Krugman on Hayek

I'm catching up on Paul Krugman's blog (a.k.a. my Bible) and this post from Dec 5 caught my eye:

Via Mark Thoma, David Warsh finally says what someone needed to say: Friedrich Hayek is not an important figure in the history of macroeconomics.

These days, you constantly see articles that make it seem as if there was a great debate in the 1930s between Keynes and Hayek, and that this debate has continued through the generations. As Warsh says, nothing like this happened. Hayek essentially made a fool of himself early in the Great Depression, and his ideas vanished from the professional discussion.

So why is his name invoked so much now? Because The Road to Serfdom struck a political chord with the American right, which adopted Hayek as a sort of mascot — and retroactively inflated his role as an economic thinker.

There's a famous incident where Margaret Thatcher, freshly elected as leader of the Opposition, in a shadow cabinet meeting put a copy of The Road to Serfdom down on the table and said, "This is what we believe."

I've been arguing for a while that a lot of the problems with our economic system can't be laid at the feet of economists - mainstream economics pretty much understands the problem and understands what to do about it. Where there is debate is among politicians, who by and large, I think, don't appreciate (or indeed understand) the economics.

Buddhism and society

I've just finished reading The Heart of Buddha's Teaching by Thich Nhat Hanh. I think this book may have changed my life (in the short term at least), but I'll need to learn some more about Buddhism before I can say. In the meantime, I thought I would share a passage from the end of the book:

There is so much violence in our schools. Parents, teachers and students need to work together to transform the violence. Schools are not just places for transmitting technical know-how. They must also be places where children can learn to be happy, loving, and understanding, where teachers nourish their students with their won insights and happiness. We also need places in hospitals where family members, health are workers, patients, and others can sit, breathe and calm themselves. We need City Halls where responsible people can look deeply into local problems. We need Congress to be a place where our real problems are truly addressed. If you are an educator, a parent, a teacher, an architect, a health care worker, a politician, or a writer, please help us create the kind of institutions we need for our collective awakening.

Our legislators need to know how to calm themselves and communicate well. They need to know how to listen and look deeply and to use loving speech. If we elect unhappy people who don't have the capacity to make their own families happy, how can we expect them to make our city or our nation happy? Don't vote for someone just because he or she is handsome or has a lovely voice. We are entrusting the fate of our city, our nation, and our lives to such people. We have to act responsibly. We need to create communities of deep looking, deep sharing, and real harmony. We need to be able to make the best kinds of decisions together. We need peace, within and without.

 The book has given me some very tentative thoughts about the role of spiritual awakening in bringing about social change. Basically, what I'm getting from this book is a set of concrete values that I strongly agree with, and a series of practices that can be used very effectively to bring about change in your lifestyle and behavior very quickly. Me being me, the political implications of that (some of which Hanh gets into in those passages) get me pretty excited.

My thoughts are initial and rambling. For that reason, they're behind the cut.

Why Gingrich Won the Debate

David Weigel has a good analysis in Slate of why Gingrich won the debate last night. Bottom line: he's the best debater.

Gingrich never allowed himself to get stuck [...]. His rivals, cursed in their own ways with weaker debating skills, kept letting him out. Ron Paul, never a comfortable attacker, chided Gingrich for consulting for Freddie Mac in the run-up to the financial crisis. "As you say, normally, in your own speeches, the housing bubble came from the Fed inflating the housing supply," said Gingrich. A one-two punch: He called Paul a phony and called himself innocent. "I was in the private sector," he explained, "and I was doing things in the private sector." He charged for his insights. "You're allowed to charge money for them. That's called free enterprise."

This was pure distraction. "Free enterprise," as conservatives like to think about it, has nothing to do with the health of the government. Gingrich was referring to a period when he used his clout and connections to charge a government agency as a consultant. But he slipped so quickly in and out of the explanation that no one nabbed him for it.

 Sounds about right to me - Gingrich is a smart guy, no question about it. As Weigel puts it:

When he talks to Republicans, especially to Republican voters who may not be inclined to back him, Newt Gingrich wins them over with a promise. He will outsmart Barack Obama. He will challenge him to "seven Lincoln-Douglas-style debates," as he said last week at the Republican Jewish Coalition's confab. The president can even "use a teleprompter," jokes Gingrich. It's one of the tightest punchlines in conservative politics.

Tonight's debate in Iowa was the first since Republicans agreed that Gingrich was their presidential front-runner. They've started to imagine him facing off against Barack Obama, the president they consider a pure media creation who can't put two words together unless they're in blue type on a screen in front of him.

While in any case "seven Lincoln-Douglas-style debates" will never happen (every election cycle someone yearns after a return to those, and they never happen, because the risks are too high for everyone involved), there's no question that Gingrich would probably be the most fun to watch Obama debate against. The Republican idea that Obama can't hold his own is obviously fantasy, but this is a party that hasn't been overly concerned with reality for some time, so no problem there.

I think Gingrich's biggest problem, fundamentally, is that no one likes him. He had famously bad relationships with just about everyone he worked with in Congress, and I think he'd have a hard time building a solid working relationship with the party mandarins if he won the nomination - especially because the establishment has lined up solidly behind Romney and might view a last-minute Gingrich upset as illegitimate.

In any case, Democrats should not be concerned. Gingrich is a crank, and he's a scary crank - Gary Trudeau in Doonesbury famously drew him as a bomb with the fuse lit. As we've seen since he's become the "front-runner", he might be good at wiggling out of other people's traps but he's so good at sabotaging himself with his scary, crazy ideas (legalize child labor!) that it hardly matters. I've seen several columnists ask, independently, a question along the lines of "is this really the guy we want with his finger on the button?", and I think that will resonante with voters.

I still think Romney will be the nominee because Republicans always nominate whoever's next in line. But if Gingrich were to get the nomination, I think we'd see a general with low turnout as voters unhappy with both choices stayed home, but I think Obama would win comfortably as swing voters would see him as the safer pair of hands.