Zombie Economics popped up on Scribd. I’d seen some bits of it on Crooked Timber so I thought I’d read it. I doubted I’d get much new big picture over having read a bunch (esp Krugman) during the financial crises of 2008, but I was hoping for some depth.
I was really disappointed.
It’s readable enough. And there’s lists of papers at the end of each chapter. But it didn’t feel very informative with the polemic being more rhetorical than substantive. Part of this, I’m sure, is the general reader audience. Consider this bit on privitization:
Most evidence on privatization comes from developing countries and is decidedly mixed. There are favorable cases, such as that of the steel industry in Brazil where privatization turned loss-making and declining public enterprises into profitable and growing private corporations. On the other side of the ledger, there are cases like that of Russia where privatization was the occasion for wholesale looting, allowing self-described democratic “reformers” to enrich themselves mas- sively. Most cases fall between these two extremes, but the view that privatization is always, or even mostly, beneficial is not supported by the evidence.
Examining a number of actual privatizations in Australia, I found that the government made net fiscal gains in only two cases. In both cases, the sale took place in a bubble atmosphere, with the result that the buyers subsequently resold at a loss. Looking at cases where privatization was proposed, but did not go ahead, the returns to government under continued public ownership clearly exceeded the benefits they would have obtained from selling the assets. On balance, there was a net fiscal loss from privatization in most cases. This was not offset by benefits to workers (who were mostly worse off) or consumers
If we look at footnote 7:
As discussed below, these were the privatization of the Victorian electricity industry in the early 1990s and the second stage of the privatization of Telstra, the former telecommunications monopoly, and also the dominant Internet service provider. In the Victorian case, the deregulation of the U.S. electricity industry had produced a group of cashed-up buyers, competing for a limited pool of assets. The Telstra sale took place during the dotcom boom.
Oy! We’re in squishly land here. He examined “a number” of cases (how many? out of how many?) I mean, getting net fiscal gains in only two case is less impressive if there are only two cases in toto! [Ed note: Reading Quiggan’s response, I’m worried that this might give the impression that I think Quiggan’s being deceptive. I don’t think so!]
The first paragraph sets up two extremes and then says “most case fall between”! What?! This is supposed to refute the idea that privatization is always or “mostly” beneficial (to what? government finances? consumer choice?). Why not show at least some of the evidence? [Ed note: in line with the prior note, Quiggan says in the comment that it’s tricky to present and technical. I believe him, though I’d like to see an attempt. So this complaint just is, “It’s for a general audience.” I’d still have preferred a bit more caveating about how it’s tricky over his categorical tone.]
This sort of thing makes the book largely useless, I think. At least for me. There are some howlers, too:
Given the state of the U.S. economy and the failure of the Obama administration to do much about it, the Republicans ought to be guaranteed of a sweeping victory in the 2012 elections. In reality, the process of nominating an alternative candidate has descended into farce, and the congressional Republicans have plumbed unheard of depths of (un)popularity. In large measure, this reflects the total sepa- ration between ideology and reality now required of Republicans.
Is the bolded sentence true? Or even justifiable? Remember that prima facie, being an incumbent is a strong place to be and Obama is super talented as a retail politician and he was extremely motivating for his base and he had incredible campaign structure. Is it obvious that the Republicans should have had a ginormous edge? I don’t think so. The way I’d adjudicate it is by looking at what various “fundamentals” models predicted.
And this is more of a PITA to dig out than I wanted for a quick blog post. Grr. But here’s two bits of evidence:
- A Nate Silver article from 2012 wherein he writes:
“Although the model — which is distinct from the electoral map put together by The Times’s political desk — relies fairly heavily on polling, it also considers an index of national economic conditions. Right now, the polls and the economy are broadly in agreement with one another — both point toward an extremely tight race — although the economic risks to Mr. Obama are somewhat to the downside.
Still, while the economic indicators suggest that the economy is growing sluggishly — at a below-average pace of about 2 percent growth per year — it is not yet in recession and incumbent presidents often receive the benefit of the doubt from voters. A favorable precedent for Mr. Obama is George W. Bush, who narrowly won re-election in 2004 under similar circumstances.”
So the “state of the economy” was similar to another election where the incumbent was re-elected!
- The Moody’s economic trend based prediction model said that economic factors predict an Obama advantage:
“In 2000, Moody’s Analytics began developing a model of the economic factors influencing American presidential elections that can be used to forecast the outcome. The 2008 version of the model proved accurate, predicting not only the election results that year but also the number of electoral votes received by the winner, Barack Obama. This year the election model has been updated and modified to take account of the recent recession, the deepest seen in many decades.Assuming the economy takes its most likely course between now and November, the model’s initial forecast calls for President Obama to win a second term. This prediction is tied to the Moody’s Analytics current baseline forecast for U.S. growth, which assumes that most states will continue to recover at slow to moderate speeds.”WHAT?!?!?!? Since Quiggin has given no detail about what the conditions were that were supposed to produce a strong Republican advantage, I can’t say it’s been refuted. But a big ole burden of proof shift has happened!
Now Quiggin is an economist, not a political scientist or election forecaster. His claim is exactly the sort of thing that lots of people are prone to make post facto. Indeed, it’s exactly a kind of zombie idea (cf Kerry as terrible candidate, Clinton as terrible in 2008, etc…these start with a claim that obvious these candidates had overwhelming advantages, then squandered them; the poly sci literature generally says that fundamentals dominate candidates or campaigns, esp in the modern era of polarisation).
And yet. It’s something he should have checked out. [Ed note: From his comment, I’m not sure that he did.] Fundamental models are hardly esoteric for people like him. It makes me nervous about the rest esp as I know less about those topics. The effort to check is high and I don’t have a good feel for what’s sensible and what’s fishy. So I, in principle, have to check it all.
And that could be fun, but it’s writing a whole other book!
[Ed Note: So, is this an exceedingly uncharitable review as Quiggan claims?
I don’t think so. I believe that the things that griped me are mostly things done for the sake of a general audience. So I am not the target. OTOH, I don’t know I would recommend it to a general audience because I worry about details like this and that it would do more net harm than good. I don’t feel that I get a toolbox for understanding (even at the lay level). And I don’t like even tangential strange claims which filter out.
I need to reread the Worldly Philosophers. I remember loving that in high school and feeling that I gained a lot of (lay) understanding. But maybe I wouldn’t like it today. Maybe I want to read textbooks.]