One of the more curious developments in the last couple of years has been the nostalgia for the 1950s economy from many progressives, especially Paul Krugman.  They want to argue how much better off the middle class was back then, including how much more secure they supposedly were.  In a terrific paper for Cato, Brink Lindsey effectively demolished that nostalgia with some actual data about the economy of the 1950s.  Over at Cafe Hayek today, Don Boudreaux begins a series of trips through a 1956 Sears Catalog that involved calculating the hours of labor needed in 1956 and today to purchase more or less the same goods.  Even ignoring the massive increases in quality from then until now, Don’s post today (and the future ones, I am quite sure, will yield similar results) shows that a low-cost women’s clothing ensemble is 56% 44% cheaper today in work hours than in 1956.  Never has more stuff been available to more people more cheaply than today.

Don’s methodology along with the evidence in Brink’s paper should put an end to this nostalgic nonsense, but I doubt it.

However, here’s the irony:  the progressives who are nostalgic about the economy of the 1950s are the very same ones who have (quite rightly!) criticized conservative nostalgia about the 1950s family.  The 1950s family was no great shakes and certainly wasn’t anything more than the particular manifestation of a variety of historical processes, and was certainly not the Platonic Ideal of The Family.  Progressives have pointed out all the ways in which the 1950s family was problematic and had some good laughs at the expense of the, in their view, silly conservative nostalgia about it.

Well folks, the worm has turned.  You are now the ones engaging in nostalgia, only this time it’s silly liberal nostalgia about the economy rather than the family.  And your nostalgia is just as factually challenged as is that of the right-wing nostalgia about the 1950s family. People like Don and Brink (and I will gladly join the party) need to keep on hammering these points home.  And I will join the progressives in their criticisms of right-wing nostalgia about the 1950s family.

In the end, the classical liberal confidence in the ongoing progress of humanity, both economically and socio-culturally, and our willingness to approach the future without fear, is vindicated by the data.  Those who peddle fear and stories of lost glory will, in the long run, lose out to those who understand that even in a less-than-perfectly-free world, human life keeps on getting better because innovation and creativity still find a way to get the job done.

Nostalgia is a dangerous basis for making policy, whether left or right.

(Cross-posted at Coordination Problem)

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  • Sean II

    One thing that puzzles me about nostalgianomic statists is: they all love watching Mad Men so much.

    Every episode of that show has two or three quality-of-life sight gags, showing how the standard of living then was inferior to that of the present, across a whole spectrum of goods – health, food, safety, transport, housing, personal hygiene, etc. I find those gags a bit obvious and (Jon Hamm)-handed, but I swear every Progressive hipster or New Left baby boomer I know just eats ‘em right up.

    How can they know what they must know to laugh at all those jokes, then turn around and approvingly read Krugman or Mother Jones the next morning?

    I’m not sure, but I believe that wherever the answer to that question is hiding, there is also some profound wisdom about the disconnect between actual leftist motives and popularly circulated leftist talking points.

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  • Ricketson

    It seems that they’re talking about economic organization and you’re talking about technological progress. At least, that’s probably how they’ll interpret it.

    • Sean II

      That’s just it, though…it’s a bad mistake to think of technological progress and economics as things that can be separated.

      The reasons why there was no airbag in a 1930 Model J Duesenberg are economic, as well as technological. After all, engineers back then weren’t stupid. They knew about the risk of head injuries in vehicle collisions, they knew about air bladders, pyrotechnic igniters, explosive gas expansion, impact triggers, magnets, etc.

      It’s not that they lacked the technological ability to design workable airbags, it’s that they lacked the accumulated capital needed produce airbags at a given price.

      The same is true of so many of the things that make 2012 cooler than 1959. They all required gobs and heaps of capital to be realized. When technology marches forward, it doesn’t march on time (as so many people assume) it marches on capital.

      • TracyW

        Hmmm, my mum once did some presentation skills training for Ford (the motor company), and came back home saying that sometime in the 1970s/80s the car industry had totally revamped their thinking about safety and how they made cars. It had been that they made cars to be tough and robust to survive an accident. Then they realised that it was the customers you wanted to survive the accident, not the car. So now cars are designed to collapse around the passenger compartment, absorbing as much as possible the energy from the crash.

        Of course there’s at least two points in that information chain things could have gone totally wrong.

        • Sean II

          I’ve heard that narrative as well. I’ve also heard the one that says people back then just didn’t put a high price on human life, and the one that says “exhibit Z-632, corporations simply don’t care about kids”, and the one that says Ford shareholders used to eat rare steak and cackle maniacally at meetings while the chairman of the board explained how much money they were making by suppressing the airbag, the child safety seat, and the hydrogen motor.

          The problem is, any of those accounts would still be guilty of leaving out the crucial question of capital and cost. The auto industry can’t just decide to change their safety paradigm, any more than they can just decide to change their “friction paradigm” by switching overnight to flying cars.

          The task of switching from building long-finned land battleships for white-flight commuters to building crumple-zoned Honda Civic clones takes a massive amount of capital, and becomes feasible only at a certain meeting point of development cost, unit cost, anticipated demand (and thus marketing cost), etc.

          We’ve all got our pet peeves when it comes to economic ignorance. Mine center around the words “technology” and “invented”. People use the word technology to mean “that thing that just automatically, inexorably makes life better every year”, and they use the word “invented” to mean “what happens when someone gets a cool idea, and five minutes later, viola!, we all have bitchin’ new toys.”

          I really wish people would start thinking of “technology” as something like “the joint product of applied science and accumulated capital” and thinking of “invented” as “what only happens when a cool idea meets an even cooler stack of cash and a plausible expectation of popular demand.”

          Lefties always love to tell you how pro-science they are, and the non-Green lefties also love to tell you how pro-technology they are. I’ve noticed that none of them understand the things I’ve been talking about here.

          If you ask them why consumer products are better in 2012 than in 1945, they’d have no idea how to answer that off-the-cuff. If you gave them a few hours to prepare a response, they’d probably come back with “Inventions and technology. World War II stimulated a big tech boom, then Kennedy took the lead with the space program, plus also Steve Jobs was a genius.”

          In other words, they’d show zero comprehension of the role played by (non-state) capital and risk, nor of the trade-offs between science and cost that must have been made at every step of the way.

      • Kyle Nearhood

        That is a great point Sean. Growth is not jsut a matter of time, demographics, or even technology. Growth is caused by capital investments.

  • MARK_D_FRIEDMAN

    Prof. Horwitz:

    You say: “And I will join the progressives in their criticisms of right-wing nostalgia about the 1950s family.” I am afraid you will have to be much more specific here, because I don’t know what “criticisms” you believe are valid, or why.

    Yes, in the last 50-60 years morals and mores have marched on, and so former attitudes and conventions about the family and gender roles now seem passé. And today’s values will no doubt seem quaint 50-60 years from now. Great, I’m not sure this is exactly a criticism, but if you wish to call it this, great. But one thing is absolutely certain, far more (probably 4x more) kids today grow up in single parent homes then they did in the 1950s. And, our mutual friends at the Cato Institute, who publish Mr. Lindsey, correctly blame the breakdown in the bourgeois family as being substantially responsible for a wide range of serious social problems, experienced both by single parents and by their children.

    Quoting from Cato’s “TANF and Federal Welfare,” by Tanner and DeHaven (September 2010): “The primary way that those with low incomes can advance in the market economy is to get married, stay married, and work–but welfare programs have created incentives to do the opposite.” Today 70% of black children are not born to married couples (gay or straight), and that is a very bad thing. In terms of its effect on individuals and society we should celebrate marriage, and if that makes me guilty of “right-wing nostalgia,” then I’m guilty as charged.

    • good_in_theory

      This presumes marriageable spouses for single black mothers.

  • greg byshenk

    Perhaps I’m missing something important, but the argument here seems to be absurdly beside the point. No one, so far as I am aware, argues that we do not have more/better stuff now than fifty years ago. But the mere fact that we do have better and cheaper stuff now is an argument against 1950s economic structures only if one has an argument that the provision of stuff now requires extremely unequal compensation, distribution skewed away from labour and toward capital, etc. The argument that if Bill Gates were only worth $60 million (instead of $60 billion), then we wouldn’t have the advances in computing enabled by Microsoft seems to be an extremely difficult one, though.

    • TracyW

      However, the argument that if we did not have private software, that could be sold for money, then we wouldn’t have the advances in computing enabled by Microsoft and other software companies does strike me as a much more easily made one.

      No one sat down and said “Bill Gates and Steve Jobs will be compensated with billions to build the computing revolution.” Instead, those guys, and a bunch of others, made use of existing property laws, along with some good luck, and produced things that numerous customers were willing to spend money on. The provision of stuff does entirely require some system of property laws that allows producers to keep some of the value of what they produce (obviously consumers typically get the bulk of said value).

      • greg byshenk

        Which is -also- beside the point, given that the antagonists in this discussion are defenders of some form of capitalism and of private property. It also fails to acknowledge that the “laws” have changed significantly over the past fifty years, allowing much more of the nation’s income to flow to the owners and managers of capital.

        • TracyW

          My apologies for thinking that your statement about Bill Gates and Microsoft had something to do with your argument. I assumed that since you had mentioned it, it was, like, you know, relevant, in some way. I do have these crazy ideas from time to time.

          So, in the hope that this time, when you talk about the nation’s income, you are actually being on point, and not again wandering off down some tangent, my understanding is that the changes in tax laws have something to do with this.

          See http://www.forbes.com/sites/timworstall/2012/09/26/labours-share-of-the-national-income-is-falling-but-is-it-being-measured-the-right-way/
          and
          http://econsnapshot.com/2012/10/16/is-labors-share-of-income-declining/ for US data (though there does appear to have been a decline since about 2000).

          And http://uneconomical.wordpress.com/2012/09/12/uk-gdp-by-income-revisited/ for UK data

          Oh, and here’s an argument that the welfare state and higher taxes might well cause declining shares of labour income, not just by raising taxes but by discouraging employment in industries that rely heavily on low-wage, low -skill labor inputs. http://www.nber.org/digest/dec04/w10509.html

          So this ties into my earlier point: it’s quite plausible that if we want to go back to the economy of the 1950s, we should cut the welfare state back to the 1950s. And the taxes.

          • greg byshenk

            The statement about Bill Gates -does- have something to do with the argument, but there is no part of the argument with “if we did not have private software,” as a premise. Indeed, the supposition that Bill Gates might have amassed a less large fortune from his ownership and operation of Microsoft more or less pressupposes an economic system with private property and private softfware sold for profit. This is why your first reply was entirely beside the point.

            As for the second, I note that your first cite states: “I don’t doubt in the slightest that the labour share of income has fallen by the way.”

            As for your final point, I take no position on the details of tax rates, etc. My comment was only to point out that the “argument” in the original post was beside the point to that discussion.

          • TracyW

            Greg, what I took your earlier argument as presupposing was that some people were arguing that, to quote you, “the provision of stuff now requires extremely unequal compensation”. But I don’t know of anyone making that argument and you don’t name anyone who does. You then cited Bill Gates as someone who might be motivated by $60 million rather than $60 billion, and I responded to that argument, that his wealth was about the system of property rights, not about Bill Gates.

            The reforms of the 1980s in the USA, the UK and NZ, including the broadening of the tax base and cuts in top tax rates, were aimed at far more people than Bill Gates, I don’t have figures to hand but I’m pretty confident that his earnings when Microsoft was taking off were well into the top tax bracket of the time. What matters more was what happened at the margin, for people for whom a bit more work, or a bit less tax avoidance, was a possibility, for the second income earner in high-income couples with kids like the Crosbys, for people in businesses that didn’t benefit from the massive economics of scale of software, etc. Bill Gates and Microsoft was the working out of a system of property rights that wasn’t designed with the intention of producing software billionaires, which was why I responded with my argument about property rights.

            On the second point, I remind you that you said originally that:

            allowing much more of the nation’s income to flow to the owners and managers of capital [emphasis mine]

            You were making a statement about the share of capital, not of labour. The first article cited goes on to state:

            However, we do not find that the profit [meaning capital] share is rising (assuming that we take out the entirely atypical 1970s that is).

          • greg byshenk

            So far as I know, no one actually is arguing that “the provision of stuff now requires extremely unequal compensation”. The point is that the claim, “we have more/better/cheaper stuff now than then” works as an argument against the thought that economic organization was better/more equal “then” only if one also maintains that the provision of “more/better/cheaper stuff” requires less equal economic rewards. If not, then the existence of “more/better/cheaper stuff” is irrelevant to the issue of economic organization. And again, note that the antagonists here are not Marxists, but those arguing for a somewhat different form of capitalist economic structure.

            That is is the point I am making. I won’t go further into the details of particular tax systems, etc., as I don’t have the detailed knowledge to do so effectively. But that is beside my point.

          • TracyW

            The point is that the claim, “we have more/better/cheaper stuff now than then” works as an argument against the thought that economic organization was better/more equal “then” only if one also maintains that the provision of “more/better/cheaper stuff” requires less equal economic rewards.

            And you’re still getting this around the wrong way. As I pointed out before, no one sat down and decided that the provision of stuff requires less equal economic rewards, instead there’s a structure of private property laws and taxes and what not, that combined with other changes in the global economy (eg the development of software with its particular properties, the opening up of the vast labour pools of East Asia, etc) that resulted in more unequal rewards.

            There was an agreement behind the 1980s reforms that increasing the provision of stuff required people to be able to keep more of their economic rewards. This is distinctly different though to arguing that the provision of stuff required extremely unequal rewards, as you implied with your mention of Bill Gates (unless you’ve again decided that your mention of Bill Gates has nothing to do with your argument). If it had worked out that the changes had resulted in more equal economic rewards, I’m confident that Roger Douglas and Margaret Thatcher would have been delighted.

            And you have now decided that your comment about shares of capital versus labour was beside your point, surprise, surprise.

          • greg byshenk

            Whether anyone “sat down and decided that the provision of stuff requires less equal economic rewards” is also irrelevant. If X has occurred, it makes not a lot of difference (in matters of policy) whether someone was specifically aiming for X or not. Whether or not neoliberal policies were intended to increase inequality, they have done so.

            Further, at least so far as I am aware, regardless of any “agreement” among neoliberal advocates “that increasing the provision of stuff required people to be able to keep more of their economic rewards”, there is no good evidence that such is actually true. Looking at tax and property laws across states indicates that “stuff” is compatible with a wide range of such laws.

            Finally, and again, whether anyone did “argu[e] that the provision of stuff required extremely unequal rewards” at the implementation of neoliberal policies is not relevant. Steve’s argument here is that we cannot reasonably return to the levels of inequality of fifty years ago because what we have now produces more stuff”. But that argument works only if the “produces more stuff” depends upon the current inequality. Absent such a showing, there is every reason to conclude that the “more stuff” is independent of the level of inequality, at least within a large range (and as cross-cultural comparisons would indicate), and thus that we could just as easily have the “more stuff” as well as the greater equality.

          • TracyW

            Whether anyone “sat down and decided that the provision of stuff requires less equal economic rewards” is also irrelevant

            So if it’s irrelevant, why did you bring up Bill Gates having $60 million rather than $60 billion?

            If X has occurred, it makes not a lot of difference (in matters of policy) whether someone was specifically aiming for X or not.

            But misunderstandings of past policy reforms do have a big impact on matters of policy.

            Further, at least so far as I am aware, regardless of any “agreement” among neoliberal advocates “that increasing the provision of stuff required people to be able to keep more of their economic rewards”, there is no good evidence that such is actually true.

            To expand your awareness, see http://www.themoneyillusion.com/?p=5164

            Steve’s argument here is that we cannot reasonably return to the levels of inequality of fifty years ago because what we have now produces more stuff”. But that argument works only if the “produces more stuff” depends upon the current inequality.

            You keep making this mistake again, and again. The “produce more stuff” argument depends on property rights, and tax rates, and the like, not on inequality. The property rights, tax rates, educational quality, technological developments (eg the computing revolution) may result in more inequality, but it doesn’t depend on it. Inequality is not a causal factor. It’s a byproduct.

            Maybe it will help if I point out that there’s a good argument that the world economy has structurally changed since the 1950s. In the 1950s-1960s the internal combustion engine was spreading through the global economy, and countries were building motorways. This really improved the productivity of all sorts of things, by making transport costs far easier (and improving farm and mining productivity and so forth). But that was a one-off gain. The marginal gains of more and more machines on farms, more and more motorways, fell. Policy can’t produce that sort of technological gain twice.

          • greg byshenk
            Whether anyone “sat down and decided that the provision of stuff requires less equal economic rewards” is also irrelevant

            So if it’s irrelevant, why did you bring up Bill Gates having $60 million rather than $60 billion?

            It is not the inequality that is irrelevant — obviously, as that is the issue at hand — but whether anyone decided that there should be inequality. As I further expanded, if some undesireable X occurred, then it is undesirable, regardless of whether it was a policy goal or an unintended consequence.

            Unfortunately, your cite to “The Money Illusion” fails to make your point, for it doesn’t show that changes in tax and property law lead to more welfare (or provision of more stuff), but only to slightly higher GDP per capita. Unfortunately, under conditions of inequality, measurements of the mean are always a problem, In this specific example, if the increase in GDP serves only in increase the share going to the wealthiest, then it isn’t doing anything to lead to greater welfare for the population as a whole.

            The property rights, tax rates, educational quality, technological developments (eg the computing revolution) may result in more inequality, but it doesn’t depend on it. Inequality is not a causal factor. It’s a byproduct.

            The issue I raise relates to the argument being made, and thus the point is not causal “dependence”, but logical dependence.

            As I noted in my previous comment:

            Steve’s argument here is that we cannot reasonably return to the levels of inequality of fifty years ago because what we have now produces more stuff”. But that argument works only if the “produces more stuff” depends upon the current inequality.

            That is, the argument works only if it can be shown that the “produces more stuff” cannot be achieved without also producing current levels inequality.

          • TracyW

            It is not the inequality that is irrelevant — obviously, as that is the issue at hand — but whether anyone decided that there should be inequality.

            Then why did you start off by saying that the argument only works if someone argues that the “the provision of stuff now requires extremely unequal compensation”?

            In this specific example, if the increase in GDP serves only in increase the share going to the wealthiest

            And the post that you were originally responding to, at http://cafehayek.com/2012/12/cataloging-our-economic-progress.html, argues that more stuff is more widely available, in terms of hours of average wages of earnings of production workers/average hourly earnings of nonsupervisory nonfarm private production (in the USA).

            And you yourself, earlier said: “No one, so far as I am aware, argues that we do not have more/better stuff now than fifty years ago.”

            thus the point is not causal “dependence”, but logical dependence.

            Something being “logically dependent” isn’t that impressive. Logic is about drawing valid conclusions given the starting premises, it’s not about empirical truth. To give a simple example:

            Premise 1 (P1). All things with fins are fish.
            Premise 2 (P2). Dolphins have fins.
            Conclusion (C). Dolphins are fish.

            C is logically dependent on P1, but P1 is false and as it happens, C is false. (It’s also easy to come up with true conclusions from false premises, for example: P1. All things with feathers live in the sea. P2. Dolphins have feathers. C. Dolphins live in the sea).

            To take a more famous example, Euclidean geometry is logically dependent on its set of axioms, but the Theory of Relativity implies that those axioms, and thus Euclidean geometry, is false.

            Given this, I’m pretty confident that I could come up with a set of premises that made “produces more stuff” logically dependent on inequality, and I could come up with a different set of premises that made “produces more stuff” logically inconsistent with inequality (I did the dolphins example instead in the hope of avoiding a distracting argument about the premises). The exercise would tell us nothing about the real world. What matters is causal dependence, not logical dependence.

            That is, the argument works only if it can be shown that the “produces more stuff” cannot be achieved without also producing current levels inequality.

            How about if it could be shown that the “produces more stuff” could be achieved with lower levels of inequality, by drastically improving primary education? By your logic, that would be an argument against our current economic structure, even though the real problem would be with the quality of primary education, not the system of property rights, tax rates, etc.

          • greg byshenk
            It is not the inequality that is irrelevant — obviously, as that is the issue at hand — but whether anyone decided that there should be inequality.

            Then why did you start off by saying that the argument only works if someone argues that the “the provision of stuff now requires extremely unequal compensation”?

            Because that is what I wished to say. The issue is the original argument, which quality has nothing to do with what someone might have decided at some time.

            “But we have more stuff, now!” works as an argument against the claim “current levels of inequality are higher than fifty years ago, and thus higher than they need/should be” only if there is some necessary connection between the ‘stuff’ and the ‘inequality’. If we have “more stuff” for reasons having nothing to do with current levels of inequality, then there is no reason not to attempt to have similar amounts of “stuff” with less inequality.

            Note, also, that this says nothing about how one would go about doing this. One might do so by changing tax rates, or alternatively by improving education.

            Your point about the emptiness of mere valid argument is true, but not relevant to the current discussion. A valid argument is not necessarily a good one, but an invalid argument is always a bad one. And, returning again to my original point, Steve’s original argument is an bad one, because it is invalid unless one includes an additional premise that is unjustified (and almost certainly false).

          • TracyW

            The issue is the original argument, which quality has nothing to do with what someone might have decided at some time.

            If, by original argument, you meant the argument referred to in Steve Horwtiz’s post, it was not a simple argument that the provision of more and better stuff is an argument against 1950s economic structures. If you read the Brink Lindsey paper Horwtiz links to, it’s much more complex. Brink Lindsey notes a number of points:

            Changing demographics (page 8)

            Racist norms restricted immigration from third world countries, sexist norms restricted the work that women could do. Opening up immigration increased measured inequality in the USA, by increasing the number of less-skilled workers, feminism + assortive mating increased household income inequality (page 18)

            That there was a shift to more individualism, and this was a response to the prosperity of the 1950s and 1960s (after the Great Depression and WWII) (page 21)

            A set of arguments why economic growth was so substantial post-WWII (roughly, pent-up consumer demand, pent-up supply of new products, advances in transportation, communications and air-conditioning, explosive growth in high school graduates and college graduates) (pages 23-24)

            Brink Lindsey also covers a bunch of other material in this paper, eg the limitations on competition in the 1950s-1970s, and why many of these were unwound in the 1980s.

            To quote Horwitz:

            Don’s methodology along with the evidence in Brink’s paper should put an end to this nostalgic nonsense[emphasis mine]

          • TracyW

            Your point about the emptiness of mere valid argument is true, but not relevant to the current discussion.

            This is the third time that you’ve made a point, I’ve patiently pointed out what’s wrong with it, and you’ve then told me that your point was irrelevant.

            Steve’s original argument is an bad one, because it is invalid unless one includes an additional premise that is unjustified (and almost certainly false).

            I’ve re-read the post several times, and can’t see anywhere where Steve made the argument that you described. Steve characterised the argument of the people he was responding to as: “how much better off the middle class was back then [1950s],” and Steve summed up his response to this as “Never has more stuff been available to more people more cheaply than today.” I can’t see anywhere where Steve said that more inequality was required to produce said stuff, nor is there any good reason in any strand of economics I can think of to think that more inequality than in the 1950s is required to produce more stuff: current inequality is a by-product, not a causal factor.

          • greg byshenk
            Your point about the emptiness of mere valid argument is true, but not relevant to the current discussion.

            This is the third time that you’ve made a point, I’ve patiently pointed out what’s wrong with it, and you’ve then told me that your point was irrelevant.

            This seems to be because you want to “patiently point[] out what’s wrong with” things that I’m not actually arguing. As I noted in my immediately preceding comment, your pointing out that valid arguments are not necessarily good ones is no counter to my point that invalid arguments are bad ones.

            More generally, so far as I am aware, just no one in this discussion claims that the 1950s or 1960s were perfect. Certainly Krugman and everyone else on the “equality” side recognizes that there were a great many less-than-perfect things about social organization fifty years ago. That said, there are at least a few measures, such as the distribution of wealth and income, that seem much better than now.

            If the argument you are defending is merely that, in some (or even many!) ways things were actually worse fifty years ago, then it is even more absurd than I originally suggested, as it argues against a position (generalized nostalgia for the 1950s) that no one involved is espousing.

          • TracyW

            I was responding to your earlier assertion that “the point is not causal “dependence”, but logical dependence.”
            To be pedantic, I admit that you merely asserted this, and didn’t argue for it (probably because there’s no good argument for your point). But, also to be pedantic, I used your own word “point”, not “argument”.

            I do agree with your more recent assertion that invalid arguments are bad ones (I predict that that assertion at least is safe from suffering a reclassification to irrelevance), but I note that you do not counter my point that Horowitz did not make the argument you attribute to him. I can see nowhere in what he wrote any implication that today’s stuff could not be produced with lower levels of inequality. As I’ve been saying, inequality is a byproduct, not a causal factor.

            On the other points you make, I agree with you in that I don’t know anyone arguing that the 1950s or 1960s was perfect. (Although I would, when making statements about the distribution of wealth and income in the 1950s, add a restriction like “in the USA”, or “in the Anglo-sphere excluding Ireland”, one would have to be an extremely hard-core egalitarian to look at average incomes and wealth in countries like China or Spain or Japan or Botswana in the 1950s compared to now, and say that things were much better in the 1950s).

          • greg byshenk

            I don’t know what it is you are trying to defend, now.

            The article opens by claiming:

            One of the more curious developments in the last couple of years has been the nostalgia for the 1950s economy from many progressives, especially Paul Krugman.

            If you now say that no one is actually expressing any nostalgia for the 1950s, then it seems that you think the whole article was an irrelevance from the outset.

            As I understand the general discussion (regarding inequality and the 1950s), it goes something like this: some people (call them ‘progressives’, if you wish) have noted that inequality in the USA has been increasing significantly over the last 25 years, to a degree that some consider troubling or even dangerous. Others (call them ‘neoliberals’) have claimed that this is just the product of a dynamic, growing economy. The progressives responded that such can’t be the answer, because dynamic, growing economies have existed elsewhere (and elsewhen even in the USA, such as in the 1950s) without requiring current levels of inequality.

            I can see Steve’s original article contributing to this discussion in one of two ways. One way is by saying, as the rhetoric of the opening suggests, “your nostalgia for the 1950s is mistaken, since they weren’t so great”. But I consider this to be an extremely silly reading, given that (as you seem to acknowledge) no one is actually expressing any ‘nostalgia’ for the 1950s. So I chose to read the opening as rhetoric and the argument as suggesting that, even if inequality is not required for a dynamic, growing economy in some general way, it is required for the particular dynamism we experience now.

            I claimed that the result of the latter reading was a failed argument. If you are instead arguing that we must adopt the former reading, then I won’t particularly object. I will just point out that you seem to be saying: “no, the argument is not mistaken; it’s irrelevant!”

          • TracyW

            You are trying to sneak a change in wording past me. In your previous comment you said:

            “More generally, so far as I am aware, just no one in this discussion claims that the 1950s or 1960s were perfect.” [Emphasis mine.]

            To which I responded:

            I agree with you in that I don’t know anyone arguing that the 1950s or 1960s was perfect[Emphasis added.]

            You are avoiding actually outright lying, by prefacing your statement with an “If”.

            But what’s the point of this attempt at confusion? Who did you hope to fool? I responded to your last attempt at pretending I was responding to a different argument by making pedantic statements about the difference between an assertion and a point, indeed, I even explicitly said I was being pedantic. And who else do you think is reading this thread by now?

            (The alternative interpretation is that you think that “perfect” and “nostalgia” mean the same thing, but your grasp of English strikes me as too good to think that interpretation likely).

            Anyway, going by dictionary definitions, one can be nostalgic for a past time without considering that time perfect. The people advocating a return back to the 1950s American economic structure could indeed be reasonably described as nostalgic for the 1950s American economic structure without thinking said structure was perfect, and also without being nostalgic for all of the other elements of 1950s USA.

          • greg byshenk

            Whether some period is actually “perfect” is (once again), not really the point. If I say that i prefer the original 1968 Camaro to its new 2000s incarnation (for example), then that is not expressing ‘nostalgia’ for the 1960s, nor even for automobiles of the 1960s. Rather, it is merely pointing to one thing that I consider superior.

            Similarly, if someone points out that current inequality cannot be a requirement for economic growth, as growth occurred in the 1950s without the same degree of inequality, then they are not expressing ‘nostalgia for the 1950s’, nor even ‘nostalgia for the 1950s economy’. Indeed, I am not aware of anyone claiming that “the 1950s economy” was superior in some general sense to the current economy.

            ‘Perfect’ is a sort of limit case, but once one says “there was a lot wrong with period X, but it looks like thing Y was better then”, it doesn’t qualify as ‘nostalgia’, particularly when “thing Y” is something measurable. Such just isn’t some sentimental longing for the past, but an objective (presumably) evaluation of thing Y in two different periods.

            Let me turn it around: is there any instance of progressives expressing anything that might reasonably be interpreted as “nostalgia for the 1950s” or even “nostalgia for the 1950s economy”?

          • TracyW

            is there any instance of progressives expressing anything that might reasonably be interpreted as … “nostalgia for the 1950s economy”?

            Krugman:

            “Along the way, however, we’ve forgotten something important — namely, that economic justice and economic growth aren’t incompatible. America in the 1950s made the rich pay their fair share; it gave workers the power to bargain for decent wages and benefits; yet contrary to right-wing propaganda then and now, it prospered. And we can do that again.”

            Sounds to me like nostalgia, in a general sense (“economic justice” is a pretty general term, as is “fair share” and “decent wages”).

            Whether some period is actually “perfect” is (once again), not really the point

            So now you’re introducing new statements and then immediately deeming them irrelevant, without me needing to say anything. I applaud your increase in efficiency.

            Particularly as I have no idea what you mean as you’ve put scare quotes around the word ‘perfect’ here. (I know I did too, but I’m singling out the word ‘perfect’ as a word as opposed to what the word refers to, a use that doesn’t make sense in your sentence).

            Similarly, if someone points out that current inequality cannot be a requirement for economic growth, as growth occurred in the 1950s without the same degree of inequality

            And to repeat myself, economic inequality is a byproduct, not a causal factor and you have not identified anyone arguing the contrary. You’re arguing with a straw man.

          • greg byshenk

            Krugman:

            “Along the way, however, we’ve forgotten something important — namely, that economic justice and economic growth aren’t incompatible. America in the 1950s made the rich pay their fair share; it gave workers the power to bargain for decent wages and benefits; yet contrary to right-wing propaganda then and now, it prospered. And we can do that again.”

            Sounds to me like nostalgia, in a general sense (“economic justice” is a pretty general term, as is “fair share” and “decent wages”).

            You’ve made my point for me by quoting Krugman. His point is in his first sentence: “economic justice and economic growth aren’t incompatible.” His discussion of “America in the 1950s is just an illustration of that fact, and not nostalgia. Krugman is plainly not expressing a sentimental desire for a return to the 1950s, nor even to the economy of the 1950s, but calling for giving “workers the power to bargain for decent wages and benefits” and greater economic justice.

          • TracyW

            This seems to have now come down to a difference of opinion over the meaning of nostalgia, and perhaps the meaning of the word “sentiment”. I’ve said why I regard it as nostalgia, but I seldom see much point in arguing about the meaning of words, and I don’t see any sign that Horwtiz is paying attention to this continuing discussion of ours at all.

            And of course economic justice and economic growth aren’t incompatible, particularly not if you don’t define what you meran by economic justice.

          • greg byshenk

            If you think the Krugman quote is an instance of ‘nostalgia’, then there probably isn’t any way to discuss this.

          • TracyW

            Actually I think it’s an instance of nostalgia, no scare quotes required. If I thought it was a case of ‘nostalgia’ then we would already be agreeing. Conventionally putting a single word in scare quotes like you are doing here with nostalgia means that you’re using the word not in its conventional sense, and quite often means that you disagree outright with its literal meaning.

            But, although I am picky about the use of quote marks, I am relaxed about the definitions of words. If you’d like to suggest another single word to summarise what you think Krugman and some other progressives are calling for, please do so. To me, what matters is the actual ideas, and their implications, not what term we use to label them.

          • greg byshenk

            What “Krugman and other progressives are calling for” is already there in your own quote from Krugman: “economic justice and economic growth”. Not everything desireable can or need be reduced to a “single word”.

            Krugman opens his piece by mentioning ‘nostalgia’, but then immediately rejects it, instead using the 1950s as an illustration:

            the success of the postwar American economy demonstrates that, contrary to today’s conservative orthodoxy, you can have prosperity without demeaning workers and coddling the rich.

            He makes his point, that “economic justice and economic growth aren’t incompatible” both here and in what you quoted, using the 1950s only to “demonstrate[]” that point.

            (As something of an aside: the above are not ‘scare quotes’, but just ‘quotes’. Neither are those in the preceding sentence ‘scare quotes': they are mention quotes. I rarely use ‘scare quotes’, and when I do, I think tone and context make it quite plain that I am doing so without anyone needing to guess about it.)

          • TracyW

            On Krugman’s point, he doesn’t actually identify any single person who argues that it’s necessary to coddle the rich and demean workers for prosperity. I’ve never come across a person arguing that either later than the 19th century (and even then I’ve only read such arguments being attacked, by people like Adam Smith). I think Krugman is attacking a strawman.

            The point that economic justice and economic growth are compatible is, without a definition of economic justice, a very weak point. The important things for me in what Krugman said is his call for a return to 1950s policies, in particular high tax rates on the rich, and his lack of a call for a return to other features of 1950s economic policies, such as a much smaller welfare state, higher working-age-retiree ratios, and higher military spending.

            I agree that nothing can be reduced to a single word, but anything, or everything, can be labelled with a single word (for example, the word “everything”). While we don’t need to label complex ideas with one word or two words, it is a lot more convenient to do so, for writers, readers, speakers and listeners. After all we don’t need to be debating this topic at all, but here we both are.

            On the issue of mention quotes, your usage is not one I’m familiar with. This article illustrates is the distinction I’m used to between uses and mentions.

          • greg byshenk

            It may be that “Krugman is attacking a strawman”, but that has no bearing on the current discussion, as that is not what Steve argued.

            The important things for me in what Krugman said is his call for a return to 1950s policies, in particular high tax rates on the rich, and his lack of a call for a return to other features of 1950s economic policies, such as a much smaller welfare state, higher working-age-retiree ratios, and higher military spending.

            And indeed Krugman is not callign for “a return to other features of 1950s economic policies”… because he is not expressing nostalgia for the 1950s, nor for “1950s economic policies” per se. Rather, he is arguing that certain policies, such as giving “workers the power to bargain for decent wages and benefits” and higher taxes on extreme wealth, are good policies and and are not (necessarily) anti-growth, as demonstrated by the fact that the US had such policies in the 1950s, combined with economic growth.

            I would also point out that one hardly needs to search to find neoliberals claiming that worker rights and/or taxes are anti-growth.

            [On the issue of mention quotes, the second paragraph of the article you link to gives an illustration of mention quotes.]

  • http://www.facebook.com/profile.php?id=193112608 Chris Bertram

    AFAICS, Brink Lindsey’s attempted rebuttal of Krugman contains no international comparisons. Yet many countries other than the US with similar technological change and similar human capital profiles have experienced much less growth in inequality. In the light of this, politics and the relative bargaining power of capital and labour looks a lot more plausible.

    • Kyle Nearhood

      What is also possible is that it is all funny numbers. It seems that every time I see some sort of international comparison, there are things that are not counted, things that are counted as something else, and generally comparing apples to oranges.

    • anonymous queer

      This is false. http://www.oecd.org/els/socialpoliciesanddata/49499779.pdf

      The largest rises in income inequality are those bloodsoaked anarcho-capitalist rapetocracies of Sweden, Finland, and New Zealand. Israel ,Germany, and Luxembourg also have increases roughly equivalent to the US. The ones with declining inequality? Turkey and Greece. The same? Hungary, France, and Belgium.

      The 3 largest gainers have far more labor/union representation on boards and in government than the US. Lindsey’s rebuttal may not be complete, and bargaining power b/w cap and labor may be the answer, but I wouldn’t look for it in cross-country comparisons.

      • good_in_theory

        It’s entirely consistent for both ‘many countries [with similar profiles] to have much less growth in inequality’ and for ‘Sweden, Finland, &etc to have ‘roughly equivalent’ increases to the US. (And in fact, the paper you point to demonstrates how this could be.) Further, one might want to distinguish increases in inequality among relatively low gini countries towards the median for the group from large increases in already highly unequal countries. Plus, there’s the stats other than gini that set the US somewhat apart from many other countries within that paper…

  • TracyW

    A point I think that needs to be mentioned is that the 1950s economy was very different in a number of other ways. The ratio of retirees to workers was far lower. Government spending on welfare was far lower, and government spending on the military was far higher in per capita terms. (see British data but I understand the overall story is similar in western countries).

    Environmental laws were also far looser (this time US data, but I understand the trend’s the same.)

    So, if we’re to go back to the 1950s economy, I think this calls for a sharp raise in the retirement age (other ways of raising the worker-retiree ratio being much more nasty), sharp cuts in welfare spending, particularly health and benefits, sharp environmental deregulation, and sharp rises in defence spending. I can really see Paul Krugman calling for that set of policies.

    • Sean II

      Let me put that in terms Krugman would accept. To get back to the good old days of bold aggregate demand management, the thing to do is lower the retirement age to 58, in order to create some broken windows in the labor market. Then we take all the retired 58+ year olds and draft them into the army. Unlike our usual cadres of perfectly healthy (and thus economically useless!) soldiers in their early 20s, this “new” cohort will raise health care demand immediately, not just 40 years from now. All the Occupy kids can start paying off their college loans once they get jobs at the massively expanded VA.

      Scratch that. We don’t want them to pay down their loans. Correction: All the Occupy kids can get higher limits on their credit cards and start spending, once they get jobs at the massively expanded VA.

      Also, environmental regulation should be increased. Properly understood in Krugmanian terms, the costs of regulation are benefits, because they too have an ultimately positive effect on aggregate demand.

      So, you know, problem solved. Now let’s circle the wagons against all those ignorant reality deniers who can’t wait to stand in our way, and get this done.

    • Kyle Nearhood

      Yes, over-all government spending was about 20% less than now, and Government regulation of industry was basic at best. Funny you never hear Krugman, Reich, or DeLong mentioning any of that.

  • Silly Wabbit

    Steve,

    Not to be nit-picky but aren’t you a self-attributed Austrian Economist? Isn’t this type of quantitative debate outside or your epistemology and methodological purview or, indeed, illegitimate in some manner? Maybe I don’t understand how you guys think……..

    I think this piece miscasts the “progressive” 50s nostalgia a bit. From what I can tell, the Krugman and other manifestations of “progressive” nostalgia seems to be an effort to meet some “conservatives” were they are at. If a prominent conservative (say Bill O’Reilly) talks about the “good old days” of the 1950s or early 1960s “progressives” are wont to point out that the top marginal income tax rate was quite high, labor unions were very powerful, school levies never failed, etc. etc. I believe this type of argument is also employed to challenge conservative tropes about the policy predictors of economic growth. The intellectual side of the center-left mediascape (e.g. Krugman, Delong) seems to employ this as a sort of rhetorical device. The Lindsey piece seems to take a few sentences from a blog to infer that Krugman advocates for some wholesale return to to 1930s, 40s or 50s. I’m not sure how you could make that inference.

    A number of Inglehart’s theories are not supported by empirical analysis of cross-national survey data (like the ISSP or even the World Value Survey). With that being said, I think Lindsey is misreading Inglehart’s theory of post-materialist values but that is another matter; Inglehart suggests that social norms which encourage a personal drive to compete and accumulate lesson as societies become more affluent. Thus, we see the rise of movements around the environmental, social justice in less developed countries, and the like (maybe BHLism belongs in there too).

    The Lindsey piece is full of claims that have probably been empirically tested. He seems to claims that sexism and racism lower income inequality. One could easily design a panel regression model to test this idea using country-level data. Countries vary substantially in the legal, economic and political rights they grant to women and one could see if sexism (operationalized using indicators of the political, legal or economic rights of women) was associated with low levels of income inequality net of other relevant predictors.

    If the “Lindsey Theorem” about the income inequality reducing effects of sexism or racism are correct than, as a society, the U.S.must experience much more income inequality to experience racial and gender parity……

    Its rather odd to claim that some type of “Keynesian” consensus has been shattered, as libertarians seem wont to do. Good or bad, policies like the “Bush Tax Cuts” and the Obama stimulus are both “Keynesian” in broad sense. I don’t really know were libertarians are coming from when they celebrate the death of “Keynesian economics”.

    More broadly, it is of utmost importance to not create mythical golden eras in our collective consciousness. I’ve always been amazed that the Ron Paul wing of the libertarian epistemic community cites colonial America as the ideal libertarian society; for somewhat similar reasons 1950s nostalgia from center-left bloggers makes little sense. However, I’m not really sure that that is what Krugman was doing in the few sentences that Lindsey cites…….and the Ron Paul people probably don’t really want to wear powdered wigs and own black people….so maybe the nostalgia trope should be avoided if you really want to get your point across……..

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