17 February 2019   Leave a comment

US Vice President Pence gave a speech to the Munich Security Conference, an annual conference on global security issues that has been held for many decades in Germany. However, his greeting to the audience–“I bring greetings from the 45th president of the United States of America, Donald Trump.”–was met with complete silence instead of the usual diplomatic applause. The highly unusual rebuff serves as an index to the frayed relations between the US and the rest of the world. Pence was highly critical of European states who have sought to maintain the nuclear agreement with Iran and offered stinging rebukes to China and Russia. One the other hand, German Chancellor Angela Merkel gave a speech in which she criticized the US in very direct terms and she received an extended standing ovation from the delegates.

Suresh Naidu, Dani Rodrik, and Gabriel Zucman are economists who have studied economic inequality for many years and they have written a fascinating essay for the Boston Review. The essay attacks the current infatuation with neoliberalism and argues for an alternative focus in economics for “inclusive prosperity.”  They define this new perspective in this way:

“While prosperity is the traditional concern of economists, the “inclusive” modifier demands both that we consider the whole distribution of outcomes, not simply the average (the “middle class”), and that we consider human prosperity broadly, including non-pecuniary sources of well-being, from health to climate change to political rights. To improve the quality of public discussion around inclusive prosperity, we have organized a group of economists—the Economics for Inclusive Prosperity (EfIP) network—to make policy recommendations across a wide range of topics, including labor markets, public finance, international trade, and finance. The purpose of this nascent collective effort is not simply to offer a list of prescriptions for different domains of policy, but to provide an overall vision for economic policy that stands as a genuine alternative to the market fundamentalism that is often—and wrongly—identified with economics. “

In rejecting neoliberalism, the authors argue that its embrace has been fundamentally flawed and has damaged the economics profession:

“Many of the dominant policy ideas of the last few decades are supported neither by sound economics nor by good evidence. Neoliberalism—or market fundamentalism, market fetishism, etc.—is not the consistent application of modern economics, but its primitive, simplistic perversion. And contemporary economics is rife with new ideas for creating a more inclusive society. But it is up to us economists to convince our audience about the merits of these claims, which is why we have embarked on this project.” 

The authors then go through research that is being conducted by a number of economists that do not share the same assumptions about the nature of the market economy. By and large, this new research looks carefully at the way market assumptions dictate the final conclusions of any analysis. Challenging these assumptions is a long overdue task for liberal economists.

Posted February 17, 2019 by vferraro1971 in World Politics

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