Fellow economists, we’re mostly to blame for this mess

Brexit, Trump. We built the world that let extremism thrive
This is on us

This is on us

Dear world, on behalf of economists I offer an apology. More than anything or anyone else, we are responsible for the clusterfuck that has been 2016.

Since the 1980s we said that inequality didn’t matter. That working and middle class people would be fine if their incomes didn’t worsen even as those in the top 10% (and especially 1%) saw their own income and wealth skyrocket to levels not seen since the Gilded Age. We did not see that people did not view their lot in absolute but in relative terms. We expected them to accept our logic, and acted dumbfounded when they didn’t express gratitude for the few tiny drops of prosperity that trickled down. We never imagined that they’d be rightfully pissed. Then we blamed them for living beyond their means to catch up with the Joneses, for being irresponsible for maxing their credit cards and taking out mortgages on houses they couldn’t afford. We never saw inequality as a psychological problem as much as an economic one.

We called anyone who disagreed a socialist.

Around that same time, we said that free markets were a panacea for growth. True, many countries did benefit heavily from globalization and certainly those countries that did not follow certain basic rules of market logic have fared terribly (Venezuela being a case in point). But globalization was not a panacea for the working and middle classes of the developed world. In our smugness, we said that the lost jobs either to China, Mexico, or technology were a necessary evil for continued productivity growth. We acted like it was their fault that they did not have the skills needed for the new economy, and that it was nobody’s responsibility to find them those skills either. In the dog eat dog world of neoliberal economics there are losers, and we could afford not to be those losers becomes economists are still not being outsourced to India or replaced by robots so we had little empathy for those who were less lucky. We applauded that unemployment fell and didn’t care that it was because people lost stable, salaried jobs and became self-employed with zero benefits. We cared more about the Dow Jones than the Gini index.

We called anyone who disagreed a socialist.

We also assumed that everyone was rational. We even had a name for this species of humanity that always took decisions based on all available information, weighed all options, and picked the one that maximized their utility: homo economicus. Since we thought psychology, sociology, and all the other social sciences were inferior disciplines because they could not prove their hypotheses with econometrics, so we never bothered to accept their insights into human behavior. The result is that we thought markets were self-correcting, industries were self-regulated, and markets punished those who took decisions against the public interest. We saw the “irrational exuberance” of the dot-com bubble and then did nothing when a bigger bubble, the subprime housing bubble, sprung up almost immediately after the first one popped.

We called anyone who disagreed a socialist.

And finally, we assumed we had all the answers. We took the view of Noble laureate Robert Lucas that the “central problem of depression-prevention has been solved, for all practical purposes, and has in fact been solved for many decades”. This was just five years before the global financial crisis. We also poisoned the minds of politicians, who adopted our elegant yet simplistic neoclassical view of how the world worked. We flooded bookstores with titles like Freakonomics and The Economic Naturalist: How Economics Explains Everything to educate the masses on why we knew better. We were conceited, arrogant, and frankly, fucking annoying.

We called anyone who disagreed a socialist.

Then on June 23rd we wondered how the British could be so stupid as to want to leave the EU. On November 8th we were even more perplexed on how Americans could be dumb enough to vote for someone like Trump. From our little intellectual ivory towers, the framework in which we understood the world was perfectly fine. We didn’t get that we didn’t get it.

And now with the twin shocks of a global crisis in 2008-09 and a political crisis in 2016, our world has been shattered. Probably irremediably. But we don’t know it yet. This will still be blamed on people (deplorable as they may be), rather than the structures that conditioned them to be that way. And we’ll be scratching our heads into oblivion by failing to understand why a laid off steelworker from Pennsylvania or miner from Yorkshire won’t be voting with rapturous joy for the man or woman who promises free trade agreements, minority rights, and open immigration in place of the only thing that really matters to them: dignity.

(The author wishes to note that he has stood against everything that has been criticized in this piece since his days as an undergrad. And if you think he is a socialist, well, you’re pretty much the type of person he wrote this for)

The Donald Trump fascist experiment

Think the Trump-Hitler comparisions are exaggerated? Think again
Look familiar?

Look familiar?

Is Donald Trump fascist?

The knee-jerk reaction by his opponents makes this an easy answer: yes. He has made borderline racist comments about Mexicans, black people, Muslims, and as the recently leaked 2005 Access Hollywood recordings have made all but clear, is an appalling sexist as well (although this was pretty obvious back when he said he would date his own daughter who by his own admission is “a piece of ass”). But his defenders would cringe at the idea that he is an American Hitler. Hitler, after all, killed 6 million Jews (among millions of others) and launched a world war. Yes, Trump is a bully, a sleazeball, and a demagogue and seems to not care much about institutions as evidenced by his wanting to jail Hillary Clinton. But there is a pretty big gap between that and genocide. It’s kick the foreigners out, not murder them (at least yet).

Furthermore, even many people who dislike Trump feel uneasy by the fascist/Nazi/Hitler comparison. Godwin’s Law, for example, famously affirms that “as an online discussion continues, the probability of a reference or comparison to Hitler or Nazis approaches 1”. Indeed, the left (and also the right) uses comparisons to fascism, Nazism, and genocide to such an extent that in many cases they have pretty much lost their value. It is an argumentative cop out for the simple reason that nobody in the history of humanity has been as bad as Hitler (except possibly Stalin or Mao but they mostly killed their own people which seemingly carries less of a stigma). Trump is not even in power yet, and he has not started a world war or a genocide.

Although Godwin’s Law has its merit, I feel in this particular case it is a very weak defense of what Trump would be willing to do and how far his supporters would be willing to follow. And there’s one very easy thought experiment to find that out. Just ask yourself the following two questions:

Would Trump have behaved any different to Hitler had he been in Hitler’s position in 1933-45?

Would Trump’s supporters have behaved any different to Hitler’s in 1933-45? Continue reading