A provincial, largely forgettable treatment of public life in California from 1990-2003. Starr, the state librarian for most of the term, ranges from establishmentarian to postmodern lite, writing as if to please the academy. As an assessment of important events, the book lacks context and reads like too many clipped essays strung together, especially on such matters as political economy or social issues like ‘diversity’. A major theme, the comparison of Los Angeles and San Francisco, is poorly constructed as the southern metropole should be compared to the greater Bay Area. Starr shortchanges the digital revolution, devoting a scant seven pages to the dot coms — focused on the downturn at that — and misses the cloud / collaborative trend that is more important than offshore production as a barometer of innovation. The book’s treatment of second-tier cities (San Diego, Sacramento, Berkeley, Santa Barbara, Palm Springs) is somewhat useful, and it is also helpful on the aerospace collapse, crime in LA, and a few other topics. But the decade’s principal triumphs are seen as large public works (often in the Southland), and much cultural analysis appears to be narrowly written for architects. There is little political narrative, even as the state was moving toward a single-party oligarchy. Starr’s primary question — wither California’s middle-class dream — is inconclusively answered. More rigorous historical treatment awaits.
Political economy
4. Schales, Forgotten Man (7 Apr 2009)
Reevaluates the Great Depression’s political economy, finding FDR’s policy to be statist, jejeune, and ultimately ineffective. After an overview of the Coolidge and Hoover administrations’ failure to grasp secular changes, the book describes the baleful effects of seeking to balance the budget, the Smoot-Hawley tariff, and decreased liquidity. The incoming Democrats showed themselves heavily enamored of the social engineering and centralized planning of Soviet Russia. Their conceits (not least FDR’s vanity) were most evident in the Tennessee Valley Authority, Rex Tugwell’s utopian settlements, and the scheme to pack the Supreme Court. FDR used demagoguery (via radio), politicized prosecutions, and taxation to hound the ‘rich’ while rewarding the favored socioeconomic classes that carried him to reelection in 1936. He then caused the 1937 downturn, and blamed capital for staying out of the market. Eventually standards were lowered from the goal of recovery to the cause of improvement. Figures like Wendell Wilkie are woven into the narrative, while the title refers to the contest for popular opinion — was the government to help the ward of the state or the defenseless taxpayer? Persuasive and provocative: the Obama administration is heading the same route with its questionable, phony stimulus.
14. Garnaut, Dog Days (24 July 2022)
Assesses Australian political economy near the end of the resource boom (circa 2013), asserting the need for more non-primary exports, decreased real-exchange rate (the Aussie adjusted for comparative interest rates, inflation, and productivity gains), and reduced living standards (less imports). Dismissive of political leadership, Garnaut, the Hawke-era government economist, barracks for technocracy. Why wouldn’t rivals respond in kind? How do his prescriptions escape the trap of public choice economics and unaccountable progressives?
Japan’s postwar boom had brought the center of the world economy closer to Australia; the impact of China’s post-1978 gains are well documented. White Australia had been inefficient because the country needed people as well as hobbled by encompassing protection, personified by McEwen. The Hawke-Keating era had never known a majority for reform: it was championed by independent experts. The recession of 1990-91 started backlash against reform.
Though Hawke ran a tight budget, the country did not save enough of the fiscal surplus (as a percentage of GDP), instead drawing the lesson that budgetary policy was ineffective.
The Howard administration is upbraided for acting to soften the introduction of GST and higher gas prices. Australia has yet to adopt ready-made foreign productivity practices: in the 1990s, growth trailed the OECD, 1.1 vs 2.5 per annum.
One-third of the economy is exposed to international trade, and the leading constraint on Aussie economy remains balance of payments. Health and education comprise 13 percent of GDP and 20 percent of employment. Accordingly, productivity must be packaged not pursued piecemeal. (Unexplained) monopoly pricing stops the declining cost of imports from reaching consumers, checking the desired depreciation of the Aussie. Immigration has raised skill levels and thus helps attract international capital (although such capital would seem suspect); the assertion that immigration reduces Aussie inequality in comparison with the US is unsupported, and there is no general discussion of social cohesion.
More in the policy realm, states lack effective powers to tax and therefore fiscal freedom while the Commonwealth cannot exercise powers of scale. Garnaut recommends constitutional review by experts. But states with larger equalization receipts have larger public sectors: public choice dynamics look to be at work: why would they not capture the review process?
A chapter on the green economy, now seeming a prelim to more recent work, fails the ex ante test: among many other examples, studies touting the effects the Olympic and the World Cup have been wildly optimistic and rarely address inevitable unintended consequences. Why should ‘climate change’ different? Aren’t advocates another special interest? There’s also a discussion of contemporary alternatives for taxing primary resources, summarized as ‘fair distribution’ of the burden of adjustment.
Most aggressively, Garnaut says no ‘thinker or leader’ has lead decisive historical progress (‘inflections’), crowing a number of questionable assertions about the capacity of political leadership, in support of arguments for technocratic government.
Politics in a democracy is inevitably a contest between groups seeking efficient policy for economic development and equity, and other groups seeking interventions to confer special benefits upon themselves or to kill or constrain interventions that would impose unwanted costs.
Abbot is chided for his determination to keep political promises in changed economic circumstances – why will public experts prove more adaptive? Confusingly, Garnaut suggests the relevant of international benchmarks (p.51) but also the failure of Aussie social sciences to stand independent (74). Private interests skew research.
How is technocracy insulated from moralizing practice (e.g., woke America) – Garnaut’s pandering through the back door?
10. Zimbalist, Circus Maximus (25 Mar 2015)
The Olympic Games and soccer’s World Cup nearly always fail to make good on promised economic benefits in both the short and long term. Bidding for monopolized products, egged on by ex ante predictions (rather than ex post studies) and those who stand to benefit from public works (e.g., contractors), and often competing with authoritarian subsidization, candidate cities jostle with one another and thereby overbid their means. IOC and FIFA requirements and corruption inflate the costs, which have been conclusively shown to outstrip revenues (and soft benefits) both on a short- and long-term basis — particularly when measured against the city’s next-best investment opportunity. Only Barcelona 1992, which fit the Summer Games into a long-term, post-Franco trajectory, has emerged without crippling debt and white elephants. Following a lull in interest from 1968-84, the Summer Games have been most popular but may now again be less desirable. Popular opinion in democratic societies is turning against the opportunity costs. Intended for a lay audience, the work is clear and definitive but somewhat repetitive.
25. Wapshott, Keynes and Hayek (3 Dec 2017)
The preeminent argument of 20th-century economics, regarding the political utility of marco- and microeconomics, took shape in the interwar rivalry between John Maynard Keynes and Friedrich Hayek. Keynes, a Cambridge don and Bloomsbury intimate, was a ‘public intellectual’ wile Hayek, an Austrian emigre who found a home at the London School of Economics, was a theorist who only later turned to polemics. Keynes held the economy could be managed, primarily on the demand side, and rejected conventional belief in the necessity for equilibrium between savings and investment. The 1936 publication his General Theory of Employment, Interest and Money transformed Western economic and political consensus, predominating through ~ 1980. Surprisingly, his rival made no reply, in contrast to his dogged challenges to Keynes’ earlier works. Hayek, defending the laissez-faire view of Alfred Marshall and Ludwig von Mises, contended that to manage demand is to manage prices, which is the individual’s role, and thus to court either inflation or contraction; further, when the stimulus is removed, increased consumption will collapse. The amount of money and speed of its movement is key to understanding an economic system. Yet improved ability to measure and calculate did not substitute for qualitative understanding: individual decisions can never be anticipated or planned. (In this respect, he agreed with Keynes that the economy rarely comes to rest, the classical equilibrium.) Keynes, later accused of being a socialist fellow traveler — not unfairly due to his Fabian associates — shrugged off planning as the route to totalitarianism, contending tyranny results from collective sociopolitical choice. Keynes began to recover ground with the 1949 founding of the libertarian Mount Pelerin society and his decamping for America. More important, at the University of Chicago, economists led by Milton Friedman, though accepting the macroeconomic premise of laissez-faire as an inadequate policy, embraced prices as core to understanding. Subsequent ‘freshwater’ economists determined inflation to be the main objective of public policy (unlike the ‘saltwater’ view of unemployment as paramount) and gave rise to supply-side economics embraced by Margaret Thatcher and Ronald Reagan. Moving faster than in the years of the Keynes-Hayek rivalry, the author sketches the decline of Keynesian economics over 1970-2000s. Ultimately, however, Wapshott’s history of ideas is a polemic in its own right: the Bush administration’s response to the Global Financial Crisis is portrayed as necessarily Keynesian, rather than the preliminary moves of an outgoing administration, and the last word is given by the Keynesian John Kenneth Galbraith against the now straw-man Hayek, without reference to the supply siders.