Further, Reagan and Thatcher governed in the 1980s and US policy since then has been much more modified capitalism than they espoused. Part of the American superiority arises from the favorable demography of the US relative to its peers. One glaring example is the fact that growth in GDP per capita is the sum of the growth of output per worker (productivity) and growth in the ratio of workers/population (participation). The basic premise of the article was that the economic performance of the US in comparison with other advanced economies in terms of GDP per capital and stock market indices was impressive (and due to neo-liberal policies.) GDP per capita is an inadequate comparison for economic performance - internationally and intertemporally for many reasons which DeLong knows and could have cited.
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It is a shame that he decided on a rhetorical attack on the Economist for its recent long article on comparative economic performance rather than the professional dissection of the economic data on which the article (and David Brooks' encomium (NYT) for the article was based. But, as an economic historian, what took my breath away was the essay’s conclusion, which attributes America’s postwar prosperity to its worship of the Mammon of Unrighteousness (more commonly known as laissez-faire capitalism).ĭeLong is a an accomplished American Economic Historian. Americans must sit down, shut up, and recite the catechism: “The market giveth, the market taketh away: blessed be the name of the market.” To doubt that the US economy’s current problems are caused by anything other than an interventionist, overbearing government is apostasy. After urging despondent Americans to be happy about their country’s “stunning success story,” the authors double down on condescension: “The more that Americans think their economy is a problem in need of fixing, the more likely their politicians are to mess up the next 30 years.” While acknowledging that “America’s openness” brought prosperity to firms and consumers, the authors also note that former President Donald Trump and current President Joe Biden “have turned to protectionism.” Subsidies, they warn, could boost investment in the short term but “entrench wasteful and distorting lobbying.” In order to address challenges like the rise of China and climate change, the US must “remember what has powered its long and successful run.”Īs usual, the Economist delivers its reverence for neoliberal dogma with all the sanctimony and certitude of a true believer. But the economic paradigm that underpinned Thatcherism, Reaganomics, and the Washington Consensus is alive and well in at least one place: the pages of the Economist.Ī recent essay celebrating America’s “ astonishing economic record” is a case in point. With 40 years of deregulation, financialization, and globalization having failed to deliver prosperity for anyone but the rich, the United States and other Western liberal democracies have seemingly moved on from the neoliberal experiment and re-embraced industrial policy. BERKELEY – The past decade has not been kind to neoliberalism.
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