence is to the contrary? Why should our media’s economic so-called “experts” come from a pool of elite economics departments beholden to corporate donors and right-wing think tanks? And why must “the economy” be defined in terms of whether the Dow is up or down, instead of whether people have food, housing, healthcare, and job security?
Adam: On today’s episode, atpart one of a two-part series, we’ll examine the first five of our 10 most popular clichés, jargon, and rhetorical thingamajigs that economists, economic reporters, and pundits use to sanitize, obscure, and provide a thin gloss of Science-ism to what is little more than power-flattering, cruel, racist, austerity ideology.
Nima: Later on today’s show, and the next one, we’ll be joined by Hadas Thier, an activist based in Brooklyn, New York, and the author of A People’s Guide to Capitalism: An Introduction to Marxist Economics.
Hadas Thier: Karl Marx talked about the ruling ideas of any society are the ideas of the ruling class, because it’s the ruling class that has the means to fund them and has the ability to enforce them.
Adam: We want to make it very clear that this is not meant to be an indictment of the field of economics per se, nor is it meant to be exhaustive of the entire field of economics. We are fully aware that not every economist and every school of economics engages in these -isms and rhetorical thingamajigs, but we are starting from a place of what is popular in media discourse and working backwards from there. These are 10 very common and as we will show, extremely popular throughout history, in many ways, tropes and isms that we think are worth unpacking, and are very often presented uncritically as something that’s sort of just per se true, and we think they’re worth examining, because we believe that, especially given certain contexts, they carry with them a lot of ideological content. We discuss Science-ism, Nima, a lot on the show, which is sort of the veneer of officialdom and empiricism that is used to launder one’s own editorializing or one’s own ideology or opinion, and we think that these little economic terms do it quite often, and I think very potently and very effectively and so I’m excited to get into those.
Nima: Yeah, if you make something sound immutable, then it becomes immediately irrefutable, right?
Nima: It’s just a law of nature, and I think in our common conceptions, and certainly is positioned by the press, it’s a law of nature taken for granted that quote-unquote “markets” are self-regulating creatures, right? Hell-bent on benevolence, as long as you just play by the rules, markets are considered effectively synonymous with capitalism in our modern understanding, or at least of a capitalist ideology, but this is completely ahistorical. Of course, there were markets long before capitalism, so in an effort not to be comprehensive, as you said, I’m gonna run through, you know, I don’t know the past 10,000 years of human history in about a minute and a half.
Ever since hunter-gatherer societies started to cultivate agriculture and domesticate animals, economic surpluses have been a part of human societies. Trade routes and trading outposts and depots are ancient. The thriving mercantile economy of 3rd Millennium BCE Sumer had already developed things like money, contracts, credit and interest and traded with other societies thousands of miles away. This is 4,000 years before the emergence of what we know as the system of capitalism.
Between the 11th and 15th Centuries CE, medieval Venice gave us things like deposit banking, insurance policies, corporations, municipal bond markets, and double entry bookkeeping. Now, this, again, is long before the emergence of capitalism, which organizer and writer Jesse Myerson has written, quote, “isn’t distinguished by its capacity to provide market opportunities, but by the imperatives the market places on its unique system of production.” End quote.
Now, land-rent markets in England are really what drove the creation of capitalism — born of land dispossession — and established Ellen Meiksins Wood in her book, The Origin of Capitalism, referred to as “market imperatives” — that is, “competition, accumulation, and profit-maximization, and hence a constant systemic need to develop the productive forces.”
“It can and must,” Wood wrote, “constantly accumulate, constantly search out new markets, constantly impose its imperatives on new territories and new spheres of life, on all human beings and the natural environment.”
Adam: So yeah, that’s 4,000 years of economics, just to sort of as a primer, or 4,000 years of market creation, I should say.
Nima: Right. So, with this in mind, think about what we now know as quote-unquote, “the economy,” the catch-all term that we see, obviously, in political speeches and media reports in our, you know, dinner table conversations, “the economy,” right? We hear it all the time, what is the biggest political driver of people’s motivations, right? The, ‘It’s the economy, stupid,’ right? But what we understand as the economy, Adam, is in our press, I think, oftentimes linked directly to NASDAQ or Dow Jones, how the stock market is doing. So, that brings us to our very first term of this top 10 list, the one that we want to kick off with, it’s a big one, Adam, it is simply “the economy.”
Adam: “The economy,” not to be confused with economy or economies. “The economy” is the abstract representation of the kind of fiscal health of a country. Each and every election we are told “the economy” is the number one issue. Pew polls show that in literally every single election year since they started polling the question that the most important issue for voters is the economy. In 2020 it was the top issue with 79 percent of voters saying it was “very important”. 2016, 84 percent said it was “very important”. 2014, 83 percent said it was “very important. 2012, 2010, 2008, 2004. And every year number two is almost always “jobs,” jobs are very important, and these are sort of these great, generic terms that media reports, you know, most important thing to voters is the economy. Well, no shit. Clearly voters have some generic sense of the economy. It’s understandably something that they would want to be doing well, given it incorporates everything from their vague sense of inflation to ‘Can I find a job?’ ‘Can my friends find a job?’ ‘What my home price is?’ ‘Is the value of my home going up?’ ‘How much money can I make?’ And the health of their employers, right? They don’t want the place they work to shut down. If they own their own business they don’t want it to go under. So there’s this kind of vague sense of the economy and the economy as a sort of political concept emerged during the 1930s, during the Great Depression in the New Deal.
Nima: Yeah, Jacob Goldstein, for his 2014 NPR piece, “The Invention of ‘The Economy,’” really teases out the advent of this term:
At the time, people talked about things like banking panics, and national wealth, and trade. But, according to Zachary Karabell, this thing we call the economy — this thing that we constantly measure with specific numbers — wasn’t really invented until the 20th century.
‘It was invented because of the Great Depression,’ says Karabell, who just wrote a book called The Leading Indicators. He says:
‘It was invented because there was clearly a perception that there was something really, really bad going on but they didn’t really know what. You could see there were homeless people on the street, you could see there were the Okies heading from their Dust Bowl farms off to California by the tens of thousands, but there was no way of really grasping it.’
The article continues, Goldstein writes this:
So the government starts calculating out this single, official number called national income. It’s the forerunner of today’s Gross Domestic Product, or GDP, and it’s basically the value of all the goods and services produced in the country in a year. When it’s released in the depression, this wonky statistic becomes an overnight sensation. A report on national income submitted to Congress becomes a bestselling book. And pretty soon, you can’t turn on the radio without hearing those numbers and what they’re measuring. In the decades that follow, national income becomes gross national product and eventually GDP — and it sweeps the world. ‘The first thing you do in 1950s and ’60s if you’re a new nation is you open a national airline, you create a national army, and you start measuring GDP,’ Karabell says.
Adam: Since roughly this time the American media has broadly used GDP, what was previously GNP, Gross National Product, Congressional jobs reports and general forecasts from investment banks and of course the stock market, or the Dow Jones Industrial average or NASDAQ, as proxies for the so-called “economy”. But the thing with economy is it could sort of include whatever the hell you want it to include, which is one of the reasons it’s so popular.
As a good point of reference, let’s look at a 2012 Romney, Barack Obama debate that was hosted by Jim Lehrer of PBS. This debate was supposed to be a debate specifically about quote-unquote “economy.” So Lehrer asked four questions about “the economy”, one about how the candidates would quote-unquote “create jobs,” one about the “debt and deficit,” one about quote-unquote “entitlements” and one asked “is there too much regulation” on businesses? Notice how the starting point of how we view the economy is abstractions and macro policy, right? It is supposed to seem cold and sterile.
Nima: And also tees up many things that we’re gonna get to in this episode.
Adam: Right. And of course, that has sort of inherent pro-capital, capital-friendly framing. So questions you never hear about when debate moderators ask about the economy, because really, debates are a really good distillation of media priorities, media framing, they’re kind of the ultimate way you can measure it in a way where you say, ‘Okay, every four years during the primaries, and in the presidential elections, these things are what these networks determined to be important.’
Nima: I mean, the moderators are journalists, remember that, from huge networks. That’s a choice.
Adam:So what you’ll never hear in an economy question is, ‘Senator, if you were elected president, how would you eliminate poverty?’ ‘How would you end homelessness?’ ‘How would you as president end childhood hunger?’ ‘How would you make life easier for poor seniors who can’t afford prescription drugs or dental care?’ Or ‘How would you help poor mothers who can’t afford child care?’ So, what you do is you sort of put yourself in the position of some wonk, who works at some bank, and you sort of have this broad inclination to want to have a quote-unquote “healthy economy,” but who that economy benefits is always abstracted and never really specified. So as we discussed in Episode 108, with Jason Hickel — How GDP Fetishism Drives Climate Crisis and Inequality — the framing of the economy is mostly the GDP and quote-unquote “growth.”
Nima: Always growth.
Adam: As opposed to social welfare and social well being has inherent in it certain ideological assumptions. So what’s good for the poor, perhaps even more urgently, what’s good for climate chaos, which is very often antithetical to growth and increased GDP, is simply not really seen as being part of the quote-unquote “economy,” and is almost always presented as a totally separate discussion.
Nima: Yeah. So effectively, all of these popular discussions in our media and our politics about quote-unquote “the economy,” are, again, these abstractions untethered from the needs of working class people, or really, most people except for, you know, maybe CEOs, or, you know, hedge fund managers. So indeed, the Pew polling about what topics are most important that, you know, what you referenced earlier, Adam, these are used in thousands of articles, Pew tells us this,’ ‘Pew tells us this,’ ‘Polling tells us this,’ ‘Popular opinion is this.’ This tells us what Americans supposedly care about. Never on that list is poverty, food insecurity, housing insecurity, those are never offered even as options of what might be important. However, this catch-all term, “the economy,” standing in for employment, standing in for NASDAQ, standing in for growth writ large, you’re never allowed to really say those other things, those things that materially affect people’s lives. The closest they get maybe is like this Davos friendly economic inequality term, you know, which speaks to the relative well being of people but still untethered to material impacts of poverty like, you know, lack of shelter, lack of food, lack of stable employment. So meanwhile, “the economy” can just be a vague thing that one appeals to to sound smart and savvy while dumping on so-called woke politics. This is a different use of how “the economy” is used to actually divert conversations, people who hate anti-racist discourse, for instance, in all its forms, love to act like they only do so because of their deep concern with “the economy.” Everything else is a distraction from “the economy,” which you have to pay attention to, and if you care about something like trans bathrooms, you’re not focusing on “the economy.”
Adam: Yeah, you’re focusing on identity politics and woke shit. So, Chris Cillizza, the absolute fucking biggest moron in media — and it’s a tough competition, but literally just I think someone who’s just a dope to end all dopage — he did another one of these tedious write ups of James Carville, which people write up every few weeks about James Carville goes on an epic rant against woke politics, and so he wrote this after the Democrats lost the Virginia gubernatorial election. Keep in mind that Terry McAuliffe, the person they ran is not woke at all, but it doesn’t matter if you’re quote-unquote “woke,” because if you’re anti-woke, like Biden or McAuliffe and you do badly, then it’s somehow still woke’s fault, and if you’re woke it’s also, so it’s sort of a win-win for the anti-woke crowd. He wrote:
Carville’s argument is that by focusing on removing statues or defunding the police or on proper pronouns for transgender students, Democrats are talking too much about issues that matter less to a broad swath of Americans than, say, the economy.
Nima: (Laughs) “The economy.”
Adam: So here you have, you can’t talk about defunding the police or any sort of other, because these are sort of niche and fringe, and notice how it’s not transgender people, it’s transgender students, it’s just a college phase. But if we talk about the economy, but really what they mean in this context and what James Carville means, again, this is someone who for over 20 years is paid $50,000, $60,000, $70,000 to do speeches from investment banks and hedge funds, someone who’s worked with corporate clients, someone whose wife is a Republican consultant who’s consultancy firm, Gaslight Incorporated, helped try to get Fred Thompson elected in 2008, this is someone who was the architect of the Sister Souljah moment for President Clinton, this is someone who was part of the neoliberal New Democrat Coalition in the 1990s that was very friendly with Wall Street. So obviously, he’s going to want to talk about the quote unquote “economy,” he’s not going to talk about these, and by the way, to James Carville woke politics also includes universal healthcare and free college tuition or college tuition forgiveness. So that’s also woke and that’s also a distraction from the quote-unquote “economy.” So you see here is economy, for a lot of people who are anti-woke, which is to say, we don’t want to talk about racism or anything else, that they sort of wouldn’t like anyway, that you can throw out the economy is the sort of vaguely populist thing like clearly, average Joe sitting around his, you know, there’s always this mental image they’re trying to evoke of some average, usually white, family sitting around a bunch of bills, you know, they just punch the clock at the average Joe factory, and they just got out of work, and they’ve come home, and none of these people are trans, none of them care about police violence. It’s sort of this average Joe.
Nima: They just want to live their lives with their stable job.
Adam: Yeah and they’re very concerned about them and that’s why they don’t want to talk about these things, which they don’t like anyway, for both financial and ideological reasons.
Nima: Yeah. Glenn Youngkin’s win in Virginia actually was like a lightning rod for this kind of argument. I mean, we’ve seen this argument, ‘It’s the economy, it’s not anything else, people just care about the economy,’ but Virginia really kind of made this come alive in a new way. So in early November, Brian Stelter of CNN’s Reliable Sources, so usually about the media, had on commentator Batya Ungar-Sargon, who has written for Newsweek, but also is now right-wing darling, kind of dark web, Bari Weiss buddy, she wrote a book called Bad News: How Woke Media is Undermining Democracies, that kind of gives away, and in this interview with Stelter, she says that the media only cares about what she terms, quote, “highly specialized, radical academic ideas,” end quote. So again, this links directly with what Chris Cillizza was saying, when quoting James Carville, this idea that, ‘Oh, it’s these boutique issues. It’s these niche issues. It’s not the big stuff.’ And she really talked about how Youngkin’s victory was a perfect example of this, and how the media reacts in a way that completely skews reality, and she said this:
Batya Ungar-Sargon: When Glenn Youngkin managed to flip majority Black districts, when he managed to get between 40 and 50% of Latino voters. Are all of those people white supremacist? Of course they’re not. They’re people who are worried about number one, the economy, right? And number two, schooling. And it seems to me it is such a self-own to tell people who are worried about the economy that that is white supremacy, right? You are essentially criminalizing the views of working-class Americans. And you saw the same thing with the conversation around Critical Race Theory, right? You saw all of these pundits being like, these people don’t know what Critical Race Theory is. That is not a political statement. That is a class statement. ‘They are not educated enough to be opposed to Critical Race Theory. How dare they oppose it?’
Adam: Yeah, the idea that Youngkin flipped Black districts, I don’t know if that’s true, I had a hard time verifying that, I looked it up, or the idea that somehow his constituency was working class is also not true. One of the counties he flipped was Loudoun County, which is the wealthiest county in the whole country out of 3,000 counties, it’s the wealthiest, average home income is $134,000. He also won Fairfax County, the third wealthiest county in the United States. So this is what we call the Bill Maher, we’ve talked about this before on the show, where ‘I don’t like something, I don’t like the woke teens,’ whatever, that’s fine, you know, they annoy you, that’s your thing. So instead of saying, ‘I don’t agree with this,’ or ‘I think this is bad,’ or ‘I think this anti-critical race theory stuff is actually justified,’ which she clearly does and has been basically on that track now for a year, you have to launder your opinions through this supposed working class who agrees with you.
Nima: That’s right.
Adam: And one of the ways you do that is you say, ‘I actually, I don’t care about these, no one cares about these other topics, which I didn’t like for other reasons, unrelated reasons, but I care about and they care about the economy.’ And it’s like, well, okay. But again, in many ways, this is something that is very important to understand is that in many ways, identity-based issues such as they are, quote-unquote “identity-based” issues, are economic issues. Anti-trans discrimination for trans people is an economic issue. If you’re discriminated against because you’re trans when you apply for jobs, it’s an economic issue. If the police are harassing and arresting you, and you have to fill out a box on every application for the rest of your life that says you spent time in jail or prison, that’s an economic issue. These things are economic issues, so again, what they mean is not an economic issue for people who look like me.
Nima: Because “the economy” is simultaneously literally everything and totally nothing.
Adam: Well, right, identity issues, again, look, I think there’s a version of identity discourse which can be superficial, but when you talk about basic laws against discrimination, rules against or social norms against humiliating people, or reducing them to a mockery, like these things do have downstream effects on people’s economic conditions. Discrimination is a major driver of poverty for Black people, trans people, et cetera. People being kicked out of their homes when they’re 15, 16 years old because they’re gay, queer, trans, that’s an economic issue, and so again, this idea that we can somehow bifurcate the economy from these identity-based, quote-unquote “identity-based” issues, is obviously meant to appeal to people for whom those issues are not important, by definition, e.g., again, people who look like Adam Johnson.
Nima: Or, as was termed “highly specialized” radical, academic ideas.
Adam: Right. Yeah. Radical. You know, I’m sure she’s so concerned with the jargon.
Nima: Oh, I’m sure. I’m sure. But speaking of academics, let’s move to our next term. Our next favorite phrase, and it is this: “most economists agree.”
Adam: Which is my all time favorite. I wrote about this five years ago, gosh, five and a half years ago — man I’m getting old, I’ve been doing this game too long — which is “most economists agree.”
Nima: I love that one.
Adam: Which is probably, again, we’re not supposed to have favorites, but this is probably my favorite because it’s so patronizing and vague.
Nima: It’s the experticians again, it’s the expertician argument. I love it.
Adam: Oh, for sure. And there’s presumably some percentage between 50.1 percent and 99.99 percent, which is most, and it’s not sort of, you know, it sort of feels like 75 percent, but, you know, maybe it’s 85 and 85 is basically 100 percent.
Nima: Right. It also could be 52 percent.
Adam: It could also be 51 percent. This is a very common refrain by both neoliberals and right-wingers to sort of assert their own opinions as, again, immutable facts of science. The Atlantic ran an article in 2012 by the great Megan McArdle, who now writes for The Washington Post, sort of one of the more tedious right-wing pundits, entitled, “4 Politically Controversial Issues Where All Economists Agree.” Quote, “The benefits of free trade and NAFTA far outweigh the costs” and, quote, “Rent control is bad.” The economists polled in her article, which is something you’ll see over and over again, and I discussed in my FAIR article on this subject back in 2016, the economists polled in the source material, it was for a piece for the Initiative on Global Market Economic Experts, a panel from the University of Chicago, a bastion of quote-unquote “free market thinking,” which consists of economists from Princeton, MIT, Stanford, and the historically reactionary Yale and Harvard and University of Chicago’s economics programs. All economics programs that are awash in corporate money. For example, donors to these institutions, the economics departments, include the Pritzker Family, University of Chicago, Harvard, who are owners of the Hyatt Hotel Corporation, and also whose issue is now the governor of Illinois. Former US Secretary of Commerce Penny Pritzker, a Harvard alum and now chair of the global investment firm PSP Partners and its affiliates, Pritzker Realty Group, PSB capital and PSP growth gave $100 million to Harvard’s economics department in 2021. The University of Chicago’s economics department received $125 million from the CEO of asset manager Citadel. Stanford’s economics department, meanwhile, is closely connected to the right-wing, also corporate-funded Hoover Institute, a think tank helmed by Condoleezza Rice and funded in part by the Scaife and Walton Family Foundations, who you may remember from about 800 other episodes we’ve discussed on if there’s something evil they’re funding it. According to IGM, the Initiative on Global Markets also has a history of supporting quote-unquote “free trade” and obviously opposing rent control. According to the Initiative on Global Markets, quote, “economists agree” that, quote, “Freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment.” Meanwhile, they tell us that, quote, “economists do NOT agree” that “local ordinances that limit rent increases…have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.”
This point has been repeated also by Megan McArdle at The Washington Post in June of 2019, when she wrote, quote, “The one issue every economist can agree is bad: Rent control.” This is echoed by Bloomberg and several Bloomberg reporters, who told me personally that I was being silly for supporting rent control, because, quote,-unquote “most economists agree rent control is bad.”
Nima: Yeah, so there’s a piece that gets shared a lot whenever this issue of rent control comes up, a Bloomberg opinion piece by Noah Smith, from January 18, 2018, and the headline is, “Yup, Rent Control Does More Harm Than Good,” with the sub headline, “Economists put the profession’s conventional wisdom to the test, only to discover that it’s correct.” And in it, it does the whole “most economists agree,” this is ‘rent control sucks,’ it’s the worst, it should go away because all economists agree that it’s bad. The article even does this kind of ‘Econ 101’ thing and not just the thing literally says it, quote, “Rent control, the Econ 101 student learns, helps a few people, but overall does more harm than good,” end quote. So this piece basically assumes that there’s this consensus. It says this:
Over the years, rent control has acquired a special bogeyman status among economists. Assar Lindbeck, a Swedish economist who chaired the Nobel prize committee for many years, once reportedly declared that rent control is ‘the best way to destroy a city, other than bombing.’
So, this piece really kind of encapsulates that idea of, we’re just gonna throw up the term “economists” and assume that it is the vast majority, if not all, of the Economics field that can agree on this argument that I’m making, because I have an ideological reason to make this argument that I’m making, then I’m going to back it up by saying ‘most economists agree.’
Adam: Yeah, and to substantiate that all economists agree on the point about rent control Smith’s piece cites a non-peer-reviewed paper about rent control in San Francisco, written by an economics student and two Stanford Business School professors who work on Wall Street. Smith wrote that in 1995, rent control in San Francisco, quote:
Created a powerful incentive for landlords to either convert rental units into condominiums or to demolish old buildings and build new ones. Either source forced existing tenants, especially younger tenants, to move. Landlords affected by the new 1995 policy tended to reduce rental unit supply by 15%.
So, the blame doesn’t line landlords for kicking people out of their homes or this isn’t something that should be regulated, but on rent control for motivating those landlords to do it, and no further questions should be asked. The paper also completely ignores, among other things, The Ellis Act, a California law allowing landlords to evict tenants in rent controlled units if those landlords are planning to go out of business, and incidentally, Bloomberg is owned by Michael Bloomberg who himself owns over $100 million in real estate.
Nima: ‘Most economists agree that what Michael Bloomberg does is cool,’ published by Bloomberg.
Adam: Yeah, and look, I mean, if you’re an economist and you’re listening to this, whatever, you’re perfectly entitled to believe what you believe, the primary thing here that I think we find so grating and kind of obviously very propagandistic is this, instead of saying, ‘I believe this, and I’m gonna argue this from first principles,’ there’s this patronizing head patting, oh, economists all agree. Well, which economists? Did you do a poll? Did you talk to every economist under the fucking sun? How do you know what percent of economists? Also what are the institutional and ideological filters of those economists? What are some alternatives? It’s just ‘Oh, economists agree. If you don’t agree, you’re fucking stupid.’
Nima: Well, because it’s a stand-in for the idea of common sense, right? Except it’s substantiated with this expertician class, right? Because there’s a certain level of degree having, or a title holder of, you know, the professor of economics or economic theorist or published economist, that once you have that kind of title, you lump all those people together, except you’re not actually doing that you’re just pretending that you polled all of those people who have the, you know, expertician class, and you get to say “most economists agree” just to argue the thing that you are already arguing, which oftentimes, if you’re going to say “most economists agree,” you’re arguing something that is held as status quo, which I think as we have discussed oftentimes on Citations Needed, Adam, status quo things, common sense things are established after decades, if not centuries, of who wields power in a society, right? That’s what becomes common sense. That’s what becomes, quote-unquote “status quo,” where the power lies, what is established, as within the kind of Overton Window of acceptability. So, therefore, when you “most economists agree” an argument, you are saying, ‘This is the mainstream, I am arguing something normal. If you disagree with me, you are a radical.’
Adam: Well, I think it’s useful to point out that things that were previously all economists agreed are not all economists agreed. So, Noah Smith, who told us in 2019 that all economists agree that rent control is bad, wrote an article in August of 2015, headlined, “National $15 Minimum Wage is Trouble,” in which he details why raising the minimum wage to $15 would increase unemployment. Subsequently, several cities did raise the minimum wage to $15, and subsequently, we discovered that there really aren’t any negative effects on unemployment, and, in fact, the opposite happened in many of the municipalities in question. For years from the ’90s, it was all “economists agree” that free trade was quote-unquote “free trade was unambiguously good,” we now know that’s not really true. So, again, who’s funding these forces, who’s funding these systems? What are the institutional biases are just sort of poo pooed away with this “most economists agree.”
For my March 2016 FAIR article, Vox was obsessed with using “most economists agree,” or the close cousin, “most experts agree.” One Vox headline read, “Martin O’Malley wants boosts to Social Security that even Bernie Sanders hasn’t called for,” and the article said, quote:
He wants to adopt ‘chained CPI,’ which is a method of calculating population-wide price inflation that most economists regard as more technically accurate than the current measure.
They were saying this when they were poo-pooing the expansion of Social Security. They would go on to say:
Most economists feel that a ‘chained’ index like personal consumption expenditure deflator would be more accurate, and those indexes paint a more optimistic picture of income growth.
Vox’s Dylan Matthews, who by the way, in 2013 The Washington Post also opposed a $15 minimum wage even a $13 minimum wage saying it would increase unemployment. He said, quote, “Study: Bernie Sanders’s single-payer plan is almost twice as expensive as he says.”
There’s also a dispute as to who would pay the employer payroll tax. Like most economists, Thorpe treats the employer payroll tax as paid entirely by workers.
Again, every single one of these instances of “most economists,” there’s no link to any economist; it’s not clear how they know this. One right up in Vox from August of 2015 by David Roberts said that, quote:
Also, the association of cap and trade with a weak economy is misleading, as most economists say a cap-and-trade program (or other price on carbon) is the most efficient way to reduce carbon emissions.
This has been disputed by environmentalists. It is now, I think, not a “most economists agree” framing. So again, there’s no link, there’s no reference to any kind of survey that’s done. It’s just asserted that most economists agree.
Nima: One of my favorites is from The New York Times in April of 2015, where N. Gregory Mankiw wrote an article for The Upshot headlined, “Economists Actually Agree on This: The Wisdom of Free Trade.” And it actually hints at our next trope by starting, quote, “If Congress were to take an exam in Economics 101, would it pass? We are about to find out,” end quote. And it talks about how international free trade and supporting international free trade was so crucially important, this is toward the end of Obama’s second term. Of course, this was at a time when there was debate about the TPP, the Trans Pacific Partnership, as well as some other policies, and the author here writes, quote:
Among economists, the issue is a no-brainer. Last month, I signed an open letter to John Boehner, Mitch McConnell, Nancy Pelosi and Harry Reid. I was joined by 13 other economists who have led the President’s Council of Economic Advisers…
Et cetera, et cetera.
It says, ‘most economists agree, me and my 14 economist friends.’ Now, if we also look back a couple decades from when that article was written, this is from February 1996, from New York Times stalwart Paul Krugman, in an article headlined, “The Economics of Never-Never Land.” It’s an article about Steve Forbes being a believer in supply side economics, which is obviously incredibly harmful, but Krugman writes this, quote:
Supply-side economics can be defined as the belief that cutting taxes produces an explosion of economic growth. Yes, most economists agree that taxes are a drag on the economy. But supply-siders insist that the payoff from lowering rates would be vastly larger than others think plausible.
It goes on to talk like that, but again, the assumption, and as is stated explicitly, is “most economists agree,” literally says that taxes are a drag on the economy. Tax is bad.
Adam: Yeah. And of course, the whole thing is so intellectually incurious, because it’s like, well, who are these economists? What does that mean? Obviously, it’s meant to sort of lend a kind of faux gravitas, which leads to our next trope, which is very similar, which is the assertion of quote-unquote, “it’s just Econ 101,” or what we kind of broadly describe as the faux Science-ism of economics. Similar to “most economists agree,” this is sort of a pat appeal to authority, which asserts that it’s just what you learn on day one in economics. Day one stuff, no ideological content, it’s again, it’s just like learning about isotopes in chemistry or learning about the various bones in human biology or first year of med school. It’s just Economics 101.
Nima: Yep, the common building blocks of how this shit works at the base level. This is the assumption that everything else is built upon. So for example, you have an article from just this past October 2021, in The Atlantic, entitled, “America Is Running Out of Everything.” The article is about supply chain issues, and here’s an excerpt:
Just as a normal traffic jam consists of too many drivers trying to use too few lanes, the traffic jam at California ports has been exacerbated by extravagant consumer demand slamming into a shortage of trucks, truckers, and port workers. Because ships can’t be unloaded, not enough empty containers are in transit to carry all of the stuff that consumers are trying to buy. So the world is getting a lesson in Econ 101: High demand plus limited supply equals prices spiraling to the moon. Before the pandemic, reserving a container that holds roughly 35,000 books cost $2,500. Now it costs $25,000.
So this is that kind of Econ 101, pat explanation of supply and demand, you know, you don’t even need to take an AP economics course, this is the basic economics course. This is how it works, demand, supply, et cetera. Portrays economics as really just a hard science, you just learn these rules, it is a set of natural laws, rather than a system of policy choices made by people in power. Industrialists, of course, are never forced to charge more for, say, a shipping container or for a bar of soap or for your iPad, but they do so because it makes them more money, right? And they will continue to raise prices, as long as they can get away with it, basically, you know, while the rate of savings are high enough.
Adam: Yeah, and there were libertarian think tanks like Reason.com, Cato Institute, love to refer to everything they believe as Econ 101. They wrote an article defending price gouging by Uber during Hurricane Sandy, where they said that quote-unquote, “Uber is not alone in dropping some Econ 101 on the storm weary populace,” when they got pushback for price gouging in 2012. The next example goes beyond the sort of pat appeals to authority, which is a recent one you’ve seen in the news lately, which is quote-unquote “wage inflation,” just intuitively when one hears “wage inflation,” it implies that you sort of inflate beyond what should be a reasonable amount of size, right? Inflation is bad, because you know, the value, bloating, so wage, which is to say wage workers, people who are not managers or owners, those who sort of work for a wage, although I suppose a manager could work for wage, but wage workers, the lowest rung of the ladder, their wages are inflating, and that’s bad, because you don’t want —
Nima: That’s always terrible.
Adam: You don’t want wages to inflate because there’s presumably some natural free market wage they should have but due to some mysterious force, some economic dark matter, the wages have inflated, much like the universe does.
Nima: And what happens if you inflate something too much, right Adam?
Adam: It explodes.
Nima: It eventually pops, right? And so you have this kind of, oh, you know, the pressure is growing so there’s this sort of menacing visual that accompanies over inflation, right? Because something is always going to burst and bursting, when it comes to the economy, is always very bad for people who want to make more money. And so even though we’re seeing this a lot now, as so often happens, on Citations Needed, we know, this is nothing new. The term “wage inflation” really began to appear in this context as far back as the 1910s, amid mid labor shortages bred by the First World War. So, you have this article from the Evansville Courier from Sunday, October 24, 1915 with the headline, “Wage Inflation Is Menace, Say Leaders,” with the sub headline, “German Authorities See Danger When End of the War Throws Army Into Labor Market.” This is a dispatch reproduced from an AP report from Berlin, Germany, this is again during World War I, and it says this:
The men and women now employed at comparatively high wages throughout Germany constitute a problem that already is occupying the attention of labor leaders in every part of the Empire. The more thoughtful of the workers realize that the days of big pay and unlimited work are not going to last forever, and that with peace is going to come a strenuous time of possible hardship, and they are saving their money.
So again, you have here, the workers have to know that war is boom time, peace is bad for their wallets, which, you know, awesome, awesome message there. You also have the National Post, a paper from Toronto, Ontario, Canada from June of 192,1 with this article, quote, “Wages and Their Application to Production Costs,” with the sub headline, “Indications Are That Unemployment Situation is Still Acute.” What’s the: “Outlook in U.S. Wage Deflation Must Precede Reduction in Costs of Production — Employers are Meeting Situation Squarely.” In the article it says this:
But there will be little disagreement with the contention that one of the causes of unemployment in the United States has been excessive production costs and the consequent slowing of trade and industry dependent upon American markets. Production costs have been excessive largely because of wage inflation. There must be wage deflation before these costs can attain a level which will invite the normal resumption of business. Employers realize this fact and are, at least, meeting the situation squarely.
The article continues:
There is evidence that the workers of the country also have been brought to a realization that wages must come down. Here, as in Great Britain, there are groups such as the miners and the railroad men, who still endeavor to persuade themselves that their industries are immune from the operation of economic laws upon labor rates. But the sentiment appears to be gaining among the great body of workers that readjustment of wages is inevitable, and there is a growing disposition to accept it as such.
Adam: Yes, of course, rarely one hears about the salary inflation of the CEO. In 1953, the Manchester Statistical Society, a banker-founded research group, stated that, quote, “If unemployment were high enough, or there were no trade unions, there would be no problem of ‘wage — inflation.’” Which at least has the benefit of being honest. The concept of wage inflation falsely claims that inflation is a necessary function of wages, but as left-wing economist have historically argued, companies charge as much as they can for goods and services, regardless of worker wages because they’re not stupid. They’re not going to leave money on the table just for yuks. There’s obviously been a recent widespread panic about so-called wage inflation in media in the wake of COVID wrecking the restaurant, service and retail industries. As low-wage employers offer marginally higher wages and benefits to attract personnel, many outlets fear the existence of a slightly more empowered working class which has led to many panicked articles.
The first of which, of course, from Bloomberg, from June 9 of this year, with the headline quote, “Surprise Jump in U.S. Wages Gives Inflation Debate a New Twist.” Quote:
Last week’s jobs report showed a larger-than-forecast pickup in average hourly wages for a second straight month. It turns out that whatever the unemployment numbers say, there’s a shortage of people ready to work at the going rate of compensation — prompting many employers to boost pay or offer bonuses in order to staff up.
That raises the prospect of what’s known and dreaded in economics as a wage-price spiral. The idea is that higher wages spur more spending growth that strains production capacity and drives up business costs. In turn, companies raise prices and workers demand even larger pay increases to stay ahead of a rising cost of living.
Nima: I love how it says “in turn, companies raise prices,” like that’s not a decision made by humans, companies are this biological entity.
Adam: No, and we’re just in a feedback loop where the poors are making too much money. Yeah.
Nima: (Laughs.) There’s an algorithm where they see certain wages at a certain rate, and then they respond, and it’s just as natural law.
Adam: Some shit head in Silicon Valley sits on a Bitcoin and makes $10,000 in one week, and that’s sort of normal, or Elon Musk, you know, has since the pandemic, his wealth has gone from around $80 billion to $270 billion. That’s not inflation, that’s fine, there’s sort of no problem with that. But here we get this sort of exotic theory that this will lead to a spiral of where goods and services go up, it’ll lead to inflation, there’s too many poors and too much money. It would go on to say, quote:
The average hourly wage in the [leisure and hospitality] industry was $18.09 in May, up from $17.86 in April, and over the past three months it’s risen at an annualized pace of 14.5%. Surging demand underlies the recent pay hikes at big companies like McDonald’s Corp. and Chipotle Mexican Grill Inc. Chipotle just announced it’s charging customers more too.
They announce that every six months and they have since 2014, I actually wrote an article on it.
“… showing how wage and price increases can accompany each other.”
NPR from August of this year, “Wages Are Going Up — And So Is Inflation. Consumer Prices Have Hit A 13-Year High.” Financial Times, “UK wage inflation — sign of adjustment or symptom of woes?” Bloomberg, “Goldman Sachs CEO Says Wage Inflation Is Spreading Through Economy.” The Economist, October of this year, quote, “Is the world economy entering a wage-price spiral?” MarketWatch, “Wage inflation is the ‘new norm,’ trucker J.B. Hunt says, but stock soars biggest weekly gain in 12 years.” Yeah, contrary to these reports the profit share of GDP has been soaring in the last two fiscal quarters from 10 percent to 12.4 percent according to the US Bureau of Economic Analysis. As Dean Baker of the Center for Economic Policy Research writes, this is from CEPR, friend of the show, the only good think tank in existence, quote:
The 12.4 percent profit share we saw in the second quarter is above the 12.2 percent peak share we saw in the ’00s, and far above the 10.4 percent peak share in the 1990s. In other words, it hardly seems as though businesses are being forced by costs to push up prices. It instead looks like they are taking advantage of presumably temporary shortages to increase their profit margins.
Nima: Right, exactly. If they have fewer employees, maybe they’re paying them a little more for retention, but they have fewer in general, and they’re still charging more money, which means they’re going to be making much more profit on what they’re doing. Maybe, Adam, this is Econ 101. Should we reinvent what Econ 101 is?
Adam: Yeah, the great crisis is that people who are supposed to be at the very bottom rung making starvation wages, they’re extremely precarious and highly liquid, due to the pandemic and a series of other events, they got a little bit mouthy, and they’re asking for too much stuff and they’re quitting en masse and in many industries are just fully retiring, even after they got rid of the UI lifeline, because the UI lifeline was never really the issue, and this has sent the capital class into a bit of a panic. But again, if you look at the Institute for Policy Studies, the other only good think tank that we’ve also featured on the show, did a study from October 18, 2021, found that US billionaire wealth surged 70 percent or $2.1 trillion during the pandemic. Jeff Bezos has increased his wealth by $79 billion, Bill Gates has increased his wealth by $39 billion, Larry Ellison has increased his wealth by $65 billion, Larry Page has increased his wealth by $69.8 billion, Mark Zuckerberg has increased his wage by $62 billion, Sergey Brin has increased his wealth from $49 billion to $116 billion or 136 percent, Warren Buffett has increased his wealth from $67.5 billion to $102 billion or an increase of 51 percent, Steve Ballmer has increased his wealth from $57.7 billion to $96.9 billion or 83 percent, that’s an increase of $44 billion, Jim Walton and the Walton family, whose father was Sam Walton, increased his wealth by $10 billion, Alice Walton $10 billion, Rob Walton $10 billion, Michael Bloomberg $10 billion, Phil Knight $28 billion and McKinsey Scott $19. 5 billion. In total, these 16 billionaires have seen their wealth increase on average $70.3 billion from $2.9 trillion to just over $5 trillion.
So when we talk about “wage inflation,” mysteriously this is left out of the conversation. Now, they would argue that these are kind of discreet trillion, billion, multi-billionaires, they don’t affect the broader prices of goods, but it does raise the question, because again, this is mostly stock market wealth, right? It is real wealth, it’s not fake wealth, but it’s not necessarily like they’re getting paid in big buckets of cash. But of course, this doesn’t create any kind of corollary moral panic. What they’re worried about is that the precarious labor has gotten cute, that they’ve gotten too independent minded, there’s far too much union activity, and what they want to do is make sure that the media reading public believe that their Chipotle burrito or the McDonald’s burger, that the price increases or has increased, because of a bunch of greedy low wage workers, not because of record profits by these corporations, which as Dean Baker points out, the profits have outstripped the relative increase in wages.
Nima: Let’s move on to our fifth of this episode, and it is “crony capitalism.” Now, because we were just talking about Paul Ryan a little while ago, let’s stay on 2012. “Crony capitalism” was a major election time talking point, especially for the Romney campaign. I remember Mitt Romney calling Obama a quote-unquote “crony capitalist” in late 2011, early 2012, namely, because of the Obama era government bailout of the auto industry, and so Romney would often call Obama a “crony capitalist,” so much so that Washington Post fact checker Glenn Kessler, who we’ve talked about before on the show, had to examine this is Obama crony capitalist and declaring that to be false, at least in one iteration of how Romney put it.
At the time, Bill Moyers interviewed David Stockman, a former congressman, who served as Ronald Reagan’s budget director and later became an investment banker and author of the book The Great Deformation: How Crony Capitalism Corrupted Free Markets and Democracy. And in the interview, Stockman said this about Obama:
If you have a former community organizer who was trained in the Saul Alinsky school of direct democracy, appointing the worst abuser, the worst abuser of crony capitalism, GE, who came in and begged for this bailout, to head his Jobs Council, when obviously GE’s international corporation, they’ve been shifting jobs offshore for decades, then it becomes so obvious that we have a new kind of system, and that we have a real crisis.
Now, “crony capitalism,” this term generally refers to a form of capitalism, defined by collusion between government and industry, but here’s the thing, Adam, that’s just fucking capitalism.
Adam: Well, right. “Crony capitalism” is the quintessential superfluous qualifier. It’s what I referred to previously as Adam’s lofts of suspiciously gratuitous modifiers, right? Which is like, why not just say capitalism?
Adam: Because it’s similar to “special interest,” right? All interests are special interests, all history is revisionist history, all capitalism is crony capitalism. That’s sort of what it is. And I remember when Jeb Bush in 2015 launched his campaign he said in his opening speech in his campaign materials he was going to fight crony capitalism. Jeb Bush, a brother of George W. Bush, the son of George H.W. Bush, and the heir to the Bush Prescott family is going to fight crony capitalism, because what makes it so great is, again, it implies the existence of some pure form of capitalism. What it really does is it alludes to liberal capitalism, right? It alludes to like, Obama’s a crony capitalist, because he sort of close with Wall Street, it’s like, yeah, that’s just capitalism. That’s not another form of capitalism and your guy will also be subject to the same forces, and is definitely taking money from the same people.
Nima: Yeah, this is the feature not the bug, right? This is just like the way things work. But this term is used to attack your enemies for doing the same thing that you do as a policymaker, as a corporate CEO, right? If you throw around the term, it’s because you’re attacking someone for doing something that maybe you wish you had done just with a different end. This term seems to really have taken hold in the US Press back in the 1980s, especially in the final years of the dictatorial Presidency of Ferdinand Marcos in the Philippines the, you know, far-right dictatorship, before he was ousted in a 1986 popular revolt. Now, Marcos was backed by the US, of course in the mid-1960s, to help quash the communist movement in Southeast Asia. But media really began invoking the term “crony capitalism,” as the United States then sought to distance itself from the Marcos regime, which had become increasingly brutal in the intervening decades, obviously, a mess that the United States often makes when it supports anti-communist movements, and then, lo and behold, I guess you’re supporting a dictatorship, which is kind of the point all along.
Adam: They’re not doing capitalism the right way with enough legal formalities, because what we want is we want legal corruption, not illegal corruption, which we’ll call crony capitalism.
Nima: So you have this article, again, this is when the US is now trying to distance itself from the vast support that it had for Marcos over the years, this is from the Detroit Free Press in February of 1984, with the headline, “Manila: The U.S. has a stake in preserving Philippine democracy,” and it says this:
Mr. Marcos has asked for almost $4 billion in loans from foreign sources, including the United States, just to keep the Philippine economy from crashing. Billions have been drained from productive uses to prop up the commodity monopolies Mr. Marcos created for his friends. The World Bank, as a condition of a $300 million ‘structural adjustment’ loan, is asking the government to dismantle the sugar and coconut monopolies. This ‘crony capitalism,’ as the system is nicknamed, also distorts the political process. Mr. Marcos finances his friends, they finance his election campaigns.
You have a similar reference a year later, this is February of 1985, in the Evening Sun out of Hanover, Pennsylvania, an article headlined, “Fostering Philippine reform,” and in it, it talks about how the Reagan administration could put pressure on President Ferdinand Marcos, it says:
The desired political reforms would expand and accelerate the current process of restoring the Philippines to the multi-party democracy that Mr. Marcos dismantled during the 1970s. The economic reforms would center on replacing the Marcos regime’s corrupt ‘crony capitalism’ with free markets for such basic Philippine industries as coconuts.
So again, a dictator who uses his power to benefit his friends through a market economy. That is crony capitalism. But I guess, if you’re not the closest of friends, and you’re still doing the same thing, it’s fine, right?
Adam: So the right-wing media loves to talk about crony capitalism. And again, typically what they mean is they mean, the sort of Obama era, in the first economic and climate package, or the only one that Obama did, there was this Solyndra mini scandal. They made panels for copper for sunroofs, they made solar cells, basically, they were a California-based manufacturer, they filed for bankruptcy in September of 2011, and they found that they had misled federal officials to obtain $535 million in government back loans with the help of President Obama’s White House and several of the people involved in the company had donated to Obama, this was the sort of great scandal. Now this is fairly routine. The right just made it a thing because they make this shit a thing all the time because they need to separate that from sort of what we consider to be the normal non crony capitalism, the Hoover Institute talks about this, Jonathan Macey 2016, “The Rise of Crony Capitalism.” They wrote a whole economic paper by Anne Krueger in 2006 about the problems with crony capitalism. The Heritage Foundation always talks about crony capitalism, and they say the solution is, “to reduce government intervention, not just because of economic reasons, but because more government intervention invites more cronyism.” In an attempt to define crony capitalism, Anne Krueger of the Hoover Institute, says:
What is normally meant is that some of those close to the political authorities receive favors that have large economic value. Usually, these favors are not outright transfers of wealth (such as forgiving taxes or providing subsidies) but rather take place through provision of economic entitlements. These entitlements can take a variety of forms, but the ones that are most visible in the Asian crisis and the ones under discussion here normally entail ownership of a business or its operation. Ownership may come about when cronies are favored as state-owned enterprises are privatized.
And so the basic left-wing critique of capitalism, Nima, is that it necessarily erodes democracy by definition, that I can show you a thousand studies that say, inequality correlates heavily, not just with routine street crime, but with the corruption of the government. Poor countries are usually quote-unquote “more corrupt,” but that’s because they don’t have the sophisticated corruption mechanisms that wealthy countries have.
Nima: Right. Their corruption happens in wads of cash as opposed to the system that operates at the highest level. Yeah.
Adam: But if we define corruption, not by some strict legal definition of sort of what under the certain statute it violates, but corruption is generally the enriching of the wealthy, again, earlier I read off the 16 billionaires whose wealth had increased by $2.1 trillion, that the transfer of wealth to the super rich if we define that as corruption, again, the left-wing critique of capitalism is that by definition all capitalism is crony capitalism, because the high concentration of wealth into the hands of a select few necessarily erodes any kind of democratic process, even just when it comes to even campaign financing, again, there may not be exchanges of cash in some parking garage somewhere, but by definition if you have a high concentration of wealth into very small hands, which the US has way more than any other country, that by definition that’s going to corrupt the democratic process, and this is why we’ve had campaign finance reform since Montana did in the 1890s because this sort of intuitively, we know this to be true, and so the idea that somehow little mini versions of this, or versions of this that are a little bit more unseemly are out in the open, are somehow a corruption of capitalism is hilarious, because then you can sort of divide, there’s presumably this pure form of capitalism that is not crony capitalism, but all crony capitalism really is like, ‘Hey, man, they made this routine corruption that’s inherent in the system, they sort of did it in a kind of unseemly way, or they didn’t necessarily dot their i’s and cross their t’s.’
Nima: Well, totally, which is why also, you know, Trump invited a lot of articles about crony capitalism, for good reason, but again, under Trump, it’s ‘Oh, this corruption is laid bare,’ and so you had corporate media railing against this for years. You had The New York Times opinion page, February of 2016, “Donald Trump, Crony Capitalist.” The next year, April of 2017 in The Daily Beast, “Donald Trump, America’s Ultimate Crony Capitalist.” The New Republic, a year later, March of 2018, “Why Conservatives Tolerate Trump’s Crony Capitalism.” Two years later, January in 2020, USA Today, writing, “Trump’s model for America is corrupt, autocratic crony capitalism. Like in Russia.” Just had to throw that in because that’s a good one. And of course, you have MarketWatch in October of 2020, writing, “Trump has corrupted American free enterprise with his own brand of crony capitalism.” Now, that Trump is out, the right-wing is back in touting why cronyism is bad again, because Biden is in power, and so you have the Heritage Foundation, right-wing Heritage Foundation, Senior Research Fellow Daren Bakst, writing this just this past October 2021, “Why Cronyism is Antithetical to Capitalism and Free Enterprise.”
Adam: Free Enterprise. Yeah, because really what they mean by that is the need to reduce liberal intervention in the market. So it’s the right criticizing neoliberals, even though they’re just variations of a similar theme. This is similar to Hillary Clinton’s ‘Trump’s not a real billionaire’ line she had in part of her closing arguments. She told a crowd in October of 2016, “I love having the support of real billionaires, and they’ve been speaking up because Donald gives a bad name to billionaires.”
Nima: And everyone cheers.
Adam: There’s sort of this, there’s this proper way of being a billionaire and unseemly Trump came along and ruined it, and it’s like, okay, he’s the bad billionaire, which is an incredibly difficult balancing act to achieve, right? ‘Trust me, there’s this pure form of capitalism, but you just haven’t seen it yet, but trust me, it’s there,’ because, you know, people criticize, and I think maybe even fairly, they criticize Marxists or socialists sometimes we’re always sort of doing the No True Scotsman thing like, well, that country’s not really socialist. But obviously, crony capitalism does the exact same thing that there’s this, presumably this, this free market for which we’re all kind of meretriciously rising or falling, and there’s some corruption in the system that needs to be weeded out.
Nima: Right, it needs to be weeded out because now it’s not pure, and so you have, you know, the Heritage Foundation now that Biden is in office, writing this, this is Daren Bakst from the Heritage Foundation article in October 2021, that starts this way:
It makes no sense to say “crony capitalism.
Yet, it has become common jargon, often used when policymakers load up legislation such as the Democrats’ $3.5 trillion tax-and-spend bill with crony policies.
Capitalism and our free enterprise system are concerned with individuals and businesses having the opportunity to compete on their own merits to achieve economic success and realize their own personal American dreams.
By contrast, cronyism places favoritism ahead of merit, giving special treatment to some individuals and businesses over others to give them an advantage over their competitors.
Simply put, cronyism is the antithesis of capitalism and free enterprise.
Adam: Yeah, I mean, it’s No True Scotsman, right? This is not real capitalism, this is crony capitalism, and 99 times out of 100 when they say that they mean when liberals want some kind of publicly subsidized pro market intervention. So it’s really just the sort of dumb civil war between capitalists, right? You need to be making more handouts to the coal and gas industry through tax breaks, but if you give them a contract to make solar panels, that’s merit based.
Nima: Right. That’s all. That’s all just merit and, you know, freeing people of unnecessary regulation, but if you actually have a contract then it’s cronyism. To discuss this some more, we’re now going to be joined by Hadas Thier, an activist based in Brooklyn, New York, and the author of A People’s Guide to Capitalism: An Introduction to Marxist Economics. Hadas is going to join us in just a moment. Stay with us.
Nima: We are joined now by Hadas Thier. Hadas, thank you so much for joining us today on Citations Needed.
Hadas Thier: Thank you, I’m really glad to be here.
Adam: So we want to sort of start off with the big picture as we oftentimes do. Now, obviously, the field of economics is not per se or by definition conservative, it’s theoretically value neutral, but as we’ve pointed out at the top of the show it’s kind of largely played out that way for a variety of reasons. Oftentimes, it’s even used by the far right, libertarians, et cetera. I wanted to begin the discussion by talking about the sort of reasons for this beyond maybe the kind of obvious that we’re fish swimming in the water of capitalism, so everything’s going to have that bent to it, you know, the range from left to right is typically kind of neoliberal to John Stossel, why women shouldn’t have maternity leave, I want to sort of talk about the ways in which that space has become kind of broadly conservative or broadly serves capital, and what kind of impact that sort of ideological production reproduction has had on the field of economics, let’s say over the past 50 years or so.
Hadas Thier: Right. Well, I think, so over the last 50 years, there has been a market shift and part of that is about how libertarian ultra free market ideas have been organized very systematically, they were on the fringes, but they were very consciously being organized on those fringes in places like University of Chicago, and so on. But I do think that part of seeing how that shift took place over the last 50 or so years, has everything to do with the needs of capital. So basically, the ideology that’s most supported, and most buttressed and enforced, and so on, are the ideas that match the needs of the capitalist class at any time, a sort of a big picture thing in the way that Karl Marx talked about the ruling ideas of any society are the ideas of the ruling class, because it’s the ruling class that has the means to fund them, whether it’s through the universities or elsewhere, and has the ability to enforce them. So in the way that, you know, in the 1930s and ’40s, coming fresh off of the New Deal, liberal Keynesian ideas were dominant at that time, and they were dominant, again, because capital really needed them to be dominant, you know, we had the complete bottoming out of the economy during the Great Depression and just complete devastation had ideologically undermine free market principles, but also capital really did need something else. So those ideas kind of suited the American ruling class at the time, and, you know, that changed. So these kinds of libertarian ultra free market ideas were part of leading a backlash against New Deal policies, you know, the way that Milton Friedman put it was like, ‘You need to have ideas that are lying around, so that when the moment is ripe, the politically impossible becomes politically inevitable.’ So I think that that was really kind of what we’ve seen, right? Roughly speaking, once New Deal policies, not only became unnecessary for capitalist survival, but were an impediment to increasing profitability, then those kinds of more libertarian ideas became more appealing and they were able to lead, I think, a broader conservative coalition against New Deal economics. So you had, you know, even just within the framework of a Red Scare, you know, rooting out more progressive economists out of both academia and the government, and then conservative economics becoming ascendant, really, from the ’50s, and then taking on new form in the 1980s, and kind of the neoliberal world order that came about at that time.
Nima: One thing that I’d love to hear your thoughts on is the idea that economics as a field of study, as a concept kind of unto itself, is a science, is a cold, rational, almost academic exercise unconcerned with emotion, and this idea that you can just kind of study or understand economics or even further organize your entire society around quote-unquote “economics” or “the economy,” an economy oftentimes comes with another idea embedded in it kind of implicit to it, sometimes glaringly explicit, but also quite gendered, the idea that the economy is set up, ordered, operated by serious men making tough choices in our imperfect world. Now, how does this idea, this kind of, you know, cigar-filled back room is how the economy operates, but it’s also very cold and rational, right? It’s not human beings making concerted decisions. How does this supposed detachment from emotion help make some of the crueler elements of the economics of our time, of the profession of an economist, how does that kind of almost embedded cruelty, gendered cruelty often become more palatable?
Hadas Thier: Yeah, absolutely. I mean, well, first of all, everything is political, economics is political, science is political. So to say, well, economics is just cold, hard science, well, science is not cold hard science, as we can see during the course of the pandemic, obviously, and through many other examples. So that whole idea, I think, is a fallacy. But I think, in particular, this idea that you’re kind of drawing out, that it’s, well, there’s nothing we can do about it, it’s just how it is and it’s this neutral, cold free market, you know, is basically just an excuse for outrageous inequality and complete devastation of people’s lives. You know, the fact that we have death via poverty on a mass scale, during a time in history where we have the productive capacity to food and shelter and clothe the world’s population many times over, it masks the fact that that’s a political decision, the fact that we have the means to feed, clothe, and shelter the world’s population, and yet, we choose not to, and I’m saying “we,” I don’t mean me and you, but I mean the political elite status quo, et cetera. This is a political decision to not organize our economy, to not organize distribution in such a way to actually meet those needs, that you would have millions of children dying of hunger every year, that’s unfathomable that that would happen when it doesn’t actually need to happen, and so you can kind of behind the cloak of a cold and calculating market, you can say, ‘Well, that’s just how it is.’ So you either have to admit this is a political calculation to enrich the few at the expense of the many, or you hide behind that kind of veneer of a rational market, which is not just the newest, libertarian idea, but it goes back to the foundations of classical economy and Adam Smith’s Invisible Hand. Some people play by the rules, they get ahead, they should be rewarded, and then other people, the implication is, either did something, or they didn’t do enough of something else, to be worthy of having access to ample resources, or to enough resources to survive and thrive.
Adam: Yeah, because this is fascinating to me, because there’s a similar social and psychological dynamic that our previous guest, Alec Karakatsanis, has talked about in the legal profession that for sort of decades, lawyers were seen as being instruments of a system that was sort of cold and harsh, but they were sort of dysfunctionaries and their job wasn’t to really question the kind of bigger picture, that someone was getting 10 years in jail for or you know, in prison for stealing hand soap because it was their third strike or whatever, that that’s what the people voted on, that’s just what it is, and ‘I’m just doing my job.’ It’s a system in place and the kind of human face, and it’s actually not only do you ignore the human stakes in a lot of these conversations, but it’s actually considered a virtue. You see this a lot with the way people talk about the Supreme Court, right? They’re sort of above the fray, we’re all just buddies, we all drink afterwards, after we decide the fate of 15 million women in Texas who can no longer have an abortion, et cetera, et cetera. I’m kind of fascinated by this dynamic because you see this play out a lot in economics, they’ll sort of say, ‘Look, this isn’t something I think is good or bad it’s just where the numbers lead me,’ there’s this mysterious because it sort of offsets the responsibility onto this mysterious algorithm or formula, and one of the things that we’ve talked a lot about in these episodes, is this kind of psychological dynamic, and one of the things, you know, you take econ 101, in high school or college, they’ll say, here’s the inputs into the model, and you’re really not supposed to challenge the inputs. The inputs are just the inputs. They’re what they are, right? And of course, if you create a model, and you create a bunch of inputs, and you skip past the ideological implications or assumptions of those inputs, then naturally it will lead itself to certain outcomes. So I want to talk about, if you don’t mind, how do you sort of condition that kind of psychology of disinterestedness in the axioms themselves? And again, I know this is a general statement, I know there are plenty of economists who don’t do this, but as a kind of professional norm and norm fetishizing.
Hadas Thier: Yeah, I mean, I think that the field of economics, maybe more than any other field, the mainstream of it is about defense of the status quo. So, I think that connection is really right, you know, whether it’s a law or it’s the free market, the question of, well, who makes these rules, and for whose benefit? I was at this forum this past weekend that was organized by the Hannah Arendt Center at Bard and the Mercatus Institute, which is sort of like a free market, academic institute.
Adam: And George Mason, right?
Hadas Thier: Yes, exactly. So they co-sponsored this forum on socialism versus capitalism, which was fascinating, and we kind of got to butt heads a little bit and argue with people that are the so-called experts of the pro-market policies and so on.
Adam: I’m sure they were charming.
Hadas Thier: Yeah, you know, some of them are very nice people, but the underlying assumptions of all of these arguments were just phenomenal. So, one of the things that came up was around housing, and so one of the pro-market participants was defending evictions on the basis of, you know, there’s nothing violent or coercive about it, it’s just the state is enforcing the rules of the game, and it’s just, that’s all it is, it’s the rules of the game, just like a hockey coach would enforce the rules of hockey, and of course, leaving aside the fact that, obviously, the rules aren’t enforced equally, you know, landlords that preside over rat infested buildings, gas cut off for over a year, I was just speaking to a couple of tenants a couple days ago, about their building where they haven’t had gas in their building for over a year. You couldn’t get the building taken away from the landlord, despite them breaking these rules, just to even sue them is this incredibly arduous task. Whereas to evict tenants that’s just well, enforcing the rules of the game. But it really gets to, what are these rules, who made them and who benefits from them? And the free market myth is that the market kind of operates outside of the state, or even in opposition to the state, in this kind of voluntary free space, but in reality, the market depends on the enforcement of property rights for the landlords or intellectual property in the case of, you know, drugs and vaccines, and so on, and so forth. The rules are incredibly skewed, and that’s something that I can’t get into the psychology in the minds of conservative and libertarian economists, and mainstream economists and so on, except to say that the entire field is sort of based on perpetuating the status quo, and that’s what gets advanced whether it’s in the universities and academia, and that’s what gets advanced, in terms of who winds up as the advisors, and the, quote-unquote “important people” in creating policies.
Adam: Yeah, I mean, again, not to be too reductionist or material, but there’s just, I mean, the simple reality is there’s just a shitload more money telling rich people what they want to hear than there is the other thing, right? I mean, that’s just the reality of it. Even with academia as some kind of buffer that there’s, being a mercenary economist pays well and that’s a huge part of it obviously, that’s why you see the 1970s, especially early ’70s, there started being so many right-wing think tanks that emerge because that’s a way you can basically shove a lot of these PhDs into a track that’s more ideologically, you know, sort of transparent.
Nima: Thought leadership, Adam.
Adam: Yeah, it’s basically a more elegant way of bribing a bunch of eggheads to tell you, you know, here’s this line on the graph and here’s why poor people have to die, you know, ‘Sorry, it’s just the line in the graph.’
Adam: ‘The poor people dead graph. I don’t know. It’s just the way it is.’
Hadas Thier: Right, exactly, and who is it that gets brought on to the television networks to be the experts and, you know, who gets promoted there and who owns the television networks. Those are all part of the framing of the whole thing.
Nima: We’ll hear more from Hadas Thier next week when we get to our next five economic thingamajiggy terms. To recap, the ones that we talked about this week, of course, there was the capital “T,” capital “E” “The Economy,” we talked about “most economists agree,” of course there was “it’s just econ 101,” “wage inflation” and “crony capitalism.”
Adam: Yeah. So like you said at the beginning, we sort of don’t want this episode to be a broadside against economics as such, I think it’s more about the isms, the sort of clichés that emerge around the mystical art of economics, rather mystical science, and of course, we have this supposed objective clergy class who’s simply interpreting the inscrutable text for us.
Nima: And then we get shorthand in the media so it all kind of, it’s a vicious, I’m going to call it a spiral.
Adam: It is a bullshit spiral.
Nima: Yes, but we are excited to delve into our final five economic talking points, tropes and thingamajigs next week when we will again be joined by our guest Hadas Thier so stay tuned for that one. But until then thank you everyone for listening. That will do it for this episode of Citations Needed. Of course you can follow us on Twitter @CitationsPod, Facebook Citations Needed, and become a supporter of our work through Patreon.com/CitationsNeededPodcast. And as always, a very special shout out goes to our critic level supporters through Patreon. I am Nima Shirazi.
Adam: I’m Adam Johnson.
Nima: Citations Needed is produced by Florence Barrau-Adams. Associate producer is Julianne Tveten. Production assistant is Trendel Lightburn. Newsletter by Marco Cartolano. Transcriptions are by Morgan McAslan. The music is by Grandaddy. We’ll catch you next time, everyone, thanks again.
This Citations Needed episode was released on Wednesday, December 1, 2021.
Transcription by Morgan McAslan.