Old Socialist comments.
Mr. Sandbu has many political admirers, fellow travelers!? The International Monetary Fund, in the person of Paolo Mauro, offers this in the final paragraphs of his review of ‘The Economics of Belonging’ :
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His proposed policy package pushes the boundaries of the economics consensus but is not going to shock those who have followed recent debates. Key elements include net wealth taxes, universal basic income (or negative income taxation), and carbon taxes and dividends. Drawing on positive lessons from his native Norway (and an intriguing comparison of automated car washes in Scandinavia and their labor-intensive equivalent in the United States), Sandbu calls for de facto minimum wages. These force employers to select more productive processes, rather than creating low-skill jobs. To avoid the risk of unemployment for the low skilled, he calls for higher spending on education and retraining, as well as forceful demand stimulus. Economists will enjoy debating the pros and cons of each of these policies. Sandbu reasonably points out that they complement one another and work only as a package.
This book is a thorough and compelling overview of recent economic analyses of the factors underlying the electoral travails of the democracy/globalization model. I would have liked the author to venture more into the art of political persuasion. Even if the ultimate source of discontent is economic, political messages that resonate with people’s moral preferences stand a better chance of passing through parliament. Sandbu takes tentative steps in this direction. For example, he presents an intriguing right-wing perspective on universal basic income. He also points out that piecemeal reform efforts may be easier to block than his ambitious package. This reader hopes for more analysis of how to overcome political obstacles in Sandbu’s next columns and books.
Paolo Mauro is highly credentialed : director of the Economic and Market Research Department at the International Finance Corporation.
The Economist on two books, one by Sandbu:
Culture | Rethinking capitalism
Two authors wrestle with inequality and the allure of populism
Martin Sandbu and Gene Sperling support free markets—but fear their power
I will comment on the Sandbu book:
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On many measures inequality had not risen much over the preceding decade, or had risen more slowly than in past economic expansions. And yet political systems were gripped by a populist backlash which, at least in part, reflected an indignant reaction against perceived economic injustice. The liberals who had constructed the old order were suffering a crisis of confidence.
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As usual the Oxbridgers seem to have ignored, subjected to a convenient erasure, the 2007-2008 Economic Catastrophe. And its many victims who now resort to Political Populism, as a methodology, to address their immiseration at the hands of Mises/Hyak/Friedman Cadre, and its apologists in The Corporate Media!?
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In “The Economics of Belonging” Martin Sandbu, a columnist at the Financial Times, excoriates policymakers for unforced errors over recent decades and sets out an agenda for correcting course. In “Economic Dignity” Gene Sperling, a former top economic adviser to Presidents Bill Clinton and Barack Obama, argues for a new value system to underpin American economic policy.
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Mr Sandbu’s book is in some respects the more optimistic of the two. He rejects the fatalistic argument that populism is a straightforward revolt against immigration and progressive cultural attitudes. Economic insecurity always triggers angst about culture and suspicion of outsiders, he points out. Fixing the economy, in other words, will heal cultural divides. The key is to get the economic diagnosis right. Trade, immigration and globalisation more broadly are easy scapegoats for lost manufacturing jobs and growing geographical inequality. But it is technological change that has really caused the rise of a service- and knowledge-based economy. The solution, thinks Mr Sandbu, is for governments to forge social contracts fit for technologically advancing economies, not to try to turn back the clock.
Yet his policy proposals do not reflect the “compensate the losers” redistribution for which economists frequently reach. Instead, he favours increasing workers’ productivity and bargaining power so that they are never too dependent on a single employer. To that end, monetary policy must put greater emphasis on keeping labour markets running hot, so that firms compete for workers rather than workers for jobs. Tax-free earnings allowances should be replaced with a small universal basic income, to reinforce safety-nets without laying poverty traps. And governments should direct investments in the knowledge economy, such as publicly funded research, towards places that have been left behind.
Mr Sandbu claims this agenda is not left-wing, and does not require an increase in government spending as a share of gdp. But it does require a recognition that individuals must not completely lose control over their economic fate to market forces. Otherwise, as they endeavour to wrench it back, they may be swayed by extremists.
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On a fundamental level, these books are similar in attitude. Messrs Sandbu and Sperling both combine a basic support for free markets with a fear of their power. It is precisely because incentives are so potent that competitive forces must not be allowed to go haywire, as when firms gain an edge by reclassifying their workers as contractors, or by moving to tax havens. Such races-to-the-bottom define many of the policy failures of recent history.
And both books highlight the moral blind spots that many liberals and economists think have been exposed by the era of globalisation (and perhaps by the pandemic, too). Clarifying those problems, and finding solutions that avoid compromising too much on freedom and free markets, is crucial work
I offer the above as a prelude to Sandbu commentary on the question of Navalny. This essay by Alexey Sakhnin offers insights on Sandbu’s funeral oration:
Headline: Named Alexei Navalny Became a Liberal Hero
https://jacobin.com/2021/01/alexei-navalny-russia-protests-putin
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Who was Navalny
Like most politicians in modern Russia, Navalny’s worldview was formed under the total dominance of right-wing, market liberal ideology. In 2000, he joined the liberal Yabloko party. In those years, by his own account, he was a classic neoliberal, supporting a regime of low public spending, radical privatization, reduction of social guarantees, “small government,” and total freedom for business.
However, Navalny soon realized that a purely liberal politics has no prospect of success in Russia. For most people, this ideology was discredited by the radical reforms of the 1990s. It symbolized poverty, injustice, inequality, humiliation, and theft. And after pro-Western liberal ideology had lost so much luster in the eyes of the population, it ceased to be of interest to the ruling class either. Following Vladimir Putin, Russian officials, politicians, and oligarchs proclaimed themselves as patriots and true inheritors of the Russian state. Liberal parties turned out to be of no use to anyone.
Navalny soon found a new ideological niche. In the late 2000s, he declared himself a nationalist. He participated in the far-right Russian Marches, waged war on “illegal immigration,” and even launched campaign “Stop Feeding the Caucasus” directed against government subsidies to poor, ethnic minority-populated autonomous regions in the south of the country. It was a time when right-wing sentiments were widespread, and urban youth sympathized with ultra-right groups almost en masse. It seemed to Navalny that this wind would fill his sails — and partly, it worked.
But Navalny did not get lost among the petty nationalist “führers.” He found a special niche that made him a hero far beyond the boundaries of the right-wing radical subculture. He became the country’s main fighter against corruption. He would buy small amounts of shares in large state-owned companies and thus get access to their documents. On this basis, he conducted and published high-profile investigations. Many of them were brilliant journalistic work — though some critics suspected that Navalny was simply involved in the “media wars” among rival financial-industrial groups, receiving “orders” from them and information that compromised their competitors.
In any case, the liberal narrative that corruption is the cause of the ineffectiveness of the state brought Navalny the sympathy of the mass of the middle class. Corporations’ top management and businessmen saw corruption as a major obstacle to their own success. Many subscribed to Navalny’s blog and increasingly sent him monetary donations.
In 2011-13, Russia was swept by a mass movement of protest against the rigging of parliamentary elections and growing authoritarianism, symbolized by Putin’s return to the presidency. Navalny took part in this — but failed to lead it. He got support mostly from middle-class people in the capital and the largest cities. But the working class, and the poor majority in general, did not trust him. They remained indifferent to his anti-corruption agenda, seeing corruption as only one of the techniques for enriching the elite and not the foundation of class inequality.
Indeed, it turned out that left-wing values still have some influence in Russia. In those protests, thousands of people demonstrated under the red flags, and the leader of the Left Front, Sergei Udaltsov, became one of Russia’s most popular politicians. Navalny’s closest aide, Leonid Volkov, said in an interview that it was necessary to convince the Russian elite that an opposition victory would be better for them than a corrupt Putin government. But to do this, it was necessary to get rid of left-wing allies, who scared off big business.
So Navalny split the oppositional coalition and when leftist leaders were thrown in jail, he declined to intercede on their behalf.
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Mr. Sandbu essay follows the Party Line on Navalny and Putin , this is The Financial Times! The final paragraphs of Sandbu political moralizing offers the plaster saint of Navalny, or just a convenient Western construct! Who has no relation to Andrei Sakharov, Yelena Bonner, Alexander Solzhenitsyn, Eugenia Semenovna Ginzburg, Varlam Tikhonovich Shalamov, Anna Akhmatova, Osip Mandelstam!
The lesson on both the military and the economic side is the danger of believing in the virtue of caution when that in practice means delay. Early “caution” has prolonged the suffering in Ukraine, emboldened the Russian dictator who thinks he can outwait Kyiv’s western supporters, and increased the cost of pushing him back. Whatever could have been achieved early, can now only be achieved in more time and at greater cost.
Navalny’s message before his last return to Russia was that “the only thing needed for the triumph of evil is for good people to do nothing”. Evil benefits, too, when good people are too cautious. Don’t keep making that mistake.
Old Socialist
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