In order to alleviate any suggestion of concern trolling on Matt Zeitlin’s part, I’m going to take a shot at why this Naomi Klein piece on Obama’s economic advisers is such a mess. Klein’s continued obsession with Milton Friedman as a symbol of everything that is wrong with anything approaching a market solution causes her to not only flatten distinction between economists, but also miss a growing consensus among liberal economists that more has to be done to ensure social welfare and address inequality. First here’s what Klein has to say about Jason Furman:
Furman, a leading disciple of Rubin, was chosen to head the Brookings Institution’s Hamilton Project, the think tank Rubin helped found to argue for reforming, rather than abandoning, the free-trade agenda.
In contrast to the Furman/Rubin position, Klein approvingly cites two economists:
The news is not all bad. Furman claims he will be drawing on the expertise of two Keynesian economists: Jared Bernstein of the Economic Policy Institute and James Galbraith, son of Friedman’s nemesis John Kenneth Galbraith.
So let’s turn it over to James Galbraith:
In a Washington Post essay published late last year, on the eve of the Democrats’ ascension to the majority, Senators Byron Dorgan and Sherrod Brown articulated a trade policy that typifies the consensus view of the party’s labor-liberal wing. They criticize “free trade,” call for strong labor and environmental standards in future trade agreements, and argue for aggressive policies to open foreign markets to American goods. Their critique reflects a genuine anger, and the concerns their piece embodies deserve to be met. Their program is populist, nationalist, muscular, and in tune with the mood of the Democratic base.
But it is not reality-based. As policy, it would not achieve the senators’ basic objective — namely, more jobs at higher wages in the United States. As politics, the danger is not that it will fail but that it might succeed. And then, progressives in power will repeat the pattern that conservatives set in 1981, pushing a program based on high expectations and illusions that ends in confusion, reversals, defeats, and an eventual lapse into incoherence and disrepute.
Not exactly a ringing endorsement of Klein’s anti-trade rhetoric. But what does the Rubin/Summers (and Furman, by implication) wing of economic centrists (part of Klein’s nasty Friedmanite cabal) think about the current economic situation? Here’s Larry Summers:
The domestic component of a strategy to promote healthy globalisation must rely on strengthening efforts to reduce inequality and insecurity. The international component must focus on the interests of working people in all countries, in addition to the current emphasis on the priorities of global corporations. […]
While labour standards arguments have at times been invoked as a cover for protectionism, and this must be avoided, it is entirely appropriate that US policymakers seek to ensure that greater global integration does not become an excuse for eroding labour rights.
Let’s be clear: the “Wall Street” and “Main Street” sides of economic policy (represented by Robert Rubin and Robert Reich during the Clinton years, respectively) are closer now than ever before. Naomi Klein’s picture of the global economy is a caricature, and one that fellow critics of the Washington Consensus reject. Anti-market screeds might be a winner for populist-minded voters, anxious about their financial security and the turn in the American economy, but it won’t make for good economic policy. There are people out there who are gripped with by a Friedmanesque “free-market-in-all-things” ideology, but economists like Furman and Goolsebee aren’t among them. The truly problematic ideology is Klein’s own.