By Dan Kervick
Brad Delong, after taking appropriate and honest notice of the badness of today’s job report, then goes on to muse despondently about the way future historians will assess the performance of our present leaders:
Twenty years from now, young whippersnapper economic historians will come to interview me.
They will ask: “Why don’t you think Ben Bernanke was the worst Fed Chair since the Great Depression–worse even than the hapless G. William Miller–because of his failure to understand even one of (a) the implications of the pre-2008 growth of leverage, derivatives, and shadow banking; that his job in the summer and fall of 2008 was not to curb moral hazard but to prevent depression; (c) the goals of his dual mandate; the structure of the economy he was managing; and (e) how to mark his beliefs to market when the economy did not evolve as he had predicted?”
What answer am I going to be able to give?
What was Barack Obama thinking? What was Tim Geithner thinking? What was Ben Bernanke thinking?
What is Barack Obama thinking? What is Jack Lew thinking? What is Ben Bernanke thinking?
Characteristically for contemporary professional economists who are deeply embedded in the Democratic Party, DeLong pins the largest share of blame for ongoing economic failure on Ben Bernanke. But I have a different take on the kinds of questions the whippersnappers of the future will be asking about the economic policies – and economists – of the early 21st century.
The young whippersnapper will first note that Ben Bernanke engineered a staggering expansion of the Fed’s role, maintained near-zero interest rate policies despite significant pressure to reverse them, returned tens of billions of dollars to the US Treasury in an attempt to give the political branches the political space to conduct aggressive fiscal expansion, and carried out an extremely aggressive policy of unprecedented asset purchases – to little avail.
So our curious whippersnapper will then wonder why so many liberal economists invested so much intellectual effort in an obsessive campaign on behalf of a failed neo-monetarist paradigm, despite years of mounting evidence on the limited efficacy of central bank tools. They will wonder why these liberal economists continued to deflect attention away from the massive political failure of elected leaders and toward a futile “push harder on the string!” campaign aimed at the conveniently unelected scapegoat Ben Bernanke. They will wonder why liberal economists were not out front-and-center calling for a return to fiscal activism, and for the deployment of the vast, untapped potential of the national government to hire up the desperate and struggling masses of the unemployed, underemployed and working poor, and to put them to work restoring prosperity, building our future and saving our planet – and achieving more personal prosperity, self-respect and security in the process.
And then the persevering whippersnapper will entertain some uncomfortable questions about the retired generation of liberal economists. Could it be that these liberal economists were compromised party hacks who placed subservience to the plutocratic political aims of their corrupt and incompetent party leaders above any real commitment to social justice, human liberation and broad prosperity? Could it be that these liberal economists were just as deeply committed to preserving established hierarchies of wealth, private power and institutionalized inequality as their conservative colleagues? Could it be that they disdained democracy just as much as conservative economists, which is why they were so committed to placing macroeconomic policy responsibility with the operators of the blunt and undemocratic tools of a central bank and the parasitical financial sector it superintends? Could it be that they were firmly committed to helping their party’s leaders work with the opposition party to dismantle the few remaining parts of the economy that were socially organized? Could it be that they were just as firmly committed to helping the bipartisan political and corporate establishment reduce the once-vibrant social achievements of the past – universal social insurance and support programs that had helped create a prosperous, optimistic and expanding middle class – to a smattering of charity programs for poor people that can’t get in the way of the globalized and ungoverned titans of private capital and their relentless campaign of privatization?
And could it be that even well-meaning liberal economists of the early 21st century, themselves the architects of the inhumane and regressive neoliberalism that went critical in the crisis years following 2008, were too stewed in pride and dogma to reverse course, admit failure and re-imagine a future of human progress based on equality and democratic empowerment?
Of course, the coherence of this thought experiment depends on indulging the fantasy that the whippersnappers of the future will still be interested in, or have the resources to study, obscure fields such as History – which 20 years from now will probably have been reclassified by the banks and corporations that own everything as one of the intellectual luxuries of a decadent past, things that people did with their minds in the dark old days when they ran their own societies, went to schools run by their fellow-citizens and didn’t all work for hierarchically structured and democratically unaccountable corporations. It assumes they will still be interested in asking their elders historical questions rather than skinning those elders alive for squandering the county’s democratic and economic patrimony and then handing its children over to the leviathan of private capital. It assumes those whippersnappers will still be free people rather than just the property of the plutocrats who first broke the world, and then inherited it.