(Roughly) Daily

Mental models can be helpful, but they can also obscure as much as they reveal…

“The era of big government is over,” then-US President Bill Clinton proclaimed in 1996. But President Joe Biden’s multi-trillion-dollar spending plans are suggesting precisely the opposite. Behind the politicians stand the policy gurus, eager to put their names on – as the fashionable phrase goes – a new “policy paradigm.”

Paradigm-peddlers have not yet settled on a single label for the post-pandemic era, but frothy ideas abound. Countries should “build back better,” but only after a “great reset.” Economic growth used to be a pretty good thing on its own; these days, it is unmentionable in polite company unless it is “inclusive, equitable, and sustainable.” (I can see why, but must all three adjectives always be strung together?)

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Harvard University’s Dani Rodrik was right to argue recently that we should beware of economists bearing policy paradigms. Such frameworks are supposed to organize thinking, but more often than not they substitute for it.

Consider a paradigm that the pandemic is supposed to have killed: neoliberalism. Neoliberal once meant a particular approach to free-market economics. Applying the description to leaders like Margaret Thatcher and Ronald Reagan made some sense. But in current parlance, the term also applies to former UK Prime Minister Tony Blair, former German Chancellor Gerhard Schröder, and the social democrats who have governed Chile for 24 of the last 30 years – in fact, to anyone who thinks markets have some role to play in human affairs.

Through repeated, careless use, neoliberal has now become one of those words that, as George Orwell said, “are strictly meaningless, in the sense that they not only do not point to any discoverable object, but are hardly even expected to do so by the reader.”

But meaningless is not the same as useless. If a speaker at an academic seminar, policy conference, or cocktail party tars someone as a neoliberal, two messages are immediately clear: the speaker is good, and the target is bad, unconcerned with the plight of the downtrodden. Tarring someone with this particular epithet is virtue-signaling par excellence. It marks the speaker as a member of a progressive tribe concerned about the world’s poor.

The right has its own ideological identity markers. In the debate about Obamacare and health insurance in the United States, or about vouchers for school funding anywhere, anyone claiming to support “freedom of choice” is not just making a point, but also sending a signal.

Both freedom and choice have multiple meanings that philosophers have been debating at least since classical Greek times: freedom to or freedom from? Choice to do what? Is someone with little money or education really “free to choose,” as the Nobel laureate economist Milton Friedman used to say? In fact, today’s freedom-of-choice advocates probably do not want to pursue those ancient and endless debates; they are simply signaling their membership in the ideological free-market tribe.

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As the world seeks to ensure recovery from the COVID-19 crisis, simplistic political and economic ideologies will not lead to effective policymaking. Rodrik rightly pines for economic thinking that is unbeholden to cliché or to narrow identity politics. As he says, “The right answer to any policy question in economics is, ‘It depends.’” Circumstances matter, and the devil is in the details. 

I want the same thing as Rodrik, but you can’t always get what you want. Because nowadays (at least outside Trumpian circles) identities based on race or religion are unacceptable, ideologies have become the last refuge of the identity-seeking and politically savvy scoundrel, and new economic paradigms the weapon of choice…

In the old joke, a man walks into a psychiatrist’s office and says, “Doctor, my brother’s crazy! He thinks he’s a chicken.” The doctor says, “Why don’t you bring him to me?” And the man replies, “I would, but I need the eggs.” 

Political ideologies can be crazy, and those who peddle them often behave like chickens. But how we crave those eggs…

Simplistic political and economic ideologies that serve as identity markers will not lead to effective policymaking; but something in human psychology makes many crave them anyway: “The Perils of Paradigm Economics,” from Andrés Velasco (@AndresVelasco).

[image above: source]

* George Orwell, Politics and the English Language

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As we acknowledge nuance, we might send qualified birthday greetings to Sidney James Webb; he was born on this date in 1859. An economist, he was an early member of the Fabian Society (joining, like George Bernard Shaw, three months after its founding). He co-founded the London School of Economics (where Andrés Velasco is currently Dean of the School of Public Policy), and wrote the original, pro-nationalisation Clause IV for the British Labour Party.

A committed socialist, Webb and his wife Beatrice were staunch supporters of the Soviet Union and its communist program. Ignoring the mounting evidence of atrocities in the USSR in favor of their commitment to the concept of collectivism, they wrote Soviet Communism: A New Civilisation? (1935) and The Truth About Soviet Russia (1942), both positive assessments of Stalin’s regime. The Trotskyist historian Al Richardson later described Soviet Communism: A New Civilization? as “pure Soviet propaganda at its most mendacious.”

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