Podcast / The Time of Monsters / Jun 21, 2023

Establishment Economics Is Under Siege

On this episode of The Time of Monsters, Marshall Steinbaum weighs in on the inflation debate and the elite’s wagon-circling.

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Time of Monsters: Establishment Economics Under Siege
byThe Nation Magazine

The debate over the causes of inflation is heating up and showing an important divide in the discipline of economics. Mainstream economists like Larry Summers blame it on rising wages and recommend interest rate hikes to cool the economy by raising unemployment. But other scholars, notably Isabella Weber of the University of Massachusetts, have a different theory: they argue inflation is due to price gauging made possible by the Covid emergency and the Russian invasion of Ukraine. Weber’s ideas, which are gaining traction, suggest the solution is price control.

The possibility that establishment economics is losing its dominance over policy is making some economists angry. There’s been a vicious backlash to Weber’s work. To talk about the inflation debate and other examples of heterodox thinking on the rise, as well as the circling-the-wagon approach of the discipline, I talked to Marshall Steinbaum, an economist at the University of Utah and a Senior Fellow at the Jain Family Institute. On this episode of The Time of Monsters, we range widely over the discipline of economics and the unseemly hissy fit of many leading practitioners. Marshall’s twitter account can be followed here

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US President Joe Biden delivers remarks on the economy and inflation in the Eisenhower Executive Office Building on January 12, 2023, in Washington, D.C.
(Kevin Dietsch / Getty Images)

The debate over the causes of inflation is heating up and showing an important divide in the discipline of economics. Mainstream economists like Larry Summers blame it on rising wages and recommend interest rate hikes to cool the economy by raising unemployment. But other scholars, notably Isabella Weber of the University of Massachusetts, have a different theory: They argue that inflation is due to price gouging made possible by the Covid emergency and the Russian invasion of Ukraine. Weber’s ideas, which are gaining traction, suggest the solution is price control.

The possibility that establishment economics is losing its dominance over policy is making some economists angry. There’s been a vicious backlash to Weber’s work. To talk about the inflation debate and other examples of heterodox thinking on the rise, as well as the circling-the-wagon approach of the discipline, I talked to Marshall Steinbaum, an economist at the University of Utah and a Senior Fellow at the Jain Family Institute. On this episode of The Time of Monsters, we range widely over the discipline of economics and the unseemly hissy fit of many leading practitioners. Marshall’s twitter account can be followed here.

Jeet Heer: [00:00:00] The old world is dying. The new world struggles to be born. Now is the time of monsters. With those words from Gramsci, I welcome you once again to the Time of Monsters Podcast sponsored by the magazine. This week we’re gonna pick up the sort of monster of inflation and the economic debate around it.

Larry Summers who had been a very powerful figure, treasury secretary an advisor to Obama and bill Clinton had said just last year that the threat of inflation is so large that one would need above 5% inflation. For a long time maybe like if you have 10% inflation for a year, or 7% inflation for like a few years, that would kill Ila inflation and What we discovered is that once again, Larry Summers is wrong.

The, the Fed did raise the interest rates and that inflation has been going down although it’s probably been going down for multiple reasons, but unemployment thankfully it hasn’t [00:01:00] had the anywhere near the severe rise that Larry Summers was recommending. So if Larry Summers is wrong perhaps there are other voices that are worth attending to.

And it’s very interesting that in the last few years there’s been a real interest in the general population and, but also in policy making circles and in even in the business community in sort of alternative Voices within the economic profession. The New Yorker recently had a profile of Isabella Weber a professor of economics at the University of Massa, Massachusetts at Amherst.

And she’s become a sort of very prominent voice of different way of thinking about inflation. One that emphasizes the world of pro price dodging that occurs. When you have a crisis situation, as with Covid and as with the Russian invasion of Ukraine. And that recommends not the sort of 10% unemployment that, again, Larry Summers was recommending this, this is his recipe, 10% unemployment.

But as he says, like, well, why don’t we try price control, you know, like, and go after the companies that are profiting [00:02:00] from inflation rather than like hurt workers. And the profile of the New Yorker by Zachary Carter did a really good job of showing how Weber is coming to sort of prominence.

And more people are listening to her. But this has sort of come at a kind of cost within the economic profession where there’s a lot of angst. Like why aren’t people listening to the, the great sages of oath like Larry Summers? Why are they listening to other voices? So, so stick all this up.

I wanted to invite on Marshall Steinbaum assistant Assistant Professor of Economics at the University of Utah and a senior fellow. At the Jane Family Institute. And he’s someone who’s like often engages in arguments with fellow economists and then thinks a lot about the way economics actually comports itself in the public sphere.

And, and it’s not the sort of idealized view of these beneficent technocrats who offer good advice and are attended to. So, so Marshall welcome. And do you wanna just start off by saying like, what are the arguments surrounding Isabella Weber? 

Marshall Steinbaum: Sure. Thanks Jed, for [00:03:00] having me. I’ve wanted to be on this podcast for a long time as a a very happy listener.

I’m glad to to be a guest and discussing one of my favorite topics, which is the epistemological crimes of my my own chosen profession and discipline of economics. To sort of describe the background of this inflation controversy As we all know, there was a lot of unexpected inflation as the economy kind of came back together during and after the Covid pandemic.

So a lot of shutdowns caused product production to diminish. And then when it kind of finally came back online inflation spiked. And I think that some scholars, like JW Mason had predicted that there would be a surge of inflation after the, the shutdowns came back online.

But it ended up being more severe than anyone thought. Now that was embarrassing to a lot of different people, but there was also a sort of whole like, Edifice in the economics profession that thinks inflation is the greatest sin that ever happened. And the main thrust of macroeconomic policy making is to prevent inflation from occurring.

That type of person [00:04:00] tends to be the type of person who predicts inflation, feather and Jan, no matter what the economic circumstances. So in particular, if you remember after the Great Recession, there were a lot of overheated predictions about, oh, inflation, you know, the, the monetary expansions that.

The central banks did in, you know, 2009 to 2000 12 and even ongoing until now, those would all be inflationary and that turned out not to be right. Yeah, yeah. No, I 

Jeet Heer: just wanna Yeah. Make the point that this is actually one way to look at this whole story, is the boy who cried wolf. Yeah. Because there was people including I think Larry Summers but have long been warning, like, you know, inflation is just around the corner.

It’s coming, it’s coming. And there’s a long period where inflation didn’t come. And then it did come after Covid you know, and the sort of stimulus spending. So the boy who cried wolf was proven right, but like, if you, you know, if you understand the story properly, that’s not a vindication of the boy Greg.

Low. No. Yeah, yeah, yeah. 

Marshall Steinbaum: That’s a, that’s a great point. Yeah. Yeah. So, so I would say like, Larry Summers is the greatest example of someone who was like, the moment that there was inflation was like, oh yeah, yeah, yeah, of course there’s gonna be a lot of inflation. We did too much.[00:05:00] Fiscal expansion, you know, there’s a backstory to why he was criticizing the Biden administration at that time, which is in effect that he didn’t have the job he wanted, I assume.

Mm-hmm. You know, he was in, in the sort of Trump administration, he was writing papers and making all sorts of moves that very clearly indicated he was vying for some sort of senior position. Yet again, since he’s had one in every. Democratic administration and living memory. And he didn’t get it.

And I don’t know exactly why he didn’t get it, but that was the backstory to him saying, you know, this is all vindicating my views, that you expanded too much and it’s all, you know, I, I think Gene, you’ve covered in past episodes the sort of phenomenon of the reactionary centrist who sort of feels the wokeness got out of hand that the left had had too much power in the public discourse.

You know, it from the late. 2010s up through the pandemic and the George Floyd protest. You know, Larry Summers is the sort of shining example of the economics caucus within the overall party of the Radical Centras. 

Jeet Heer: Yeah, I just wanna add two points to that. One is Larry Summers own formation.

You know, like he actually rose to prominence not in a [00:06:00] Democratic administration, but in a Republican one. He worked in the Reagan administration. And if you look at his writings he sort of cites Milton Friedman as a kind of very formative influence. And I think generationally Summers belongs to that generation of economists that were traumatized.

By the sort of 1970s stagflation and really like, came to see monism and the sort of, you know, punishing of workers through high interest rates as the sort of, you know necessary economic component. And you know, people who came later don’t necessarily think that way. The other aspect, I mean, you’re right about the job thing that like, you know, it’s a classic case of, you know, like if you don’t get a job in the government, you start criticizing it.

He actually, I think that there was like a you know political aspect to this in 2020, once Biden became the nominee. Summers was very actively trying to like worm his way back into power. Was like dropping hints that he’s an advisor to Biden and also trying to get his acolytes positions within the Biden administration.

This is [00:07:00] reported on with some excellent reporting in the American prospect. And that caused a lot of activist groups to like, you know, like raise the alarm and say like, we don’t want Larry Summers in the Biden administration. And, and I think. Patient, although they’ve had summers on as an as official advisor, someone they talked to, they have sort of kept a little bit of a distance and have not given him a job.

So this is actually like literally, you know Has no fury, like an economist burned. 

Marshall Steinbaum: Yeah. And, and it’s, it goes back a long way. Well, not that long. I mean, his career goes back a long way in in all the ways that you said in 2014. So, remember Obama reappointed, Ben Bernanke, who had been George w Bush’s fed Share first, so that was, I don’t know, 20 2009, 2010.

Then ber that second term of Bernanke was expired in Obama’s second term itself. And he nominated. A new person and Summers was very, very clearly gunning for that job. And he didn’t get it because of Elizabeth Warren and John Tester, I think. So there was an organized effort among what, you know, what little progressives there were in Congress at that [00:08:00] time.

In combination with other interests that Summers had screwed over the years to basically deny him the one job that he’s wanted his entire life. And his reaction to that was actually honey, not vinegar. So he spent the interim period basically cozying up to the left. You know, in so far as that exists in democratic politics, in order to have them, them not veto his position the next time around, and yet they did.

Mm-hmm. So you’re talking about the, the, the, the what must have played out in the personnel politics of the early part of the Biden administration. He is like, oh, all of my being nice and work for the last five years, now I’m gonna be mean. And so what we’ve seen the last two years is what you just described, which is, I didn’t get a job, so now I’m your enemy.

That’s right. 

Jeet Heer: That’s right. Yeah. And then so he did kind of like raise the alarm and a a as I mentioned, I mean like, you know he gained some cred. I mean, the rise of inflation was good for him in the sense that, you know, finally something he’d been warning about for like a decade. Right. 

Marshall Steinbaum: But as, as you rightly said, the boy, the, the moral of the story is not that the boy who cried wolf was vindicated when the wolf came.

That’s exactly right. [00:09:00] That’s right. So I, I think let’s, you know, talk about, and the, the you know, sort of alternative perspective that she’s put forward and how this con latest controversy arose. So her view was basically the, the macroeconomic facts are not consistent with the type of inflation that comes from overstimulated demand that Larry Summers was saying was ex was why there was inflation.

In fact, it was more specific to certain sectors of the supply chain and due to the scarcity of certain factors. So it’s more microeconomic price increases due to scarcity than macroeconomic across the board inflation due to excess demand. That’s the basic thrust of, of Weber’s theory. And.

Right. You know, pretty much immediately when she you know, first voiced this in public, you had exactly what Carter describes in the New Yorker article, which was a bunch of economists saying, you know, basically saying she was, you know, so far out of the mainstream, her policy recommendations were beyond the pale.

Let’s all come together and link arms to you know, burn the witch, basically. And it turned out that she was right about what causes [00:10:00] inflation. And so that’s created this. You know, first of all, created the circumstances for Carter’s new Yorker profile, saying she’d been vindicated. But now there’s this sort of second round of economists, you know, having not gotten their way in marginalizing this person and her theories, you know, being.

Even more aggrieved you know, to have that basically rubbed in their face, which is what Carter did. So that, that’s the backstory to the, the current bruhaha. 

Jeet Heer: Yeah, yeah, no, that’s right. And I think the we can maybe sort of put out some, you know, names. I think one prominent person is the sort of sub stacker Noah Smith.

And there’s been a few other people and the, to. Like not personalized, but maybe set up the generic complaint. It seems that a lot of the focus is on media coverage. They’re saying that the media is elevating sort of fringe heterodox voices and ignoring. The sort of mainstream consensus of the profession and that good media coverage of economics should be focused on the sort of, you know, consensus view.

And [00:11:00] there seems to be a, sort of a larger concern as well about the sort of status of economics that this is a, an attack on the discipline or the discipline is gonna be undermined. If these heterodox voices have alternative roots to get their, getting their voice out that they’re not that, you know, you don’t just achieve status in economics by publishing an article, but like, if you could have a think tank or a magazine or people on Twitter or a ck promoting your ideas then you can somehow you can get the voice your voice heard and listened by policymakers and.

There seems to be a sense that this is a threat to like good technocratic policy making. Do you think that’s a fair, fair summary of the critique? Yeah. So, 

Marshall Steinbaum: so bef I, I do think it’s a fair summary of the critique before getting into the meat of it and why it’s wrong. I also want to name a few more names and point out hypocrisy though.

Pointing out your opponent’s hypocrisy is hardly the most robust debating tactic. There’s a economist at NYU named Christopher Conlon, who is a industrial organization economist, meaning studies market power.[00:12:00] He is one of the few economists I would say who engaged in and criticizing Weber’s theories prior to the.

Current Bruhaha. And his wife is Washington Post Car columnist Katherine Ramp pe. And she wrote a column in this first go round of criticizing Vapor, essentially channeling her husband’s theories in the, on the pages of the Washington Post op-ed page. So the idea that it’s sort of unfair competition for Vapor to get coverage in the New Yorker when all these, you know, Stu studious serious economists are in their academic ivory towers, churning out extremely robust papers, but don’t have the same kind of pipeline to To the media that we do.

So like, look at how unfair it is that they’re winning the public debate. Like it’s just not true. The mainstream has plenty of pipelines to the media, you know, they go through the, their literal households. So you know, it’s, it’s not some sort of unfair competition. And Larry Summers has been getting himself quoted on, in news articles and all over the financial press for his entire life, and certainly over the last two years.


Jeet Heer: Yeah. I don’t think that, that, the problem is that [00:13:00] Larry Summers does not have a prominent enough voice in public discourse. Right, right. Or that he’s treated too critically far from it. I think there’s a lot of critiques. What could make of summers that strangely don’t get aired? Whenever he’s interviewed on you know, national television, CNN.

Or the New York Times. Yeah. 

Marshall Steinbaum: Yeah. So, you know, as I said, it’s, it’s not a factual critique to say, oh, it’s unfair to somehow have a pipeline to the media. And I thought, you know, the sort of definitive response to that aggrieved Posture, that was the one that you gave GED on Twitter, which was in effect, there’s a reason why there’s an appetite for orthodox theories that are not espoused by mainstream economists is cuz the mainstream economists are wrong.

You know, they haven’t put forward a convincing alternative theory of inflation. And so consequently, like when you have an establishment that has all the credentials but repeatedly falls flat on its face you know, you get people seeking alternative sources of expertise, whether those are cranks and imposters or.

Actually people with good ideas. And you know, in my view, I think vapor definitely falls in the latter category. [00:14:00] But the economists should ex engage in some self-criticism in seeing how this state of affairs came about and not simply, you know, kind of whine and groan and point fingers elsewhere. 

Jeet Heer: No, that’s right.

And what can point to a sort of larger historical pattern, which is that sort of heterodox ideas tend to flourish in times of economic crisis when the sort of, you know, mainstream consensus can no longer explain things like, you know, the 1890s when the sort of, you know, the idea that the gold standard is pillar of the economy.

You know, like, well, if you’re like a farmer out in America, you know, you see that the gold standard is actually driving you into poverty. You’re, you’re gonna look for like alternative ideas as the populist did. The 1930s you know, the, a widespread crisis and you had, you know, peak economists at Harvard.

Saying, well, you know, there’s no such thing as like unemployment. That if if wages go low enough, right? And then people had eyes and they could see that they were riot, like, you know, like a vast reservoir, army of like hobos traveling the country [00:15:00] because they were unemployed. And so the people start to look for alternatives some of which are cranky, like social credit some of which are much more credible like keynesianism, but what you were treated by the mainstream as cranky, right?

Like if you went to those Harvard economists, they would say, you know, like Keynes social credit, that’s all giver. And again, in the 1970s I think is a very interesting in some ways Example of all this because sort of stagflation and the sort of crisis then you know, like allowed both sort of, I think an excessive monetarist view of macroeconomics to take place, but also things like supply side economics, which I, you know, I do think are, you know, cranky solutions, but they, they flourish because of the crisis.

Of the mainstream. So yeah, I mean, I, I just generally think like, if you’re looking at these debates, you know, you should have put view ideas as separate from the material reality that, you know, people around them. Like, like I, you know, I sort of come from this tradition that sees like, you know, you have the sort of, you know, the base of economic experience and this [00:16:00] epiphenomenon of ideas that people create to make sense of that experience.

Marshall Steinbaum: Yes, and I, I think this is a good opportunity to sort of characterize and then criticize a particular mindset of self. Self told his intellectual history on the part of economists, which is in effect that the field of economics itself assimilates these critiques in a whitish direction. So you have these events in the real world that disprove.

Previous theories those events give rise to new theories that better explain those events. And overall, the intellectual history of the economics profession is an upward march of progress and understanding that you know, so, so the self told inte intellectual history of moist macro economist from the sixties and seventies is we had all these theories about cism causing over.

Heated economy and excess demand leading to inflation, then that’s what happened in the 1970s. And so we were proven right, and thus we took over macroeconomics, and keynesianism became fringe and heterodox. I do not view the intellectual history of the discipline in, in any r anything remotely like those [00:17:00] terms.

It’s all contested by. Political considerations as it’s happening and in some sense before it’s happening. So I think that the moist takeover of macroeconomics was in some ways for ordained by the breakdown of the New Deal order in the 1960s and see, see, seeing that somehow vindicated in the 1970s stagflation.

I mean, I think Kim Phillips fine writes about this extremely well in her more general history of the conservative movement. Visible hands and as well as her book about the New York City financial crisis of the mid 1970s is you have all these sort of conservative policy entrepreneurs circling the New Deal consensus like vultures and saying, aha, this is our chance to move.

And that’s what brings something like monetarism or more broadly the, the sort of conservative takeover of like law and economics and all these different subfields of economics. Not just macro, you know, the macro economists wanna say, oh, it was because the events vindicated are theories.

But really it was cuz the, the intellectual edifice and movement building had been done in the preceding decades such that they were ready to [00:18:00] pounce and, you know, feast on the carcass of keynesianism in the seventies and 

Jeet Heer: eighties. Yeah. No, that’s right. That’s right. And again it does sort of hit the boy who cried Wolf bottle in the sense that, you know, going back to the 1930s, there’d been these sort of warnings of sort of like inflation.

And then like, you know, my understanding is that what happened where there’s a particular conjuncture of events the Vietnam War and the way that Johnson and Nixon. Decided to hide the financing of that war. And coupled with the oil shocks and the sort of the dollar shock, you know, like led to this inflation.

But the people had been like wanting to undo the new deal order. Like they, they, they seized on an opportunity that they had been waiting for, for a long time. So I think, I think that’s an excellent point. It’s interesting that like the, in the current sort of juncture. In trying to send a sort of fend off heterodox ideas and trying to sort of shore up you know, like a very troubled orthodoxy.

There’s a kind of almost a creed of professionalism of economics that’s sort of being put out there. You and that’s kind of used as the [00:19:00] shield for challenging people like Weber. Do you wanna like, maybe talk a bit about that and who are some of the people. Doing 

Marshall Steinbaum: this. Yeah, yeah, absolutely.

I think this is an extremely interesting phenomenon, and in thinking about this in light of the controversy over Weber, I, I was trying to sort of think of a a model or metaphor from another field. And in fact, your own episode in the last couple of weeks about the Auto Dealers Association, I think is a very good metaphor for what the or example of what the sort of professional creed among economists is.

Likewise, I would. Highlight like cop unions, you know, that get a lot of attention obviously in criminal justice and social reform circles as just this like stark edifice standing in the way of any progress that clearly has its own prerogatives, has its own inward looking professional identity and will absolutely engage in collective action in order to protect those prerogatives.

You know, this is the kind of like worst. Negative some like craft unionism or guild operations, that economics as a creed, decries. So, you know, if you read Adam Smith, it’s like, oh, the [00:20:00] guilds are you know, the impediments to capitalism. We have to break those. And that is very much the attitude, the official attitude of economists towards others, other examples of them.

So, like on the auto dealers episode, you made some comment like you and, and Alex, who you’re interviewing said You know, they, there’s little attention to the amount of power that these people wield over local economies you know, using the apparatus of law to, you know, protect their prerogatives.

It is actually economists who have gone to battle with them basically on behalf of Tesla. So there is some attention to that. You know, the economists as a creed do not like the auto dealers as a creed. And the idea that there’s this protectionist apparatus preventing any competition is like very familiar to economists and criticizing others.

My point would be that is absolutely the ex the same social dynamics going on in this sort of professional prerogative defense on the part of economists and an interesting aspect of it. So I mean, you said like, let’s name some names here. So there’s certainly Noah Smith who’s kind of like, to my mind, the part of the iceberg tipping up, you know, that, that, that is apparent above the surface of the ocean.

You [00:21:00] know, representing something 10 times as large underneath. No, I thought Jason Furman, who’s a former senior economic policymaking official and Democratic administrations now a, like clinical professor at Harvard or something like that, some appointment. That means he he teaches at, at a, you know, the fanciest university in the country.

You know, he has also engaged in this. In particular, he had a review. I mean, he, he does this regularly, but I thought he gave a very telling review of. Beth Pop Berman’s book, thinking like an economist last summer when that was published, which basically said you know, here’s an intellectual history of the profession, but it doesn’t give us enough credit for the scientific advancements that we’ve made over the years.

You know, the wig intellectual history I was referring to earlier. And that is, You know, basically using the research that actual economists do as a human shield to protect against any kind of critique perceived to be coming from outsiders. And, you know, that’s what’s been going on with the critique of Carter’s profile of Vapor.

You know Noah Smith’s first response to it was, [00:22:00] you know, basically, you know like twofold. One was, well, you know, she’s an outsider. So of course we don’t take her seriously, which Naturalizes. The outsider insider distinction, it’s like, oh, the field must be meritocracy because, you know, if her ideas really did have value, she would be on the inside, but she’s not on the inside.

Therefore, her ideas must not have value. And secondly, you know, Noah went around, you know, so Carter had said, well, VA’s policies had, or VA’s prescriptions had had a major impact on natural gas policy and, and energy policy in Germany. You know, Noah went to talk to some German economists.

We were like, no, no, no. Actually we did the opposite of what she said. We didn’t do a price cap, we did something else, which is basically more favorable to industry than a price cap. So actually Vapor did not get her way. You know, Noah not. Realizing, or at least not, you know, certainly not sharing with his readers.

The fact that those people he interviewed definitely have a vested interest in making it seem like what they did was orthodox policy and they didn’t do price controls. Instead they did this other thing that isn’t, that comports better with economics, orthodoxy, whatever that other [00:23:00] thing is. You know, people who are like economists who are in.

Position of influence are always going to say like, oh, it was our orthodox correct ideas that one out in the end. And these fringe people on the outside had no influence because look, if, as I said, if they, if their ideas were any good, they wouldn’t be on the outside and in, in the, to begin with.

They’d be on the inside because economics is a free marketplace of ideas that’s perfectly competitive and blah, blah, blah. So I think I, I think that sort of like craft union like point of view on the part of professional economists is very interesting in its own right. I mean, as a professional economist, I don’t subscribe to that.

Like viewpoint at all. In fact, I think in so far as I’ve had success as conventionally defined as a professional economist, economist is precisely by being on the border of what, what’s considered, you know, acceptable to say or not. But in being on that border, what I have seen time and time again is that what counts as the border of the discipline is solely.

Ideological that is mainstream. Economists are gonna say, [00:24:00] you’re on the inside. If they agree with you ideologically, and they’re gonna say that you’re on the outside. If they don’t agree with you, ideolog, ideologically, there’s no other derate. So it’s not the quality of your research or or anything else that qualifies you.

And if that’s how the borders of the discipline gets set, it’s not really a social science. It’s really an exercise in, you know, political coalition building or, or line drawing where, you know, We are a political party trying to get our ideological view instantiated into law. Not we are the people who study the economy as a social and natural phenomenon.

Trying to figure out how it works. And I think that, that it’s exactly this kind of posturing that tells you kind of what the, is really going on behind the scenes. You know, which is, as I I just described it. Yeah, 

Jeet Heer: no, the, the, the that’s right. The insider outsider thing reminds me again of something in the sort of Larry Summer’s career which is in the autobiography of the Greek former Greek finance minister of Finance Giannis ver Veru faus who wrote about how la at some point during the Greek crisis summers, [00:25:00] Took him aside and said, you know, you have to understand you know, like the choice you have to make is, are you an insider or you’re an outsider?

Are you gonna play the game and and then be looked back? Or are you, you know, gonna be join the rabble and oppose the status quo and not have your voice attended to. So I mean, that is the real. Of all this as, 

Marshall Steinbaum: yeah, and it’s, I mean, contra what Furman said in his review of pop Herman’s book about the intellectual history of the economics profession, you know, that is what determines the success or failure of ideas within the field of economics is.

You know, that kind of real politic, and he’s Fermin and, and Smith and all these other people are very aggrieved to say that anything else matters other than the quality of the ideas or your research. But I’m sorry to say, the empirical evidence definitely does not uphold their hypothesis. 

Jeet Heer: No, that’s right.

And but I, I, I do wanna say though, that. I don’t want like our cri my critique or, and I don’t think your critique either to be seen as a critique of the disciplinary work that has to be done. Like I [00:26:00] actually do think there’s an immense amount of value in economics and other academic disciplines in having things like peer reviewed in training scholars and going through, having people that know the literature and can debate within the literature.

And you do actually make real advances in knowledge. In that way. I, I think that’s all very important and I think it’s very important for society to maintain that and to defend that. But, you know, having said that, like once these, you know, ideas are debated, you know, within the field, like that is not what settles their fate.

What settles their fate is these larger like extra academic issues of, you know, coalitions power media roots. And this is something that exists. They get to emphasize on all sides and the, the people that are, you know, criticizing heterodox, heterodox economists for like, cheating by, you know, publishing in newspapers and by lobbying and getting the ear of some politicians and makers.

I mean, that, that, you know, that’s like everyone does that, and that’s actually [00:27:00] how, that’s the only way like economics can manifest itself. In actual policy because, you know, like we don’t actually have like, you know, Plato’s philosopher gangs setting policy. We have like, you know, like semi democratic regimes where you would need to have some mediation and some pathway from ideas to policy.

Yeah, I 

Marshall Steinbaum: mean there are a ton of important points are rai you, you raised just now. Obviously I wouldn’t be engaged in the work that I do for my entire life if I didn’t agree with your point that there’s some value in the scholarly inquiry and it should be protected and it’s structures such as peer review do serve an important function.

I think if you agree with that as I do, then. You would think it is not great to have somebody like Noah Smith or Jason Furman out there saying, you know, using real economists as their human shields and saying, no, this is all about ideological defense of the mainstream because that discredits the Scho scholarly inquiry.

You know, that is not a, a winning PR strategy if what you’re trying to do is protect the discipline of economics as [00:28:00] a real social science. If what you wanna do is. Exile all the people who mu ideologically disagree with, though that’s a great PR strategy. So the fact that some economists sign up with it and think that, that the Noah Smith and Jason Furman’s of the world are doing them a service by acting in that extremely sort of self-interested, like self-motivated guild type action in public where, you know anyone who’s not already.

Convince is gonna see that and say, oh, these people are just a bunch of car dealers protecting their profits. You know that you know, if you don’t want that, then, then you would want to raise up the value from the scholarly inquiry. I think the point about like what other, how do ideas make it from the sort of scholarly edifice into the, the policy mainstream?

That is a super important question. So as we’ve talked about already, you know, there’s this sense of grievance on the part of the Jason Furmans and Noah Smiths, that somehow the heterodox economists are cheating. That is how heterodox ideas ever get kind of heard in the political realm. And that is healthy as far as I’m concerned.

It also sort of [00:29:00] doms them. I mean, there, the. You know, the, in, in the sa same sense that the auto dealers and the cop unions are there, kind of regardless what happens. You know, it’s the, the so are the mainstream economists. So yes, it’s possible to get around them. It’s not that they always get what they want a hundred percent of the time.

They, their gatekeeping is not Perfectly effective in every case. But no matter who gets around them, they’re still there and they’re still getting what they want. So that’s why it’s like the cop dealers and the auto, the cop, that’s why it’s like the cop unions and the auto dealers is like, no matter the, you know, you can have a municipal election where the enemies of the cop union wins, but the cop unions are still gonna get what they want.

They just. Step stand there, don’t move. And eventually they know the political winds will change. Like, that’s what it means to have power. All of these organizations have power. The mainstream economists have power. You know, insofar as like there’s an aspect of the Carter piece in the New Yorker that you know, says, oh, Weber’s ideas are now having influence in the mainstream.

Noah’s right in, in critiquing that it’s not really true. It should be [00:30:00] true, but it isn’t true. You know, Carter kind of told an over optimistic story that that in some ways mimics the ishness of self told intellectual history on the part of economists like I. VA’s out of the club. She is never going to have influence in the mainstream.

She has been tarnished by this entire controversy in the sense of like you know, she’s doing perfectly well professionally herself, and her ideas are having influence in the policy world, but it’s not like that is going to. Alter the structure of mainstream economics or cause her ideas to be taken seriously therein.

Anything that gets tarred as greed. Deflation, which is the name calling that Noah and Chris Conlin and others engaged with when vapor first came on the scene, you know, that that means you’re not one of the club. So it means you can’t say that if you want to be in the club. And there’s always going to be a tendency of the club to suss out any slight hint of quote unquote.

Reinflation in order to determine whether someone’s allowed in or or excluded, and that’s gonna be the case forever. So these [00:31:00] alternatives are not the same thing as the establishment. They’re ways of getting around the establishment. They don’t really draw the establishments power into, into question in any, in any fundamental sense.

So, and, and, and I wanna say one more thing about that. You know, both Carter and Weber have been part of the sort of like progressive nonprofit industrial complex in the sense of widening the debate, the, the scope of like what’s acceptable ideology in economic policy making. Parts of that world and I used to work in it myself, are like very oriented towards getting the mainstream to say that what you’re doing is good economics.

So I wrote about this again in my, my review of Beth Pop Berman’s book and, and critique of Ferman’s review of it like. There’re, there’s all these organizations that are basically, like, what they’re trying to do is get fancy economists at the top departments to say whatever it is that some democratic administration wants to do is good economics.

And they think that’s gonna somehow inoculate them against a right wing attack. You know, from, from, you know like explicitly right wing coded economists. [00:32:00] I don’t think that’s a very useful endeavor. And it’s certainly not a useful endeavor if what you’re trying to do is actually change what the mainstream is talking about because that, that kind of institutional attitude is gonna have you supplicating to mainstream economists to try to get them to give you what they want, what you want, which is their imprimatur.

And you know, now they’re just gonna say like, Weber’s greed, deflation doesn’t have our imprimatur. Or, you know, maybe the amount of money that’s coming out of these progressive, nonprofit, industrial complex organizations is enough to bribe the Economist. Not to say that somebody else, that those organizations are upholding and, and pointing to like, It’s enough to bribe the mainstream economist, not to say, oh, she’s outside the mainstream.

But it’s not gonna change the mainstream in and of itself. And my frustration of working in these organizations is basically they’re not, you know, because they have that attitude of supplication and needing the mainstream imprimatur, they’re never going to do anything that really does. Shift power within this you know, the, the COP union and the Auto Dealers Association, the equivalent of the academic equivalent of those organizations, cuz they’re [00:33:00] not, they’re fundamentally not interested in challenging their power.

That their power, what they’re interested in is supp, is supplicating to it. And, you know, creating a, a what in their mind is a grand coalition. And of course an organization like that, if they get invited into some sort of grant coalition, they’re gonna say, okay, yes, we’ll be in your coalition on the co on the.

On the condition that we get, everything we’ve always gotten and that we’ve always wanted. And, you know, if you’re powerful enough, you get that when you wanna be drawn into the Grand Coalition. And that is ultimately what’s gonna happen with the economics mainstream vis-a-vis these you know, supposedly subversive organizations.

Yeah. No, no. 

Jeet Heer: I, I, I think that’s right and I mean, I, it is hard to think about what could actually change that, you know, sort of a broad sort of social revolution. But I mean, this is worth thinking about, yeah, I mean the dangers of being a sort of rador organization or in the case of the Democrats, a Rador party you’re asking for to be a junior partner.

Of in, in the task of governing. And there’s a, a much broader sort of critique. It has to be said, like, you know, like, I think a lot of these heterodox [00:34:00] ideas, you know, they vary in quality. Some are better than others but I think they’re both sort of necessary, but they’re also still working within the ambit of liberalism.

And they’re still you know, like aimed at as her reformist agenda and not thinking beyond that. But as VA herself said, like, you know, she thinks, you know, like One reason to think about things like price control is that we’re probably likely to have more and more crises in the future.

That the sort of, you know, the Covid and the Ukraine war, like, you know, that’s like sort of a dress rehearsal for what we’re, you know, might see in the future. Especially with things like climate change. And if that’s the case then then the sort of ambitions of heterodoxy might have to like enlarge.

But, but that’s a, you know, I, I always like to try to end on a little bit of a hopeful note even though it, it’s speculative. But in any case, I wanna thank Marsha once again for being on a very enlightening discussion. But like very far reaching issues. 

Marshall Steinbaum: Great. Well, gee, thanks for having me.

It’s always a joy for me to talk about economists and their foibles on the record. And you’ve definitely given me that [00:35:00] today. 

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Jeet Heer

Jeet Heer is a national affairs correspondent for The Nation and host of the weekly Nation podcast, The Time of Monsters. He also pens the monthly column “Morbid Symptoms.” The author of In Love with Art: Francoise Mouly’s Adventures in Comics with Art Spiegelman (2013) and Sweet Lechery: Reviews, Essays and Profiles (2014), Heer has written for numerous publications, including The New Yorker, The Paris Review, Virginia Quarterly Review, The American Prospect, The GuardianThe New Republic, and The Boston Globe.

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