McCloskey and Schansberg blowing up McCarraher

Going back into my files, a letter to the editor of mine published in Books & Culture. I enjoy this Christianity Today Inc. publication-- and have been a subscriber since the beginning (about 15 years ago).

I had forgotten about my letter, but saw another letter in B&C-- from another economist addressed to the same reviewer (on a different topic).

Since neither is available on-line through B&C, I'll make them available here!

First, excerpts from Deirdre McCloskey's eloquent and gracious response to Eugene McCarraher's negative review of her book.

McCarraher does not like my defense of an ethical and Christian capitalism, he himself being a socialist....[He] exhibits little sign of understanding Marx or Adam Smith, so I am puzzled what really is his social gospel. But whatever McCarraher is, he views capitalism as evil, the chief evil. As many left-leaning Christians do, he believes that the gospels and a proper common sense view capitalism that way, too. He sneers at my readings of the synoptic gospels, though as usual not pausing to tell why my readings are mistaken. That Jesus and his tradition used rhetorical figures of prudence as well as justice---the honest workman as well as they that mourn---is not something that the left-orthodox and Christian clerisy is willing to acknowledge.

He quotes me---"Capitalism has triumphed in our time, which I claim is a good thing, though boring"---and exclaims, in a good example of his invective, "So why spend 500 frigging pages on it?" Because, dear boy, it is good, and accords with many versions of Christianity, and you say it's not, and doesn't....But McCarraher offers no evidence that it's correct, and neither did Tillich or Day or Berry. I offer 500 frigging pages that it's false. The economy in the left-Christian view, for example, is a zero sum game, which is false. And trading goods and services is said to be inconsistent with Christian love, which is false. And capitalism is said to be mainly competition rather than cooperation, which is false...

If we're going to get beyond invective and the mere reassertion of orthodoxy---God knows the Christian tradition has plenty of that---were going have to get serious about the other's arguments. McCarraher does not.

Then, my letter in response to McCarraher's positive review of Jonathan Chait's The Big Con....

I enjoy a number of general interest magazines/journals. As you might imagine, I read articles in my field (economics) with a combination of eagerness and dread-- greater hope that the article will be of interest or use, but a greater probability that I will find things that are annoying. Unfortunately, Eugene McCarraher's recent review of Jonathan Chait's book in B&C was not enough of the former and too much of the latter.

Interestingly, both the beginning and the end of McCarraher's essay are very good. He opens with an observation from Aristotle and closes with the same thought: that we get the political outcomes we deserve. The story is more complicated than this. But in drawing attention to the public's selfishness in political matters, he underlines an important and under-appreciated contributor to less-than-optimal political outcomes-- and ironically, our frequent dissatisfaction with politics.

But for the bulk of his review, he mostly goes along with Chait, instead of challenging him. Some of the details of my disappointment:

-McCarraher relates that Chait asserts/describes "an ethos of accommodation between business and government" in post-WWII America. Actually, such "accommodations" can be found throughout our history, but they became especially pronounced at the advent of the 20th century, during the so-called Progressive Era. Ironically, such accommodations almost always work to enforce the status quo and rarely approach the epitome of justice or true progressivism. (Gabriel Kolko provides an excellent exploration of this irony in The Triumph of Conservatism.)

-A failure to deregulate in the 1970s and 1980s would have continued one such accommodation. But under Carter and then Reagan, Alfred Kahn ushered in arguably the most important (and certainly the most underappreciated) contributor to economic growth over the last 30 years.

-One could argue that the influence of "right-wing intelligentsia"-- in terms of public influence and policy-- peaked in the early-mid 1980s. Even so, their impact was relatively mild. They did little to roll back the New Deal and did not succeed in moving us within range of laissez-faire. On the latter, America's economy continues to be a dog's breakfast of about equal parts of capitalism, socialism, and mercantilism.

-On "the faith that cutting marginal tax rates...would spark economic growth"-- faith? As much faith as is required to say that reducing prices will get people to buy more stuff. The claim is unassailable that lower marginal tax rates provide a stronger incentive to engage in productive activity. One can certainly quibble over the statistical question about the extent to which it is true, but the qualitative impact is a no-brainer.

-"Cutting marginal tax rates [would]...curb inflation"? I've never heard anyone make this claim. The rate of inflation is primarily impacted by the rate of growth of the money supply.

-"Cutting marginal tax rates [would]...enlarge government revenue"? It depends on where one is at on the so-called Laffer Curve. Again, the theory is indisputable on this as a possibility-- and the data seem to clearly indicate that this happened with the 1981 tax cut

-"Considered kooky by even the most business-friendly economists"? Really? I'll have to talk with the editors of a lot of (or all) Econ textbooks!

-"...when traditional Keynesian approaches seemed incapable"? No, when those approaches were incapable. As the Great Depression in the 1930s sacked (old) Classical theory, so stagflation in the 1970s sacked (old) Keynesianism. The result is the "Modern" synthesis and the current debate between New Keynesians and New Classicals.

-"…fidelity to [supply-side] principles has left a fiscal catastrophe in its wake"? How so?

-What exactly was Friedman's "pernicious impact"? Along with this passing parenthetical attack, we get an "Uncle Miltie thrown in"-- to join a handful of other uncharitable comments about others. Why the ad hominems? And as an ironic aside, Friedman was one of two economists for foresee the doom of Old Keynesianism in the late 1960s-- before the data came in!

-Finally, a sin of omission: why not mention (and discuss) JFK's huge supply-side tax cuts in the early 1960s? Someone in McCarraher's position has to ask (and answer) why the Reagan tax cuts are a profound evil while the JFK cuts are a non-issue.

At the end of the day, I'm not sure why you would have a professor of humanities review a book on economics and politics-- especially when he is sympathetic to the book or unable to read it critically. Given his background and his approach to the review, his effort was bound to be unnecessarily short on value-added.