Robert Zoellick attempts to slay the Keynesian Dragon, a comment by Unrepentant Socialist

I just finished reading chapter 3 of Deirdre N. McCloskey’s  The Rhetoric of Economics, Second Edition titled Figures of Economic Speech and its first sub-title Even Mathematical Economist Uses, and Must Use , Literary Devices : The Case of Paul Samuelson. Her argument is that metaphor is indispensable in all forms of economic argument/rhetoric. Reading Mr. Robert Zoellick’s essay one is forcefully confronted with Professor McCloskey’s indispensable examination of economic rhetoric, or should it be called wisdom? Some selective quotation of Zoellick’s essay offer proof of the efficacy of  Prof. McCloskey’s thesis.

The former US Treasury secretary fears emerging markets face sluggish global demand, capital outflows, weaker investment prospects and depreciating exchange rates.

e.g.:emerging markets, sluggish global demand, capital outflows, weaker investment prospects, depreciating exchange rates

There are many more examples in Mr. Zoellick’s essay of the use of metaphor as central to economic argument . One wonders at the choice of Summers and Rogoff as the experts he quotes or paraphrases. Yet the appeal to authority is not just the choice of the author of this essay but the choice of the editors at The Financial Times.

On Summers: his enthusiastic support for Gramm–Leach–Bliley Act  is just the beginning:

‘In 1999 Summers endorsed the Gramm–Leach–Bliley Act which removed the separation between investment and commercial banks, saying “With this bill, the American financial system takes a major step forward towards the 21st Century.”[22]

‘In 1999 Summers endorsed the Gramm–Leach–Bliley Act which removed the separation between investment and commercial banks, saying “With this bill, the American financial system takes a major step forward towards the 21st Century.”[22]

On Rogoff: See this insightful essay by Dean Baker titled Reinhart and Rogoff Are Not Being Straight from April 26, 2013 at New York Times eXaminer.

‘Carmen Reinhart and Ken Rogoff, used their second NYT column in a week, to complain about how they are being treated. Their complaint deserves tears from crocodiles everywhere. They try to present themselves as ivory tower economists who cannot possibly be blamed for the ways in which their work has been used to justify public policy, specifically as a rationale to cut government programs and raise taxes, measures that lead to unemployment in a downturn.

This portrayal is disingenuous in the the extreme. Reinhart and Rogoff surely are aware of how their work has been used. They have also encouraged this use in public writings and talks. While it is unfortunate that they have “received hate-filled, even threatening, e-mail messages,” as one who works in the lower-paid corners of policy debates, let me say, welcome to the club.’

Or this Wikipedia entry:

‘In April 2013, Rogoff was at the centre of worldwide attention with Carmen Reinhart (coauthor of the book This Time is Different) when their widely cited study “Growth in a Time of Debt” was shown to contain computation errors which critics claim undermine its central thesis that too much debt causes recession.[7][8] An analysis by Herndon, Ash and Pollin argued that “coding errors, selective exclusion of available data, and unconventional weighting of summary statistics lead to serious errors that inaccurately represent the relationship between public debt and GDP growth among 20 advanced economies in the post-war period.”[9] Their calculations demonstrated that high debt countries grew at 2.2 percent, rather than the −0.1 percent figure initially cited by Reinhart and Rogoff.[9] Rogoff and Reinhardt claimed that their fundamental conclusions were accurate after correcting the coding errors detected by their critics.[10][11] They further disavowed the claim frequently attributed to them that a 90% government debt to GDP ratio is a specific tipping point for growth outcomes.[12] Further papers by Rogoff and Reinhart,[13] and the International Monetary Fund,[14] which were not found to contain similar errors, reached conclusions similar to the initial paper. The subject remains controversial, because of the political ramifications of the research, though in Rogoff and Reinhart’s words “[t]he politically charged discussion … has falsely equated our finding of a negative association between debt and growth with an unambiguous call for austerity.”[12] He is a member in the Group of Thirty.’

Mr. Zoellick’s concluding paragraph:

‘If in 2016 there is no shift from monetary to growth policies, the future envisioned by Profs Summers and Rogoff could prove more likely: sluggish growth; currency conflicts; and populist politics and fights over distribution — punctuated by mini-crises as struggling economies falter. Political leaders can either try to shape their countries’ destinies now or risk a future reckoning from the decade’s economic experiments.’

To foreshorten this: the failure of Neo-Liberal Dogmas has summoned forth the devil of a spent Keynesianism, which now must be slain to protect those precious Dogmas!

Unrepentant Socialist




About stephenkmacksd

Rootless cosmopolitan,down at heels intellectual;would be writer. 'Polemic is a discourse of conflict, whose effect depends on a delicate balance between the requirements of truth and the enticements of anger, the duty to argue and the zest to inflame. Its rhetoric allows, even enforces, a certain figurative licence. Like epitaphs in Johnson’s adage, it is not under oath.'
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.