Professor Robert MacCulloch: Famous US Economists are Looking like Hypocrites & Fools....

Famous US Economists are Looking like Hypocrites & Fools with their Attacks on Trump's Policies. NZ Labour is Secretly being Advised by them.

Nobel Laureate Joseph Stiglitz, who has visited NZ and has a close relative living here, and secretly advised our Labour Party during the Ardern era, wrote a best-selling book called, "Globalization and Its Discontents" in 2002. It argued that globalization had hurt many low income workers. Meanwhile, another famous American economist, Harvard Professor Danii Rodrik, wrote a follow-up book called "The Globalization Paradox" in 2011 arguing for a leaner global system "that puts national democracies front and center". It warned of "pushing economic globalization beyond the boundaries of institutions that regulate, stabilize, & legitimize markets. Hyper-globalization in trade & finance, intended to create seamlessly integrated world markets, has torn domestic societies apart". Both Stiglitz & Rodrik wrote their books before Trump became President.

Globalization is defined as the free movement of goods, people, and capital across borders. Now Stiglitz & Rodrik, and an army of US academic economists at Ivy league universities, are launching nuclear attacks on the President's domestic & foreign policies which .. you guessed it .. put his own nation's democracy "front & center", and mark a retreat from globalization, which they had been supporting. Rodrik writes, "A crucial difference between the right & left is that the right thrives on deepening divisions in society - “us” versus “them” - while the left .. overcomes these cleavages through reforms that bridge them". All he reveals with that ridiculous line is that many of America's so-called top economists are blinded by partisanship.

This Blog is not defending Trump - it is simply making an observation that US economics is in crisis. The "big names" in the subject at many of their Ivy league universities, who control publications in the leading economics journals in the world & thereby control the direction of research, are looking like hypocritical, empty vassals. They built careers writing about the awful effects of globalization & then when a President was elected who put America first, they exploded in fury at him. Their argument is actually based on the idea that it is good to put America first and make it "great again", but Trump is doing it the wrong way. 

However, the US academic economists have a problem - a majority of Americans voted for him. The way Stiglitz & Rodrik are replying is by arguing he is a "populist" president, thereby insulting his supporters as being too dumb to understand economics. So what is the preferred policy of the likes of Stiglitz and Rodrik? Higher taxes to fund a more generous welfare state so that the losers of globalization can be compensated that way. It is this approach that has become the policy of Labour in NZ, which has been heavily influenced by Stiglitz and his French friend, Thomas Piketty. Labour wants wealth & capital taxes slapped on Kiwis to fund higher welfare, whilst at the same time still promoting a free-trade agenda. Labour may yet win an election on it, since Stiglitz, Rodrik & Piketty are smart. National's economics advisers are not in their league, being the likes of local lawyers & accountants, owners of local real-estate firms & the PM's neighbors on Waiheke (lets not name names, but we could).

Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.