Econ lessons

As I lay on my sick bed (well, hopefully, recovery bed), I read the Sunday paper for the first time in a long while.

I was struck by this LA Times book review by Steve Fraser of John Kenneth Galbraith: His Life, His Politics, His Economics, by Richard Parker.

Galbraith is the last original Keynesian standing, our best reminder that John Maynard Keynes felt economics had to be about something more than a mathematically elegant description of a free-market world that never was. To really be of use, economics had to deal with the question of power, with the weight of institutions, with the inertia of habits and customs, with all that messiness that lies teasingly just beyond the reach of the algebraic formula. [...]

Parker clearly shares Galbraith's commitment to a liberalism that sees a vital role for government in helping correct or prevent abuses of the free market and in regulating the behavior of corporations whose activities affect us all. He sympathizes with Galbraith's sacrilegious insistence that public goods — parks, museums, clean air, schools, scientific discovery — are as true a measure of a society's worth as is the level of private material consumption. Because he is a fair-minded and scrupulous scholar, Parker's partisanship is a help, not a hindrance, to understanding the trajectory of Galbraith's life. [...]

Galbraith's Keynesianism always pivoted around means for checking the power of the country's dominant business institutions. By warping the distribution of wealth and income, by manufacturing and manipulating consumer "needs" and desires, by exerting a preponderant influence over the channels of ostensible democratic decision-making, so Galbraith argued, the country's great corporations did more than generate inequality and injustice. They also undermined economic efficiency and stability, while writing off whole regions of the country — inner cities, industrial ghost towns, vast zones of rural impoverishment — as if they were nonperforming assets. Galbraith's prescriptive advice, both when he was close to the centers of power in the 1950s and '60s and in the years of exile afterward, never shied away from a confrontation with that "power elite."