Samuelson and Piketty: It’s the “political” economy, stupid!

June 21st, 2014 · No Comments · economy, labor, tax policy, Uncategorized

By Arthur Alpert

I’m lucky to have fallen, years ago, into journalism, where they paid me to learn how the world works. The cherry on the cake was a crash course in financial markets and economics courtesy of Financial News Network, CNBC and the Wall Street Journal Business Report for TV, tuition-free again with paychecks.

OK, they weren’t always big paychecks, but why carp?

I’m neither an economist nor a market whiz, but the folks I covered and my colleagues taught the ABCs.

Case in point – markets and the economy differ. While the stock market affects the real economy (and visa-versa), it doesn’t predict it, not reliably. Sometimes (said Wall Street pros) the market represents the value of future profits and sometimes, it signals where GDP is headed, that’s all.

Basic stuff, but Robert Samuelson, who has been reporting on markets and the economy for some 40 years, doesn’t know it.

That’s why his syndicated column in Wednesday’s Albuquerque Journal (June 18) isn’t helpful.

It’s all about how the stock market is up, “suggesting a recovery that’s on track and strengthening,” while interest rates on bonds have fallen, suggesting “bond investors expect the economy to weaken.”

Guess he’s forgotten the market’s steady ascent in 2007 just before we plunged into the Lesser Depression.

There are numerous examples of the markets’ disconnection from the economy, but let’s not pile on. For I believe Samuelson represents the Journal’s best foot forward in economics coverage.

That’s my story and I’m sticking to it. Let me explain.

Besides Samuelson, the editors adorn the editorial page with George Will’s libertarian orthodoxy (no, he’s not a conservative any more) and claptrap (sometimes, partisan claptrap) from several other ideologues, of whom Cal Thomas is my favorite.

He’s unmatched in deifying the powerful.

Doubt that? Please read (or re-read) the Thomas column published under the rubric “Work ethic beaten down by disdain for wealthy” in the May 28 Albuquerque Journal. Note his failure to mention how the tax code favors Wall Street gamblers over, say, cops, firemen and teachers.

Or Thomas’ argument (Journal, May 14) against redistribution of wealth downward; note the topic of redistribution upward (via the political process) is nowhere to be found. Oversight?

Meanwhile, over on the Op Ed page, libertarians – some local, some imported – dominate again.

Samuelson, meanwhile, strikes me as well meaning if self-deluded. Take his attempt to size up Thomas Piketty, the author of the current intellectual sensation, “Capital in the 21st Century” in a column the Journal ran April 22.

He does a nice job, for example, in summarizing Piketty’s effort and thesis. (Thanks, Albuquerque Public Library, for lending me the book.)

It is only when critiquing Piketty that Samuelson reveals his limitations. And what limitations!

“Though Piketty is an economist,” Samuelson writes, “his book is essentially a work of political science.”

Duh. As I have noted here before, there’s no wall between economics and politics. Nor is there a science of economics; the discipline cannot escape human subjectivity. In fact, says Piketty, that’s why he prefers the old term- political economy.

Poor Robert Samuelson. He doesn’t even realize that’s what he himself is engaged in, reporting on political economy!

But let’s move on to Samuelson’s concluding comments on Piketty, which best reveal what he doesn’t grasp.

“We’d be better off if the rich were less so and other Americans were more so. But it’s doubtful that political action to force this transformation would be similarly beneficial, “ he writes. “Class warfare is bruising; today, it would degrade the confidence needed for a stronger recovery.”

Lordy, lordy! A grown man who does not know that class warfare was, is and will be forever – short of the Second Coming. (First, if you are Jewish).

And who does not know that “political action to force this transformation” is the stuff of all history, as is political action by occupants of the best seats atop society’s ladder to keep them?

Talk about a political agenda! Samuelson doesn’t know he has one, as we all do. His lack of self-awareness is so immense that I’m moved to shelter the boy from the cruel world.

By which I mean to say I prefer Samuelson’s innocence to the hidden partisans and paid apologists for the plutocracy whose essays Journal editors publish ad nauseam.

Sadly, however, this leaves us still with a newspaper that publishes nothing but Samuelson’s terribly flawed economic reportage or laissez-faire illusions about seven days a week. What to do?

Since the Journal won’t play fair (no, a half dozen “liberal” Op Ed columns a year is not fairness), I heartily recommend you visit the Center for Economic Policy Research (cepr.net) for economist Dean Baker’s “Beat the Press” columns. I get the weekly roundup via email.

Baker may not always get it right, but he regularly corrects Samuelson’s essays and lately, he’s paid attention to George Will, too.

I learn something when I compare Baker’s economics with Samuelson’s – and check the results against my internal scanner.

Too bad the Albuquerque Journal’s political agenda precludes offering similar education to its readers.

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