April 28, 2005

Always heard and never heeded, John Kenneth Galbraith haunts this account of his own life, giving way for much of Richard Parker's text to the powerful men and forces Galbraith sought to guide and failed to steer. Galbraith advised John Kennedy and Lyndon Johnson, served as ambassador to India and bete noire to Richard Nixon, wrote 40-some books of which at least three earned enduring popularity despite their distinctive prose and complex ideas, taught decades of Harvard undergraduates, yet left little imprint on the public policy or economic theory of our time and what mark he made is fading fast.
The pity is not only his but ours, for in Parker's analysis Galbraith was right even though he was often ignored.
This situation presents a biographical puzzle: given that Galbraith sacrificed a good deal of professional respectability and job security to make sure the great and good would hear his opinions, why did he have so little impact on the fields he cared most about, U.S. policy and the profession of economics? The answer has to do at least partly with the character of the Democratic Party and of American academia: for although electron-irradiated wretches of the blogosphere like to depict these institutions as riddled with liberals they are, and for decades have been, actively hostile to the New Deal liberalism for which Galbraith has consistently stood.

  1. Galbraith was right....

Here is a top-10, a partial list of Galbraith's controversial positions that turned out to be more correct than otherwise.
1) The rapid liberalization of the Russian economy in the early 1990s would lead to a massive inflation that hurt the ordinary saver and benefited a few oligopolists.
2) The mantra of "maximizing shareholder value" is empty. Because shares in American corporations are generally very widely held, managers' views trump shareholders', and corporations act accordingly.
3) The cry for "smaller government" and its associated policies of tax cuts and deregulation would lead to an increase in government size and activism.
4) The 1987 stock market was grossly overvalued on a scale commensurate with 1929, and without some intelligent maneuvering it was going to crash on a scale commensurate with 1929 -- though with some deft policy-work the crash would not produce a commensurate depression.
5) The use of quantity of money as a target would not be a success so  far as economic policy goes.
6) Inflation and unemployment don't move on a handy, sliding Phillips Curve, allowing you to target a growth rate and set economic policy apolitically.
7) Vietnam lay outside the sphere of vital American interests and the war would cost more than it was worth.
8) Regarding the Kennedy-Johnson tax cut: "'The tax rate is the clumsiest and least reliable instrument that can be used' to stimulate growth. 'It would be more sensible to depend on variations in direct government demand for goods and services than to manipulate private  
disposable income to achieve the same result.'" (p. 430)
9) Adlai Stevenson could have been a lot better as a Presidential candidate if he had only ... (long list ensues)
10) From his time at the Strategic Bombing Survey in 1946: bombing campaigns don't win wars, infantry do.

Repeatedly, as Parker says, "Time proved Galbraith right," (p. 603) and "just as he predicted," (p. 622) disaster ensued from not following his recommendations. Which raises two questions: what does Galbraith know that other clever people don't, and why won't they listen?

  1. What Galbraith knows

Simply put, Galbraith knows there can be no economics without politics. The chimera of scientific economics-of purely technical economics, predictable and systematic as physics-appeals to almost everyone. Economists love it because it lets them wear the mantle of  
science, and if they can make a prediction pay, it means big money.  
Policymakers love it because it lets them off the hook: if the equations say, "do this," you do this, because you know-you have proof! -- that on balance it's the best thing to do. Journalists love  it because it makes simplicity where once there was complexity: curves you can draw on napkins tell a story lean enough to fit in your slim column-inches.
Except: it doesn't work. Ever. Or, if you want a rote bow to  uncertainty, it hasn't ever worked yet. The Phillips Curve of the New Economics, which was supposed to show an iron trade-off between inflation and unemployment, broke down-and both Milton Friedman and  Galbraith knew it would. The Laffer Curve of the voodoo economists, which was supposed to show a sweet spot for tax rates (lower, obviously, than they were) not only broke down, it never worked-and Galbraith (and probably every other economist, even if they weren'ttelling) knew it wouldn't.
And, hang uncertainty, let's go out on a limb and say there will never  ever be such a curve that pans out. Because people aren't atoms. Draw  up a law that explains the collision of particles and they will still  (vulgar superstitions about quantum physics notwithstanding) collide  that way. People are reflexive, creative, and greedy. Draw up a law  that explains how people make money, and they will read it and try to  profit from it and soon enough, they will no longer make money the way  you predicted.
So there can be no economics without politics. No equations, no  curves, no models, will ever do the hard work for you. You have to  choose: do you want GDP growth? Do you want more-equal income and  wealth distribution? Do you want longer lives? Do you want civil  rights, victory over communism, and lower taxes all at once? Sure you  do. Now make some choices how to have as much of them as you can get  at one time, and recognize that more of some means less of another.
What Galbraith also knows, what he showed in his three great books on  the American economy-American Capitalism (1952), The Affluent  Society (1958), and The New Industrial State (1967) -- is that by  pretending we do not have to choose-by trying to take politics out  of economics-we have made a choice, willy nilly. And that choice is  to let government and private wealth get in bed together and run the  United States, sometimes for better and sometimes for worse-more  often the latter.

  1. Why won't they listen?

Galbraith is himself an acute student of why people don't listen to him. In The Affluent Society Galbraith sketched a cruel but apt cartoon of the American-as-consumer, who submits himself to the world of advertising and allows it to likewise create and sate his needs, lending him the illusion of choice and the reality of credit-card debt. Government by the free consent of the governed has given way to government by the implicit acquiescence of the adequately distracted.  
We don't want to know that the world is complicated and asks our attention. We want to watch The Apprentice.
Another piece of the puzzle is the Democratic Party, which has never-as FDR himself recognized-made itself particularly at home with  New Dealism as a philosophy. White Southerners were only the most  obvious and important constituency chafing at the creative instincts of Rooseveltian reformers. Plenty of others thought the New Deal  socialist, too friendly to minorities, or simply too complicated to  sell at the polls. The Democrats never again stood for the same spirit  of reform that characterized FDR's first term.

Perhaps the most important obstacle in Galbraith's way, though, has been academia, and not only blue-blooded Harvard, whose Corporation always fretted over the pink politics of its alumnus Roosevelt and his allies, but the whole profession. As Parker notes, Galbraith never  
wanted to play the academic game, never wanted to reproduce himself in a hundred acolyte doctoral students, never wanted to keep up with new techniques and publish in journals. And that-not liberalism-is what professional academia demands. Galbraith wanted instead to speak over the heads of his peers to a wider audience. On the second page of Parker's introduction, the word CELEBRITY appears in all-capital letters. Galbraith in truth would much rather have spent an evening with Jackie Kennedy than with a stack of fresh off-prints from the university presses. What really galled the envious was that he could, and did. So they for their part did what they could to spite him and to tarnish his reputation. Parker indicates sufficiently, without delving into dull details, the sheer drag that petty professors can  
exert by incremental minor horrors on their colleagues.

  1. What makes a Galbraith?

Let's stipulate that on balance, a Galbraith is a good thing to have around. What makes one, and why aren't there more? This question, of how the man came to be who he is, ought to be the principal inquiry a biography answers. But truly they rarely do. In Parker's account we  
can see Galbraith in the making, from his rural Ontario origins through his early career as an agricultural economist and a significant if minor player in the New Deal. But he is not the Galbraith we know until, suddenly in about 1949, he is. He got tenure at Harvard, and his young son died in a sad and touching story of family misfortune. And then Galbraith began speaking, and writing, in those round, droll, fearless periods, riding his language to prominence, and he has not stopped. Parker cannot really tell us why or how.
Nor can Galbraith. He is certain now, at the close of his career, that writing does not change minds enough to matter. "In the past ...  
writers, on taking pen, have assumed from the power of their talented prose must proceed remedial action. No one would be more delighted than I were there similar hope from the present offering. Alas, however, there is not." (p. 627) Nor is there. Yet he is still writing.

by Eric Alterman  with Eric Rauchway, Altercation