J. Bradford DeLong
James Bradford DeLong (born June 24, 1960) commonly known as Brad DeLong, is a professor of Economics and chair of the Political Economy major at the University of California, Berkeley.
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- Economists’ instincts are that uncertainty about current prices, future prices, and the real meaning of nominal trade-offs between the present and the future; distortions introduced by the failure of government finance to be inflation-neutral; windfall redistributions; and the focusing of attention not on preferences, factors of production, and technologies but on predicting the future evolution of nominal magnitudes must degrade the functioning of the price system and reduce the effectiveness of the market economy at providing consumer utility. The cumulative jump in the price level as a result of the inflation of the 1970s may have been very expensive to the United States in terms of the associated reduction in human welfare.
- Fifteen years ago, I found it easy to be in favor of international capital mobility -- the free flow of investment financing from one country to another. Then it was easy to preach for an end to all systems of controls on capital that hindered this flow. Now it is harder.
- "Should We Still Support Untrammelled International Capital Mobility? Or are Capital Controls Less Evil than We Once Believed?", The Economists' Voice (2004)
- Classical liberalism–laissez-faire–was a mighty intellectual current. But empirical reality was mightier still, especially in the form of the Great Depression. And so the main channel became social democracy. And so, I think, it remains today. But as the river entered its delta, it did spread out. There are three other channels in the delta besides Polanyi-style social democracy: call them Leninism, Keynesianism, and Hayekism.
- Hayek says that the problem with classical liberalism was that it was not pure enough. The government needed to restrict itself to establishing the rule of law and to using antitrust to break up monopolies. It was the overreach of the government beyond those limits, via central banking and social democracy, that caused all the trouble. A democratic government needs to limit itself to rule of law and antitrust–and perhaps soup kitchens and shelters. And what if democracy turns out not to produce a government that limits itself to those activities? Then, Hayek says, so much the worse for democracy. A Pinochet is then called for to, in a Lykourgan moment, minimalize the state.
- The Good Economist Hayek is the thinker who has mind-blowing insights into just why the competitive market system is such a marvelous societal device for coordinating our by now 7.2 billion-wide global division of labor. Few other economists imagined that Lenin’s centrally-planned economy behind the Iron Curtain was doomed to settle at a level of productivity 1/5 that of the capitalist industrial market economies outside. Hayek did so imagine. And Hayek had dazzling insights as to why. Explaining the thought of this Hayek requires not sociology or history of thought but rather appreciation, admiration, and respect for pure genius.
- The Bad Economist Hayek is the thinker who was certain that Keynes had to be wrong, and that the mass unemployment of the Great Depression had to have in some mysterious way been the fault of some excessively-profligate government entity (or perhaps of those people excessively clever with money–fractional-reserve bankers, and those who claim not the natural increase of flocks but rather the interest on barren gold). Why Hayek could not see with everybody else–including Milton Friedman–that the Great Depression proved that Say’s Law was false in theory, and that aggregate demand needed to be properly and delicately managed in order to make Say’s Law true in practice is largely a mystery. Nearly everyone else did: the Lionel Robbinses and the Arthur Burnses quickly marked their beliefs to market after the Great Depression and figured out how to translate what they thought into acceptable post-World War II Keynesian language. Hayek never did.
My hypothesis is that the explanation is theology: For Hayek, the market could never fail. For Hayek, the market could only be failed. And the only way it could be failed was if its apostles were not pure enough.
- The Political Economist Hayek is the founder of the Mont Pelerin Society, who sets as his post-World War II lifetime task the rollback of social democracy. That is the Hayek who, we think, urges Margaret Thatcher in the 1980s to pull a Pinochet in Britain on the Labour Party and the United Mine Workers.