
Neoliberalism Is a Simplistic Perversion of Economics - huihuiilly
https://bostonreview.net/class-inequality/suresh-naidu-dani-rodrik-gabriel-zucman-economics-after-neoliberalism
======
charliesharding
"Yet too many economists believe their quantitative tools and theoretical
lenses are the only ones that count as “scientific,” leading them to dismiss
disciplines that rely more on qualitative analysis and verbal theorizing"

Sorry if I don't want to trust the fate of the nation's economy to someone's
well intentioned verbal theorizing and 'qualitative' analysis. What could go
wrong? (lol)

I thought HN liked and trusted the scientific process and quantitative
research methods over verbal theorizing and hand waving.

~~~
beat
Social outcome is a political problem, not a scientific one. We should decide
what we want society to look like, and use the scientifically/mathematically
understood systems of economics to steer us in that direction.

I don't think the market-driven ideals of 1980s economics were _intended_ to
deliver the results we are seeing today. They would not have predicted the
drastic disparities, or the insecurity of working people. Therefore, even on a
scientific basis, they're kinda fails.

~~~
antidesitter
> the market-driven ideals of 1980s economics... they're kinda fails

On what basis? The share of people living in extreme poverty globally has gone
down from 43% to less than 10% since 1980. Global literacy rates have climbed
from 70% to 86% in the same period. Global child mortality has gone down from
11% to 4% in the same period. Global life expectancy has climbed from 63 to 72
in the same period.

It's ironic that you claim they're failing on a "scientific" basis.

~~~
Fnoord
It is about the 1,5 million homeless children in the USA [1]

It is about the income inequality which has increased since the '70s in the
USA [2]

It is about tax avoidance in the USA, and increasing taxation for the very
rich, and how the discussion about it is being avoided as recently happened on
Fox News or at the conference in Davos, Switzerland [3]

[1]
[https://en.wikipedia.org/wiki/Poverty_in_the_United_States](https://en.wikipedia.org/wiki/Poverty_in_the_United_States)

[2]
[https://en.wikipedia.org/wiki/Income_inequality_in_the_Unite...](https://en.wikipedia.org/wiki/Income_inequality_in_the_United_States)

[3] [https://twitter.com/rcbregman](https://twitter.com/rcbregman)

~~~
charliesharding
1 - Yes, numbers are high but by your own source, you can see the rate has not
been increasing since 1980. 2 - Hand waving about income inequality is fine,
it's an issue.. but what do you think should be done about it? Tax the rich
just enough so that they don't leave and take their wealth somewhere else? How
do we find that threshold? 3 - Tax avoidance is a law issue, not an economics
issue. If it's legal, businesses will do it. I saw the conference in Davos. It
was just a guy saying "but what about tax avoidance?". This was not brave or
insightful, it was just more hand waving and blaming the ones who have been
pillars of industry, creating jobs, products, and economic prosperity.

~~~
Fnoord
1) Ah, the "the rich will leave!" card. The rich won't leave if you fight the
problem under an international flag, and all their businesses will be
accounted for. Even _if_ all the rich want to live solely in the Bahama's or
Cayman Islands, let them be. If large countries plot together its not like you
can't boycott such small countries. Just like almost the entire world has
copyright laws. See also #3.

2) The problem is that large companies such as Amazon don't pay tax which by
itself is unfair. On top of that, the side effect is that small and medium
businesses [on a worldwide scale] cannot compete with them, leading to less
competition which is _bad_ for the customer and _bad_ for the economy. And it
isn't just Amazon. It is also for example Starbucks, who pay _no_ tax
whatsoever whilst local coffee shops diminish.

3) Not addressing the topic of tax avoidance is political unwillingness kept
intact by the rich world elite who give breadcrumbs to servants such as Tucker
Carlson.

4) Given the conference was visited by billionaire philanthropists who avoid
taxes, it was a highly insightful and appropriate comment.

> it was just more hand waving and blaming the ones who have been pillars of
> industry, creating jobs, products, and economic prosperity.

If you give me billions of USD I can also promise you I will be a pillar of
industry, creating jobs, products, and economic prosperity. The _lack_ of
these is caused _by_ the inequality. If people wouldn't live in poverty, their
happiness would increase, and they'd be _more_ productive in society; not
less. Instead, they're being squeezed out.

~~~
charliesharding
1 - Ok, so abolish the free market worldwide? Not sure what you're suggesting.
Removing incentive structures and high taxation does cause the wealthy to
leave. It's happening in the U.K. right now. Who does this hurt? Everyone but
the rich. 2,3 - I think we agree here. Unfair loopholes should be closed as
they are found on an individual case basis and I even think that Amazon should
be broken up on anti-monopoly grounds. 4 - They didn't come by their wealth
through forcibly taking it from poor people. The free market dictates
voluntary exchange of goods and services. They are wealthy through a long
series of voluntary transactions with the public.

~~~
Fnoord
> Ok, so abolish the free market worldwide?

Actually, it'd _empower_ the free market, as we'd have more fair competition.
Tax avoidance breeds unfair competition. After all, if your competitor is
paying tax while you don't, then you get more profit. More profit allows you
to invest more, take more risks, do more R&D, etc.

> Removing incentive structures and high taxation does cause the wealthy to
> leave.

I never argued otherwise; I argued if we, as humanity, fight this problem on a
world-wide level the rich have no place to go.

> It's happening in the U.K. right now.

We're not addressing the problem on a world-wide scale right now (AFAICT), and
it'd be a process. Not a one day project. During such a process you'll see a
lot of rough edges, like with alpha software.

The response: _" the plan isn't perfect"_ is a straw man. Of course the plan
isn't perfect. Of course they can move to the Bahama's, Monaco, or what not.
It isn't _meant_ to be perfect; it is meant as a first step in the right
direction, after which reflection must take place to continue to tackle the
problem.

> They didn't come by their wealth through forcibly taking it from poor
> people. The free market dictates voluntary exchange of goods and services.
> They are wealthy through a long series of voluntary transactions with the
> public.

However if they paid their taxes fair and square they'd have less profit, and
the little guy who starts their own company would have an easier barrier of
entry. Hence, entrepreneurs (for whom you could argue HN is for) would
_benefit_ from this climate. Instead, what we have is a few successful ponies
who get bought by the big fish.

------
86carr
Neoliberal microeconomics is just a model of markets? No model is perfect. All
models are all far simpler than reality and probably perverse in some way. If
they weren't they wouldn't be useful as models. Don't blame the model, blame
the people that abuse it.

~~~
i_am_proteus
Quoth George Box: "All models are wrong, but some models are useful."

~~~
soVeryTired
So many people use that quote as a blanket defense of bad modelling.

Some models are useful. Some models are harmful. Do you have the means to tell
the difference?

------
selflesssieve
This article is full of strawmen fallacies. Paints with a broad brush by using
"Economists" and "Economics" to mean the whole discipline.

>Economists also often get overly enamored with models that focus a narrow set
of issues and identify first-best solutions in the circumscribed domain, at
the expense of potential complications and adverse implications elsewhere.

Can loosely translate to: Economists like to study optimization problems
whereby rigorous mathematical models conclude that to maximize one variable,
other variables may be minimized.

~~~
soVeryTired
> Economists like to study optimization problems whereby rigorous mathematical
> models conclude that to maximize one variable, other variables may be
> minimized.

Thereby proving precise facts about models that are imprecise at best, and
downright misleading at worst.

~~~
selflesssieve
No, the false assumption this article makes is that the models are the
problem. The problem is how policy makers are influenced and advised by any
inaccurate model and inability to learn quickly from it.

My point was that you can't have it all. "Inclusive Economics" whatever that
means is never going to be "good enough" so it's a very easy basis for an
attack on "Economics".

------
duxup
I had a really hard time understanding all that, but I'm wondering about some
of the ideas here:

"offering plenty of tools we can use to make society more inclusive"

Isn't half the issue with ALL economic points of view now that actions aren't
having the effect we think they should and the "tools" don't work like we
think they used to?

------
dalbasal
Almost any article about neoliberalism is at least somewhat disingenuous. It's
mostly a term that gets used by critics, and it groups together movements that
aren't related and don't call themselves neoliberals.

I can't recall any proponents of neoliberalism.

This article is a good example. Everything is euphamized (neoliberalism is
market fetishism). Nothing is addressed directly. There's a disagreement
between camps, but nowhere does it bother to delve into what they disagree
about specifically.

It's also simply not true that economics is monolithic, or that the majority
of policies are based in economics of any flavour.

The EU was (i suppose, see first paragraph) a neoliberalism exercise. It
promoted free trade, and dismantled all sorts of industrial structures and
regulations as part of that. But, the actual goal was peace, moreso than
prosperity. The history of us-china trade is similar.

------
skybrian
Headline is clickbait and it's not the article's headline.

In practice, on the Internet "neoliberalism" seems to be a word used by people
who dislike capitalism and want another abstract enemy to complain about. If
you're not doing that, the word doesn't seem very useful?

But the folks behind this article seem to want to do educational outreach
about economics research and that does seem useful.

~~~
CPLX
Neoliberalism is a word that is used to describe policymakers who seem
ignorant of the fact that indiscriminately resorting to "market forces" often
leads to undesirable outcomes.

~~~
skybrian
Okay, what's an example?

~~~
CPLX
Attempting to reform national health care but thinking it's possible to
preserve for profit health insurance companies as part of the mix.

~~~
skybrian
You mean like in Switzerland? [1] I think the mistake here is being
overconfident. Most of us (including me) don't know much about heath care
economics.

[1]
[https://en.m.wikipedia.org/wiki/Healthcare_in_Switzerland](https://en.m.wikipedia.org/wiki/Healthcare_in_Switzerland)

~~~
CPLX
No, I live in the United States, where health insurance companies are
basically a giant bloodsucking leach affixed to a large chunk of the economy.
We're also not nearly as good at trains and making watches.

------
nickpinkston
Interestingly, now that neoliberal is being used as a slur, there's a rising
movement reclaiming the term and offering policies that solve a lot of the
issues earlier neoliberals went wrong with.

Here's one site:
[https://neoliberalproject.org](https://neoliberalproject.org)

Also see: [https://niskanencenter.org](https://niskanencenter.org)

My interactions with these folks have found them very reasonable. They're kind
of like reformed libertarians who've learned that we need social safety nets,
etc., but still believe more in markets than standard Democrats do.

~~~
wwweston
Even with a growing number of Democrats willing to identify as socialists (or
even leftists) rather than liberals... I haven't yet made the acquaintance of
one that doesn't believe in the wide power of a market economy.

There's just lots that also believe there are _some_ areas where markets are
sub-optimal to wrong because (a) a commons is more efficient and/or (b) it's
difficult to impossible to line up incentives correctly and/or (c) there are
values in play that supersede market activity.

(None of these beliefs are necessarily unique to Democrats, either -- lots of
people would believe that public transportation infrastructure greases the
wheels of private activity, that insurance incentives are different than other
goods/services, or that assassination markets might not really be a good
thing)

~~~
licebmi__at__
Maybe that's a notable fact because markets are equivocally equated with
capitalism. Mutualism[1] is also a socialist economic theory and is a form of
market socialism[2]

[1]:
[https://en.wikipedia.org/wiki/Mutualism_(economic_theory)](https://en.wikipedia.org/wiki/Mutualism_\(economic_theory\))

[2]:
[https://en.wikipedia.org/wiki/Market_socialism](https://en.wikipedia.org/wiki/Market_socialism)

------
randiantech
"Neoliberalism", or the story of one of the dumbest terms used on economics.
No liberals -or "libertarian" for north americans- consider itself a
neoliberal. No existing bibliography talks about it, only detractors of
traditional liberalism. Then why to add the neo prefix to it?

~~~
danharaj
I mean, the IMF hosts (but not necessarily agrees with) articles that use the
word [1].

[1]
[https://www.imf.org/external/pubs/ft/fandd/2016/06/ostry.htm](https://www.imf.org/external/pubs/ft/fandd/2016/06/ostry.htm)

------
eanzenberg
I get this is parroted ad nauseum but the reason for rising inequality (and a
reduction in the middle class) in the US is mobility of people from the bottom
and middle to the upper class.

~~~
wycy
That is not even a little bit true. The exact opposite of that has been taking
place: a reduction in upward mobility between socioeconomic classes.

