Stiglitz on Adam Smith & democratic socialism
Joe Stiglitz in the Washington Post:
Adam Smith, the founder of modern economics, recognized how, if unregulated, businesses would conspire against the public interest by raising prices and suppressing wages. Yet he also suggested that at times markets would lead, as if by an invisible hand, to the well-being of society. Now we understand why markets often fail to deliver on their promise and why Smith’s invisible hand often seems invisible: because it simply isn’t there. Modern theories of industrial organization have taught us how firms construct barriers to entry to enhance their market power. Twenty years into this new century, the empirical evidence is overwhelming: There is increasing market concentration in sector after sector, with increasing profits and increasing markups in prices….
A key component to the democratic socialist agenda is democracy. Democracy is more than having elections every four years. It includes systems of checks and balances — ensuring that no one, not even a president, has unbridled power — and a deep belief that no one can be above the law. It also includes protections of the rights of minorities, and a Congress and a healthy news media holding everyone to account. But it also embraces fair representation, because a system of voter suppression, gerrymandering and money-dominated politics, where the views of the minority can dominate the majority, is antidemocratic.
Read more here.
New Consensus
“The World Needs a New Worldview.” Right on.
A truly beautiful world is possible—one without poverty or pollution, and with prosperity and dignity for everyone. Humanity has everything it needs to build that world in a single generation: billions of creative, hard working people, technology that already can allow us to make a comfortable living safely and sustainably, and unlimited energy from the sun that we can now harness to power that technology.
So begins the opening statement from New Consensus, a bold new group that’s helping to spark the New Green Deal. Read more here.
And check out their reading list here.
Solar power + people power
Bill McKibben strikes a hopeful note:
We have two relatively new inventions that could prove decisive to solving global warming before it destroys the planet. One is the solar panel, and the other is the nonviolent movement.
Read more here.
Economists for Inclusive Prosperity
From the website of a new group committed to development of policies for inclusive prosperity:
There is considerable ferment in economics that is often not visible to outsiders. At the same time, the sociology of the profession – career incentives, norms, socialization patterns – often mitigates against adequate engagement with the world of policy, especially on the part of younger academic economists…
While prosperity is the traditional concern of economists, the “inclusive” modifier demands both that we consider the interest of all people, not simply the average person, and that we consider prosperity broadly, including non-pecuniary sources of well-being, from health to climate change to political rights.
Passing the buck
A side benefit of moving to decentralized, renewable electricity would be getting out from under these guys:
As California’s deadliest wildfire was consuming the town of Paradise in November, some of the state’s top power company officials and a dozen legislators were at an annual retreat at the Fairmont Kea Lani resort on Maui. In the course of four days, they discussed wildfires — and how much responsibility the utilities deserve for the devastation, if any.
It is an issue of increasing urgency as more fires are traced to equipment owned by California’s investor-owned utilities. The largest, Pacific Gas and Electric, could ultimately have to pay homeowners and others an estimated $30 billion for causing fires over the last two years. The most devastating of those, the Camp Fire, destroyed thousands of homes in Paradise and killed at least 86 people.
Realizing that their potential fire liability is large enough to bankrupt them, the utility companies are spending tens of millions of dollars on lobbying and campaign contributions. Their goal: a California law that would allow them to pass on the cost of wildfires to their customers in the form of higher electricity rates.
Plus update on the saga here.
Workers on boards?
Sue Holmberg of the Roosevelt Institute makes the case for a big change in corporate governance:
American workers are in a crisis that stems, in part, from having no voice in their economic lives. For decades, American corporations have been run exclusively for the benefit of shareholders, and that model has enabled rising inequality, stagnant wages, runaway executive compensation and underinvestment in research and innovation.
Read more here.
Unions & inequality
A picture worth 1,000 words, from the Economic Policy Institute’s top charts of 2018:
See more here.
The hangover from imbibing Homo economicus
More subtle understandings of human behavior have bounced off the teflon coating of Econ 101 with baleful consequences:
What students are taught in their economics classes can perversely turn models and charts that are meant to approximate reality into aspirational ideals for it. Most economics majors are first introduced to Homo economicus as impressionable college freshmen and internalize its values: Studies show, for instance, that taking economics courses can make people actively more selfish.
Read more here.
Economics: a diversity deficit
The economics profession lags behind the country:
Half a century ago, the American Economic Association, a prestigious 133-year-old society dedicated to encouraging the careers and research of economists, set up the Committee on the Status of Minority Groups in the Economics Profession in response to concerns that minorities were underrepresented. These concerns are just as relevant today.
Read more here.
