Should we abolish the Profession of Economics?

Poor old Economists! Back before the financial crash they seemed to run the world. They certainly seemed to staff half of all the Banks, Governments, Political parties and NGOs across most of it. Peace and order are what you want, they told us. Free markets, the lowest possible taxes, the lowest possible barriers to the free flow of goods, capital and movement. In this they were essentially following the doctrines of Adam Smith whose Wealth of Nations [1]was the founding principle of their Science. And rightly so: because it all seemed like pretty good advice at the time, didn’t it?

Trouble came on two fronts. The first is causal. The really profound shifts in human wealth are created by new discoveries in Science and Technology. (LSS passim) At the very time that Smith was writing his masterwork, technologists like James Watt were creating new machines of such fundamental power that they absolutely transformed the wealth of the nations that adopted them. However much you argue about taxes, multipliers and currency reserves, none of this can hold a candle to the economic leap unleashed by Maxwell’s equations or the work of Watson and Crick in Biotechnolgy. Goal down to the economists. Even worse these days: no one is listening to them. Intellectually, their prescription of how to get to a better life is impeccable. But in a world inhabited by Homo sapiens, the ethnic identity card will always trump the economic prosperity one. It’s a point we have often made here: and the evidence for it has been overwhelming ever since 2016. Are the poor practitioners of the “dismal science” doomed like so many Cassandras [2] to ever prophesy the truth-and be for ever ignored? Economists nil, Humanity 2 : game over?

But before we really go on to call for the abolition of a profession which has actually nurtured some of the brightest minds in History (Ricado, Keynes, Hayek, Stiglitz………) remember this. The technological changes we talked about take many years, decades even, to be fully adopted. Meanwhile, there’s still and economy to run, so you are going to need a few experts who can tell you what is happening here and now. Who can provide a reality check tell you that adopting ethno-nationalist and populist policies are never good for the long term health of an economy, however good they feel at the time. If you want some detail, this report contains abundant evidence[3] We prefer to offer the example of that Uber ethno nationalist Adolf Hitler: his policies didn’t exactly lead to prosperity much for anyone, neither at home nor abroad, did they? Perhaps we really need more economist not less. Especially in countries which are now adopting ethne nationalist solutions with relentless enthusiasm

[1] Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations. Edited by R. H. Campbell, A. S. Skinner & W. B. Todd. Liberty Fund, Indianapolis. ISBN: 978-0865970069 (two‑volume set).

[2] Aeschylus The Oresteian Trilogy Penguin 1959

[3]Funke, Manuel; Schularick, Moritz; Trebesch, Christoph. “Populist Leaders and the Economy.” American Economic Review 113(12) (2023): 3249–88. DOI: 10.1257/aer.20202045.

#economics #populism #science #technology #finance #wealh #identity politics #adolf Hitler #tariffs #immigration #history

Chinese success : some harsh lessons for many countries

We often showcase the Guardian’s Larry Elliott. not just because he’s good at economics (he is), but also because his articles have a way of illuminating a much broader range of human life including Geopolitics and History to name but a few. And we think today’s called China’s demise was gleefully predicted by the West-but meanwhile it’s built an AI Revolution Is a prime example. As usual, we provide a brief summary of Larry’s main points, accompanied by the earnest imploration for you to read it for yourself. Followed as ever by our own take: thoughts which the article has stimulated in the minds of the Editorial Board of LSS, its staff, and that contract bloke who does the cleaning.

LARRY SAYS

For decades, western experts have been confidently predicting the failure of the Chinese economic model. The Chinese, their wisdom ran, were overindebted, overinvested, over reliant on the property market and didn’t have enough democracy. Even when China began to do well at low level manufacturing it would never, they asseverated, catch the West’s lead in high tech manufacturing and industries of the future. But what has happened? Now the Chinese are leading the world on renewable energy technologies. They don’t even have to import machine tools from Germany, which we find especially significant. As for AI; their models and technologies are breathing down the necks of the leading American corporations. With dire risks to the current US stock market boom, perhaps even to the global balance of power itself. All in all, pretty significant stuff. Which leads us to think:

WHAT WE SAY

Let’s start by looking at how Larry thinks China achieved all this:

When China began to build up its manufacturing strength almost 50 years ago, it saw itself as a developing country. It had no illusions about the scale of the challenge but had a plan and stuck to it. There was no aversion to picking winners. Nor would the strategy be left exposed to the whims of speculators. Instead, there was a willingness to use all the policy tools available: subsidies, tariffs, exchange controls and state investment.

We remember how these were the very years western nations were taking the opposite route. Remember the Washington Consensus, Thatcherism, Monetarism, whatever you want to call it? Free markets were good, it held: and anything the State did was, by definition bad. So: cut taxes, cut regulations, abolish all industrial policy and above all keep labour costs low. If that meant outsourcing jobs to China, what the hey-it would keep those pesky unions in check, wouldn’t it? Nowhere was this policy more rigorously applied than in Great Britain, which has seen itself slide from manufacturing power base to a small offshore island living on tick, whose inhabitants wander bewilderedly through the remains of their past like the impoverished heirs to a squandered fortune.

Yet Britain’s story is the whole West’s really, only more so. We want the western nations to survive, really we do: they represent so much in the common patrimony of humankind. But if they are to do so they must stop thinking like spoiled brats, and start to think like developing nations once more. To learn a little humility, in fact.

China’s demise was gleefully predicted by the west – meanwhile, it built an AI revolution | Larry Elliott | The Guardian

#china #USA #UK #economics #technology #history #AI #manufacturing #trade #industrial policy

Alfred McCoy on the Decline of the American Empire: a truly thought provoking piece

Every so often someone comes along with a piece that seems to capture our thinking, give words to what we have been trying to say, only does it much better than we ever could. Such is today’s showcase article: After America: The Causes and Consequences of US Global Decline by Alfred W. McCoy for the Fair Observer.[1] Clear and succinct, it’s an easy voyage across a vast range of time, empires and continents, and you should read it. So magisterial that we cannot summarise it in this short space; but we hope the following, our personal takeaway, will at least whet your appetite for what is a masterclass in history, and a guide to where it may dump us all next.

In McCoy’s analysis, the American Empire rose to final geostrategic dominance in 1945. Its essential strength lay in manufacturing and energy, which was translated into power via its easy dominance of world finance through such diverse means as the IMF, dollar supremacy and other instruments large and small. Its essential strategic act was to dominate the Eurasian landmass (still the overwhelming centre of world population and production). This was achieved by the plantation of subject allies (NATO at one end, Japan and Taiwan at the other) coupled with unrivalled suzerainty over the world’s sea and air communications: a final culmination of the doctrines of Mahan, another Alfred, who had midwifed much at this empire’s birth.[2]

Generally speaking, 1945–2025 seems to be a good run by contemporary imperial standards. Like other empires, U.S. hegemony waned slowly: the rise of large economic blocs such as the EU, ASEAN and MERCOSUR would gradually erode America’s relative position. But the empire which Donald Trump inherited in 2025 was not only largely intact; it seemed actively to be addressing some of the causes of its decline. Chief among these were energy technologies. For just as the British Empire grew great on coal and steam, to which totems it became wedded, so the American fuel of choice was oil and combustion engines. China saw this and began to prepare for the coming age of green renewables, which are both safer and cheaper than planet‑destroying hydrocarbons. And while America had wasted trillions on futile wars in Iraq, Afghanistan and now Iran, China cashed in its IOUs to build the inexpungable Belt and Road across the crucially contested landmass, relegating its rival imperium to a peripheral role.

We think it is unfair to blame Trump and his acolytes for all that has gone wrong: the trajectory of their empire had long since been sent downwards by the decisions of others a quarter of a century before. But in our opinion the stubborn disregard of clean technologies has squandered a precious opportunity for further decades of leadership — and handed that in turn to a power likely to be far less sympathetic to Westerners in general and certain chosen allies in the Middle East and elsewhere. But once again — read the article, we implore you.

[1]After America: The Causes and Consequences of US Global Decline

[2]Mahan, Alfred Thayer. The Influence of Sea Power upon History, 1660–1783. Boston: Little, Brown and Company, 1890.

The reflections above represent our own reading of Alfred W. McCoy’s article “After America: The Causes and Consequences of US Global Decline.” They are offered as fair comment on a work of public interest. Any interpretations, analogies, or historical parallels are our own and should not be taken as McCoy’s views unless directly attributed to him. Readers are warmly encouraged to consult the original article to appreciate the full nuance of his argument.

#USA #China #energy #renewable technologies #history #economics #geostrategy #communications #iran #iraq #oil

Bond market worries: is America beginning to go the way of Spain and Britain?

Good morning gentle readers and welcome to another week in which we shall together learn even more about Science and Society. We’ll concentrate on the Society bit today, via economics. Because when two minds as acute as Katy Martin of the Financial Times[1] and Heather Stewart of the Guardian[2] coincide, we suspect that Society may be unravelling rather fast indeed.

WHAT KATY AND HEATHER SAY Both highlight disquieting instability in the US Bond Markets, particularly long term US Treasuries..Remember: this is the key metric by which foreigners judge a country’s future soundness and judgement, it filters out the short-term sound bites of spokespersons, and foxes the spins of friendly media. For US bonds, the outlook is becoming troubling. Yields are rising. And every intervention by Mr Bessent, however well intended, only seems to be making the markets ever more uneasy about US policy signals. What’s worse, all this worry seems to be bleeding into the dollar, the sheet anchor of the world financial system. We should be clear: Bessent is firefighting. The long‑term debt is not his creation, nor his remit. That belongs to Congress and the Presidency, and currently neither seems willing to confront the colossal $40 trillion IOU .Ok, financial ladies summarised :here follows our own gloss.

WHAT WE SAY Well, ever since the 1890s US Treasuries and the dollar have been the rock-solid anchors of the world economy. It’s like that when a superpower is at its peak. Everybody wants your currency: which in turn makes you strong because if you own the reserve currency, you can keep issuing in it long after everyone else runs out. Think the gold and silver backed currencies of Imperial Spain at its zenith, and the enormous role of Sterling and the Bank of England’s gold reserves before 1914. The first signs that these Empires were in decline was series of financial crises. Spain’s manifested themselves as a series of bankruptcies under Philip II and his successors. British readers will recall the interminable series of financial and balance of payments meltdowns -1914, 1931, 1940, 1947, 1956, 1967, 1976-are just the most outstanding as their own Empire declined from world hegemon to just another country in Europe.

Which begs the question: is America about to go the same way? Perhaps, but with some caveats. Firstly this is August and there are always some funny trades around in a quieter month. Secondly AI is competing mightily for funds in the capital markets, putting a squeeze on sovereign debt. And do not forget: this is still only a trend, America still has enormous economic potential. There is still time to elect a different Chief Executive and a different group of lawmakers to undo some of the damage of the last 20 months or so. But the warning from the ladies’ articles is clear: the margin for error is starting to narrow fast.

[1]Bossing the bond market around never works For once an FT article not behind a paywall, huzzah!

[2]Jumpy bond markets make it clear: Trump risks driving US into debt crisis | Heather Stewart | The Guardian

[3] Decline of Spain – Wikipedia

[4] British Empire – Wikipedia

#Scott bessent #US treasury bonds #financial crisis #dollar #imerial spain #imperial Britain #economics #finance #geopolitics

Alternatives to a World Government#2: the deep, deep problem with a consumer society

All our breezy prescriptions for a World Government will fail miserably if they don’t address the same problem that the Governments of the Nations are grappling with. And one of the biggest is the widening gap between People and Rulers. Almost within days of arriving in office, the government of our poor namesake Sir Keir Starmer found itself plagued by a deep and inveterate hostility from the voters.

Those same voters demand endlessly lower taxes, then complain bitterly about potholes, weak defence and the lack of capacity in the prison system. They demand an end to red tape and regulation while simultaneously clamouring for restrictions on immigration, the sale of certain drugs, and the use of the internet by minors. Where has such demanding — and self‑contradictory — behaviour come from?

One possible source, we wondered (and at first this was mere speculation), is consumer society. For decades people have been born and raised in a milieu that specialises in gratifying their capricious wants: for sweet foods, for psychologically active substances, and for ever faster ways of travelling towards the next traffic jam. We do not blame companies like Amazon, Netflix or Deliveroo; they have simply perfected trends in a culture a century in the making.

So we asked: do people now demand the same instantly gratifying solutions from politicians that they expect from fast‑food companies?

Readers will be glad to know that help arrived from a much deeper thinker. We came across the work of a remarkable philosopher, Luke Yates, whose book was published in that far‑off year of 2022. Modern society, Luke argues, is based on consumption practices: convenience, speed and instant gratification. If this is how people come to perceive politics, then our outlook is dire indeed.

For, as those of us in the — er — more reflective- elements of the population have known for centuries, politics isn’t like that at all. Its word‑cloud comprises such elements as slow, procedural, available resources, nuance, evidence and above all: choose options. To expect any politician, world emperor or local councillor to wave a magic wand and solve all is to chase mare’s nests and even, dare we say it, bark at the Moon.

Which leads us to a third, depressing metaphor: dead ducks. For if Luke’s thesis is even halfway reasonable, our plan for a World Government will solve absolutely nothing at all.

Oh well. We tried.

Luke Yates (2022), How everyday life matters: everyday politics, everyday consumption and social change, Consumption and Society, 1(1): 144–169.

#world government #luke yates #consumer society #politics#economics #culture

Alternatives to a World Government #1: the deep disease of inequality

Get the diagnosis right, or the ill will never be cured. Thus far, our LSS remedy for the current malaise– economic stagnation, mass migrations, ecological collapse, the utter alienation between rulers and ruled–is the institution of a World Government (LSS passim). But that is a Historian’s diagnosis. What if other viewpoints understand the problem better? If they are right and we are wrong, then our World Government will surely fail. Let’s look at some other possibilities then, starting with our number one candidate: economic inequality. And our Witnesses for the Prosecution, as t’were, are firstly, Thomas Piketty [1] [2] and secondly Richard Wilkinson and Kate Pickett.

In Capital in the Twenty‑First Century and Capital and Ideology, Piketty shows that when the rate of return on capital outpaces economic growth — — wealth concentrates faster than societies can redistribute it. The long arc of history is one of repeated “regimes of justification” for inequality, periodically interrupted by shocks (wars, depressions) that force elites to accept progressive taxation and broader social investment. Since the 1980s, most advanced economies have dismantled the egalitarian tax and welfare structures built after 1945, allowing inequality to surge back to levels last seen in the Belle Époque. This produces political fragmentation, democratic fatigue, and a sense that the social contract has frayed. For Piketty, rising inequality is not merely an economic issue — it is a political destabiliser.

Wilkinson and Pickett’s research focuses on the psychosocial consequences of inequality. Their central claim is that what matters for social wellbeing is not absolute wealth but relative position: societies with high income inequality exhibit higher rates of mental illness, mistrust, violence, poor health outcomes, and weakened community life. Inequality, they argue, acts as a chronic stressor, pushing individuals into status competition and eroding the sense of shared fate that healthy societies require They show that wealthy but unequal societies suffer from social pathologies that cannot be explained by poverty alone. Inequality corrodes the emotional infrastructure of everyday life — the ability to trust neighbours, feel secure, and imagine a common future. In their view, rising inequality is not just a symptom of malaise but a generator of it.

So any World Government that does not tackle these deep anomies would either become a castle built on sand, or quickly degenerate into a tyranny defending the same arrangements which have brought the Nations to this present sorry pass. Not an easy argument to overcome, especially when we thought we had it all worked out. And guess what, gentle readers-more demolitions will be inflicted in upon us in the next few episodes of this new series : don’t miss it!

[1]Piketty, Thomas. Capital in the Twenty‑First Century. Cambridge, MA: Harvard University Press, 2014.

[2]Piketty, Thomas. Capital and Ideology. Cambridge, MA: Harvard University Press, 2020.

[3]Wilkinson, Richard, and Kate Pickett. The Spirit Level: Why More Equal Societies Almost Always Do Better. London: Allen Lane, 2009.

[4]Wilkinson, Richard, and Kate Pickett. The Inner Level: How More Equal Societies Reduce Stress, Restore Sanity and Improve Everyone’s Well‑Being. London: Allen Lane, 2018.

#inequality #economics #history #world government# #politics #society #government

More on why everyone hates Keir (but this time we’ve got serious back up)

A few months ago(LSS 5 2 26) we offered a short piece called Everyone hates Keir-here’s why, in which we pondered the troubles of Sir Keir Starmer, Britain’s soon-to-be-former Prime Minister. And why this essentially dull, technocratic and overwhelmingly honest man seemed to inspire such depths of visceral hatred from so many of our fellow citizens. We tried to place it in the context of Britain’s economic decline. And our only conclusion was to liken poor Sir Keir to the sort of sensible family lawyer who tells a family of rakehell aristocrats that the family funds have finally run out. He’s not going to be welcome is he?

But today we are glad to bring you an explanation which we think goes far further, and has far more explanatory power than our own humble offering. For it comes from the sagacious Professor Ben Anderson of Durham University, in the Conversation, who places his own analysis in the context the post 2008 crash economic wasteland we all now inhabit. You should read the article for yourself; but to dare our own take, he argues that the politics of feeling have replaced the politics of coherent ideology. Poor Starmer offers reason, rationality and evidence in a world that longs for feelings of certainty, belonging and attachment.

And, we ask,what stronger feeling can there be than hatred? In some of the most memorable words we have read for some time, Professor Anderson tells us:

Hatred is intense, and that intensity is central to today’s politics of feeling. And so an apparent hatred of Starmer is about the experience of feeling something intensely – and the difference this makes to people’s everyday lives. Intense feeling interrupts boredom, loneliness and other kinds of ordinary malaise. And in uncertain and anxious times, hate offers the illusion of reassurance. It establishes an unequivocal position against something.

In such circumstances no rational centrist politician can thrive, nor even govern for long. Keynes noted that the whole world of Arts Sciences and Letters which he believed in were in mortal peril if the basic needs of ordinary people for security and food were not met. Thus he so accurately foresaw the raise of the dictators and the coming Second World War. Are we living through similar days again?

[1] https://theconversation.com/the-politics-of-feeling-why-did-boring-prime-minister-keir-starmer-provoke-such-visceral-reactions-286491?utm_medium=email&utm_c

#sir keir starmer #politics #uk #economics #jm Keynes #labour party #psychology #emotion #reason #unreason

Alternatives to a World Government: Part #1 of a new series

All the thinkers we admire say the same thing really: what is your alternative explanation? Bayes insists on always balancing two probabilities. Russell on always looking at the opposite point of view, Keynes on first establishing if your pet idea is general or just a special case. And Daniel Kahneman on checking which bit of your brain you’re thinking with anyway. Which brings us round to our universal panacea, a World Government. We’ve made the case for it a number of times here(LSS passim) so veteran readers will know our diagnosis: most of the problems of the world appear intractable because nation states can never work together with sufficient speed and co-operation to resolve them. Hence economic stagnation, growing xenophobia and a rapid breakdown of the ecological systems upon which we all depend for Life.

Hang on: because aren’t we muddling diagnosis with solution? In which case abolishing the nation state becomes a futile quest, and our World Government a mare’s nest. Are there other diagnoses of our ills which, if correc.t could address all these ills while safely retaining our systems of Governance.? We ought look at them : we owe our readers that much. And so we drew up a list of other possible root causes, which we cheerfully present below. We shall examine them in the coming weeks. Our candidates include Economic inequality. Institutional decay, Technological acceleration, and its concomitant, cognitive overload., Economic model exhaustion, Tribalism and Media systems and collapse of a common narrative

None of them are mutually exclusive and we will find overlapping themes, read similar authorities and consider facts more than once as we move through the series. So bear with us. But one thing we do know: one of you out there, maybe more than one, will have an idea we haven’t thought of. So if you want to put a candidate on the list let us know. In any case we look forward to all of you accompanying us on this next journey.

# bayes #jm keynes # bertrand russell #daniel kahneman #history #economics #politics #governance #technology

Friday Night: Canadian Cocktails

“Canada : it’s a country where scale, sanity, and scenery all conspire in the traveller’s favour. You get cities that hum without overwhelming you — Vancouver’s ocean‑and‑mountain glamour, Montréal’s café‑soaked charm, Toronto’s multicultural thrum — and then, ten minutes later, you’re in a forest so vast it feels like a thought experiment. Lakes the size of small nations, wildlife that treats humans as mildly interesting background noise, and a national temperament that is unfailingly polite without being saccharine. For the holidaymaker, it’s the rare place where you can have adventure without chaos, wilderness without hardship, and culture without crowds.”

All of the preceding has been recently confirmed by first hand reports which have just reached us. In fact, the two travellers concerned (plus wives) so very much enjoyed the place that we thought we’d salute their achievements by penning a hymn of praise to Canadian cocktails. And to save time we are going to link you directly to some brilliant experts called My Bartender [1] who have compiled a list of no less than eight (count ‘em- eight!) delicious recipes, including how to make them, how to serve them, and above all how to enjoy them, whether you are touring the Maple Leaf Land itself, or sitting somewhere altogether more cramped like these sweaty offices in Croydon. Read their outpourings now to learn more about the eponymous Canadian Cocktail, the Maple Leaf (how Canadian is that?),the Canadian Maple Leaf old fashioned(answer: even more so) The White Canadian (must be good up on the snows of Baffin Island) The French Canadian (we say “oui” to that), JP Wisers Apple Jam’n (sounds as if it could soothe the savagest sasquatch) The Strawberry Sour(ditto a bear) and finally the Canadian Caesar( not to be confused with the American Caesar-he is become so tiresome lately)

And we hope that by sipping just one of the above you you will get some taste of this glorious country which our correspondents enjoyed so very much

By the way: do not really attempt to soothe actual bears with cocktails. They have their own views on mixology and tend to become prickly and stand offish at even small frustrations

_{Thanks to P Seymour and G Herbert}

[1] 8 Best Canadian Cocktails to Drink

#cocktails #canada #travel #rocky mountains #holidays

Brexit: how two Rights made a wrong

Photo by Duu0161an Cvetanoviu0107 on Pexels.com

Brexit could have worked. Read those words slowly, from an honest Remainer. Because as some of us always knew, there were pragmatic arguments from the other side, which we feared greatly, because they were exceedingly strong. So how is that most successful political project in recent British History now seems to have fallen so flat? Why, ten years on, do the memories of Brexit feel far from triumphant? We repeat, so that no one gets us wrong: Brexit could have worked. And this is why we think it didn’t.

The overarching problem was that the Leave coalition was built from two groups who wanted entirely different futures. Both were impeccably Right Wing. Both were possessed a vision of a future that could well have worked. But both pressed the same “Brexit “ button for opposite reasons. Because they belonged to two quite different right-wing tribes. One tribe, The Free‑marketeers dreamed of a Britain unshackled from Brussels, a nimble “Singapore‑on‑Thames”: low taxes, light regulation, capital flowing freely, goods moving frictionlessly, and a labour market kept competitive by high mobility. Their model required openness — to investment, to trade, and, crucially, to people. What can be more red tape than Immigration controls? But it might have been very, very prosperous.

The other half of the coalition wanted the exact reverse. The Nationalists imagined their Brexit as a chance to pull up the drawbridge: to instigate tighter immigration rules, more insulation from global competition, to achieve a more interventionist state protecting industries and communities. Some were driven by economic insecurity, some by cultural anxiety, and yes — some by outright hostility to outsiders, seeing Brexit as a way to begin a purge of “foreigners” from public life. Their model required barriers, buffers, and a powerful State willing to police identity as much as borders. It was a vision of national retreat, not global acceleration. But it might have been very, very stable.

These two projects could not coexist beyond Brexit day. You cannot believe in the free movement of capital and goods while fleeing, like a child at bathtime, from the free movement of labour. Markets do not work that way. Block labour and capital simply moves instead; block people and goods compensate; block both and you get the stagnation we now inhabit. Brexit tried to fuse two rights — the right to globalise and the right to barricade — and produced a wrong. A decade later, the contradiction still sits at the heart of British politics, unresolved and unresolvable, because the country cannot be both fortress and freeport at the same time. Deep, deep down, the question is not about Europe, nor taxes nor even immigration rules: all are details It is What do you want to be going forwards?

‘I feel entirely vindicated’: three Guardian columnists debate Brexit and its legacy | Aditya Chakrabortty, Polly Toynbee and Simon Jenkins | The Guardian The Economic Impact of Brexit | NBER

#brexit #united kingdom #european union #economics #history #nationalism #free markets