Saturday, June 14, 2008

Beware The Chicago Boys, Naomi Klein, and The Guardian (UK)

Journalist Naomi Klein has written a column for The Guardian (UK) entitled "Beware The Chicago Boys".

Hmmmmm.....I'll be needing a few tools....
Scalpel - thanks.

Laptop - got it.
Righteous Indignation - I've got plenty.
Various Free Market Websites - check.
Copy of Thomas Sowell's Basic Economics (3rd edition) - got it.
Chainsaw - yep.
Metzenbaum scissors - check.
Let the Fisking begin !

Here's Naomi Klein:

Beware the Chicago boys
Obama's vow of love for free markets gives reason to fear a replay of Bill Clinton's 1993 U-turn


Where to begin with Naomi Klein. Where to begin.... It's a rare editorial that contains so many easy targets in just the headline. Is there anyone other than tenured faculty and union thugs who "fear" a replay of Bill Clinton's 1990's economy, also known as the 1990's economic boom? How can someone even type that sentence without her computer melting?

by Naomi Klein
The Guardian,
Saturday June 14 2008


One final aside, and I'll be through ripping the headline, the summary, the author, The Guardian, and the (surprisingly accurate) date.... I've been reading a lot of British and Australian bloggers for the last year, bloggers who occasionally use the term "Grolies". When I finally bothered to look it up, I learned that Grolies is a British/Australian acronym for "Guardian Reader Of Limited Intelligence in Ethnic Skirt".

That has nothing to do with the business at hand. I just thought it was funny. I don't mean to imply that Ms. Klein wears ethnic skirts.

Now, back to Naomi Klein's Guardian article about Barack Obama's association with the Economics department at The University of Chicago.
Barack Obama waited just three days after Hillary Clinton pulled out of the race to declare, on CNBC: "Look. I am a pro-growth, free-market guy. I love the market." Demonstrating that this is no mere spring fling, he has appointed the 37-year-old Jason Furman, one of Wal-Mart's most prominent defenders, to head his economic team. On the campaign trail, Obama blasted Clinton for sitting on the Wal-Mart board and pledged: "I won't shop there."



This is one of my favorite photos of all time. That's Mr. Sam Walton sitting front and center. To the left of Mr. Sam is the wife of the then-governor of Arkansas, who at the time was serving on the Wal-Mart board of directors. And here's a link to an article suggesting that Sam Walton was worthy of a Nobel. I've never understood the ravenous anti-WalMart bias. Name anyone else who has eliminated more poverty than Sam Walton.

Barack Obama's Craniofacial Duplication on the issue of Wal-Mart is to be expected now that he's defeated the Hildebeest. It was an easy target when he was catering to the Democratic base, but now, going against McCain, he's got to worry about semi-rational thought.

For Furman, however, Wal-Mart's critics are the real threat: the "efforts to get Wal-Mart to raise its wages and benefits" are creating "collateral damage" that is "way too enormous and damaging to working people and the economy ... for me to sit by idly and sing Kum Ba Ya in the interests of progressive harmony".
Could Wal-Mart pay its employees more? Of course. Could The Guardian? Yep. Could Naomi Klein pay more for rent than she has to? Could she pay more for gasoline? Could she pay double the going rate for psychiatric care? You betcha. If word gets out that Naomi Klein is willing to pay $500 an hour for lawn service, people will wait in line to take her money.

Ms. Klein could also try to charge a lot more for insane journalistic diatribes against Free Markets. She could charge more for her books. She could charge fifty bucks an hour to let people watch her spread Peanut Butter on her front porch while she sang excerpts from "Evita". But in this case, people would NOT wait in line to give her more money. People would shop around for a better deal. She would find that people are reluctant to pay more than the going rate for diatribes, books, or high protein Evita performances.

The glory of the Free Market system is that people can pay what they're willing to pay for goods and services, and they can charge whatever they want to charge for their own goods and services.
But you only get a deal done whenever the amount you're willing to pay is more than the amount someone else is willing to charge.

Obama's love of markets and his desire for "change" are not inherently incompatible. "The market has gotten out of balance," he says, and it most certainly has. Many trace this profound imbalance to the ideas of Milton Friedman, who launched a counter-revolution against the New Deal from his perch at the University of Chicago.
Allow me a brief diversion into The Chicago School of Economics. Friedrich Freakin' Hayek taught there. Milton Friedman, ditto. Gary Becker. Robert Lucas. George Stigler. Perhaps because of the school's geographic isolation (?), it produced eight Nobel prize winners. Eight of them. They dominate. They are to the discipline of economics what Michael Jordan's Bulls once were to basketball.

And here there are more problems, because Obama - who taught law at Chicago for a decade - is embedded in the mindset known as the Chicago School.
She says that like it's a bad thing.

Obama chose as his chief economic adviser Austan Goolsbee, a University of Chicago economist on the left side of a spectrum that stops at the centre-right. Goolsbee, unlike his Friedmanite colleagues, sees inequality as a problem.
I don't believe that any "Friedmanite colleagues" have ever denied that inequality is a problem. Here's the problem: If you have freedom, or liberty, you're not going to have equality. Mostly because....people aren't equal. Naomi Klein makes more money than the guy who cleans your office restrooms. Bill Gates makes more than Naomi Klein. Part of it is effort, part of it is talent, and part of it is luck. The average world income is somewhere around $6,000. To achieve financial equality, all you have to do is give away your surplus until you're left with only 6K.
So let's get real.
We're not going to voluntarily do that.
The government would have to make us do so. So the mirror image of the statement above is that if you have equality, you're not going to have freedom or liberty.
It comes down to this. What do you value most? What is better for society? Freedom or Equality? How about getting government out of the way, and let everyone be "Free" to do whatever "Equals" their skills, desires, and talents?

His primary solution, however, is more education - a line you can also get from Alan Greenspan.
Only in The Guardian do writers express horror over the Clinton 1990's economic boom and Alan Greenspan. Good Lord in heaven.

Goolsbee has been eager to link Obama to the Chicago School. "The guy's got a healthy respect for markets," he told Chicago magazine. "It's in the ethos of the [University of Chicago], which is something different from saying he is laissez faire."
Not really. Goolsbee is just trying to chill out his Moonbat Party Base with that statement. Laissez faire, AKA leave it alone, expresses most of the Chicago Schools core values better than any other two word statement. (I'm qualified to comment on these things, because I work in the shipping, freight, and logistics industry.)

Another of Obama's Chicago fans is the 39-year-old billionaire Kenneth Griffin, the CEO of the hedge fund Citadel. Griffin, who gave the maximum allowable donation to Obama, is a poster boy for an unbalanced economy. He got married at Versailles, and is one of the staunchest opponents of closing the hedge-fund tax loophole.
Of course he's a staunch opponent of closing tax loopholes. Once an industry pays Congress to create a tax loophole, they expect the loophole to stay open. But that's fodder for another day.

While Obama talks about toughening trade rules with China, Griffin has been bending the few barriers that do exist. Despite sanctions prohibiting the sale of police equipment, Citadel has been pouring money into controversial China-based security companies that are putting the local population under unprecedented levels of surveillance.
Well, dang it, Naomi, which one do you want? Communist China was set up as a Marxist state, where total equality was to be the rule, the goal, and the law. As I pointed out above, the only way to achieve that goal is to take away freedom.
If Red China is purchasing Kenneth Griffin's police equipment, do you think they're using that police equipment to combat left wing Communist Party members?
I don't think so.
Does the Chinese government want to purchase truncheons to combat socialism?
No.
The Chinese government is exactly and precisely what you get when the economic philosophy of The Guardian is put in place. Naomi Klein should be grateful to Kenneth Griffin, and add him to her Christmas card list. He's helping the Red Chinese put down renegade Free Market capitalists who want to overthrow their idiotic government.

Now is the time to worry about Obama's Chicago Boys and their commitment to fending off regulation. It was in the two-and-a-half months between winning the 1992 election and being sworn into office in 1993 that Bill Clinton did a U-turn on the economy. He had promised to revise the North American Free Trade Agreement, adding labour and environmental provisions - but two weeks before his inauguration, the then Goldman Sachs chief, Robert Rubin, convinced him of the urgency of embracing liberalisation.
I cannot believe she's saying that. Heck, I can't believe anyone took it and printed it, either. Clinton's embrace of Free Trade gave us one heck of an economic run. There were years when the U.S. government actually took in more than it spent ! ! ! What is wrong with that?

Furman, a Rubin disciple, was chosen to head the Brookings Institution's Hamilton Project, the thinktank Rubin helped found to argue for the free trade agenda. Add to that Goolsbee's February meeting with Canadian officials, who got the impression that they should not take Obama's anti-Nafta campaigning seriously, and there is every reason for concern about a replay of 1993.
As Brer Rabbit said in the Uncle Remus stories, "Please, please, please don't throw us back in that briar patch."

The irony is that there is absolutely no reason for this backsliding. The movement launched by Friedman, introduced by Ronald Reagan and entrenched under Clinton faces a legitimacy crisis around the world - nowhere more evident than at the University of Chicago itself.
It's almost like she's talking about a pre-Reagan/Friedman Garden of Eden. Is she fondly reminiscing about Jimmy Carter's stagflation? Nixon's absolutely disastrous experiment with wage and price controls?

In May, when the university president Robert Zimmer announced the creation of a $200m Milton Friedman Institute, more than 100 faculty members signed a letter of protest.
I just spent 20 minutes Googling in vain, trying to find the names and departments of the faculty who signed this letter. I can't find any online reference to a letter of protest, other than those based on this editorial. Does anyone fact-check Ms. Klein's typing? You can't prove it so far. Can anyone let me know which members of the French, Mythology, Womyn's Studies, Physical Education and Anthropology Departments signed this thing? Or is it another fabrication, like the Jimmy Carter Golden Age of Prosperity? Please help.

"The effects of the neoliberal global order ... strongly buttressed by the Chicago School of Economics, have by no means been unequivocally positive," the letter states. "Many would argue that they have been negative for much of the world's population."
"Many would argue?" Like, they would argue, but haven't yet? Who, in this time of post-Marxist greatness would argue it? And how much is "much" of the world's population?
There's more precision than this in the works of Nostradamus.

But they're partly correct. Nothing is "unequivocally" positive. Never has been, never will be. Markets have winners and losers. Buggy whip manufacturers go out of business. Betamax doesn't take off. Yugos go unpurchased. The musical output of Kevin Federline remains on the shelf in shrinkwrap, unwanted and unloved. And the government doesn't have to do a thing about it, thanks to Milton Friedman and The Chicago School of Economics. It's better that way.

When Friedman died in 2006, the memorials spoke only of grand achievement, with one of the more prominent appreciations, in the New York Times, written by Goolsbee. Yet now, just two years later, Friedman's name is seen as a liability even at his own alma mater. So why has Obama chosen this moment, when all illusions of a consensus have dropped away, to go Chicago retro?
I just finished Googling every phrase that Ms. Klein has provided from the letter/petition. Can't find a word about it anywhere that wasn't provided by Ms. Klein and The Guardian. I don't think we're talking about a massive groundswell of a movement here. And you can go to Friedman's Alma Mater's website, and as of June 14th 2008, Milton Friedman's name is a marketing tool, not a liability.

The news is not all bad. Furman claims he will be drawing on the expertise of two Keynesian economists: Jared Bernstein, of the Economic Policy Institute, and James Galbraith, son of Friedman's nemesis, John Kenneth Galbraith. Our "current economic crisis", Obama recently said, is "the logical conclusion of a tired and misguided philosophy that has dominated Washington for far too long".
Ah, the Keynesians. In my opinion, there are only two things you need to know about the effectiveness of Keynesians economics:
1. They generally believe that only government can quickly, efficiently and effectively pull the control levers of an economy. (Government = Keynesian economists in government jobs)
2. I still don't have my economic stimulus check.

True enough. But before Obama can purge Washington of the scourge of Friedmanism, he has some ideological house cleaning of his own to do.
The scourge of Friedmanism. It hurts my fingers to type the sentence.
If Obama gets elected, I don't think he'll be purging Washington of Friedmanism. That would be like purging Washington of Cherry blossoms, the Jefferson Memorial, and anything else decent. I bet he keeps the economic engine running right where it is. Because thanks to Milton Friedman and The Chicago Boys, that's where the tracks run.

4 comments:

Jay Andrew Allen said...

I just spent 20 minutes Googling in vain, trying to find the names and departments of the faculty who signed this letter. I can't find any online reference to a letter of protest, other than those based on this editorial

I found it in 30 seconds.

The Whited Sepulchre said...

Jay,
I did that post on Saturday.
The article you've referenced, as best I can tell, was posted on Wednesday.

Thanks for your help, though.

I'd really like to see a copy of that petition.

Ookla said...

Nice straw-man of equality there. Maybe you should address what people actually mean when they talk about equality. Equality means you succeed or fail on your own merits, and not because your black, female, or gay. And before you accuse me of being a hypocritical leftists, I'm against affirmative action as well. Now can you actually talk about equality instead of spinning it into a straw man draped with a Che Guevera t-shirt on?

The Whited Sepulchre said...

Ookla,
Thanks for commenting. My world is more interesting with you in it.

"Goolsbee, unlike his Friedmanite colleagues, sees inequality as a problem."
Naomi Klein was the one making the statement differentiating Goolsbee from other "Friedmanites" in terms of equality, or the lack thereof.

I believe she's intentionally vague about what she means when she says "inequality". It helps her reinforce the image of Free Market types as being fundamentally unfair. She just dumps the word out there with no explanation.

If anyone was setting up a Straw Man to kick over, it was Ms. Klein with her inequality espousing Friedmanite.

I believe that Goolsbee is probably referencing "inequality of results". Sometimes you win, sometimes you lose. Education probably helps you win more.

You lost me on the affirmative action bidness. I don't get the connection.

What do you mean when you say "equality"?