Paul Krugman’s “Ricardo’s Difficult Idea” is still one of my favorite pieces of pop economics. In this light, I was very disappointed to see him referring to Naomi Klein’s The Shock Doctrine in a discussion of the ongoing power struggle in Wisconsin (HT: Charles McKinney). While The Shock Doctrine tells a lot of gripping and tragic stories about governments abusing people and power, readers who really want to know about the political economy of crisis would learn much more from Robert Higgs’ Crisis and Leviathan.
Why? What’s wrong with The Shock Doctrine? Most importantly, Klein’s main thesis–that free-market ideologues and zealots constitute “a movement that prays for crisis the way drought-struck farmers pray for rain, and the way Christian-Zionist end-timers pray for the Rapture”–is at best a special case of a more general phenomenon. At worst it’s just wrong. Tyler Cowen discusses this in greater detail in a 2007 review, Johan Norberg dissects The Shock Doctrine in detail here, and I discuss and criticize some of the book’s key claims in this review essay that appeared in the Journal of Lutheran Ethics.
In The Shock Doctrine, Klein makes a number of claims that are open to empirical testing. In this paper, Robert A. Lawson and I took up her claim that “torture has been a silent partner in the global free market crusade.” In short, human rights abuses were associated with slower economic liberalization. Respect for and protection of human rights were associated with faster economic liberalization.
Krugman mentions Chile, and Chile is central to Klein’s story. After our paper was published and after we sent it around to people who were in the bibliography, I got this email from Arnold Harberger, who was one of the key villains (or heroes, depending on your perspective) of the Chilean economic reforms of the 1970s and 1980s.
In short, Klein’s sneering story about a sinister free-market conspiracy collapses when we look at it carefully. I’m sorry to see that Krugman picks it up and runs with it.
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OMG there’s a giant conspiracy to allow people to associate freely, whatever will we do…
You’re sorry to see Krugman pick Klein’s story up and run with it, but surely you can’t be surprised. At this point his writing is 100% political, and if it would further the agenda of the day he would pick up a steaming pile of dog crap and run with it.
“If Mr. Walker’s plan was to push his bill through before anyone had a chance to realize his true goals, that plan has been foiled.” Notice how Krugman starts out his op-ed with the word “maybe” but by the end of his partisan rant he knows Walker’s “true goals” without any doubt? To steal from the poor and give to the rich, of course.
It is funny to read this tripe alongside his Ricardo piece, in which he states the importance of intellectual and mathematical rigor, and he decries the tendency for some intellectuals to oversimplify their arguments. Some intellectual.
I like actual data when criticisms are lodged. Explain how the following does not propose to legalize a theft of Wisconsin’s public utilities:
16.896 Sale or contractual operation of state−owned heating, cooling,
and power plants. (1) Notwithstanding ss. 13.48 (14) (am) and 16.705 (1), the
department may sell any state−owned heating, cooling, and power plant or may
contract with a private entity for the operation of any such plant, with or without
solicitation of bids, for any amount that the department determines to be in the best
interest of the state. Notwithstanding ss. 196.49 and 196.80, no approval or
certification of the public service commission is necessary for a public utility to
purchase, or contract for the operation of, such a plant, and any such purchase is
considered to be in the public interest and to comply with the criteria for certification
of a project under s. 196.49 (3) (b).
What is the value of these taxpayer built and maintained facilities proposed for no bid disposal?
Krugman recognizes a scam when he sees one.
Can someone actually respond to my earlier question. (March 8th, 4 p.m.) I understand that most posters on this site are happy to provide ad hominem responses but I’m asking for a bit better.
The taxpayers did not build and do not operate these facilities. The State of Wisconsin does, and it does so with funds expropriated from the citizens of Wisconsin without their individual consent. That’s when the real theft took place, when the taxes were collected. And no, the decision that it’s less trouble to pay taxes than to go to jail or foment a rebellion does not constitute consent.
This bill may well be a scam; it is certainly not good stewardship of the state’s assets. I would guess the purpose of this bill is much the same as the purpose of most other state actions: the benefit of a favored group at the expense of everyone else. If it is a scam, though, it is possible only because the state used its monopoly power (the only true monopoly power, by the way, lies with the state) to enter an industry and acquire assets using other people’s money.
Better the state would have never owned such plants in the first place. The second best option is for the state to divest such assets as quickly as possible, and cease using coercion in the economic arena. Of course, given the hue and cry put up by the teachers as a result of their small loss of privilege, I doubt anyone in Wisconsin has the political fortitude to make any other radical changes.
So Wisconsin built and maintained these utilities from fairy-dust? Did the taxpayer benefit from services provided by these facilities which either appeared magically out of the supply-sider ideology or from taxes? Let’s just dig up the taxpayer financed inter-state highways in addition.
Now in response to your comment, ‘This bill may well be a scam,’ what more do I need to do than point out that when the utilities are “transferred’ to private hands that the money charged for their output will be funneled into a few very deep private pockets with an additional surcharge called ‘profit’. When electrical utilities in Texas were deregulated we were told our bills would drop ’cause ‘bidness’ was so much more efficient. Deregulated electricity is now 40% higher than the surviving public electricity utilities which don’t have a ‘profit’ overhead. BTW, do you really think that a private electric utility isn’t also a monopoly? I can’t have six lines running into my house that I can choose from.
The idea of the commons is simply absent from your philosophy and perhaps even extends to the air we breathe and the water we drink. Back to the point, the utilities have value which the bill allows to be given away. Do you really believe, whatever your ideology, that that is not a criminal act in the absence of this bill?
Thanks for your response.
What is criminal is paid Union goons from New York and Chicago interfering in the politics and economics of a sovereign state – Wisconsin. Union goons who will obstruct at every opportunity the decisions of our duly elected officials from executing their sworn duty.
What does the operation of state−owned heating, cooling, and power plants have to do with governments purpose of defense of individual liberty? Nothing. It only serves the Unions purpose to steal from tax paying serfs.
Remove the tools of the thief and everyone will benifit.
Tell me where you found information that a significant number of union ‘goons’ came into Wisconsin for the protests? Since the protests have been continuing for months it must be very expensive to put up all those foreign ‘goons’. Are there any locals involved in the protests or is it all ‘goons’ ? Also indicate the goonish stuff that the goons did other than perhaps being present and how they differ from corporate ‘goons’.
When the citizens of Wisconsin built with their taxes and subsequently owned the state utilities and currently benefit by lower rates from their services, it seems to me that GIVING that value to a few corporate entities so that they can charge what they wish for their newly acquired facilities and their output, can only be termed theft. The legal principle of ‘unjust enrichment’ seems to apply here. That is not, in my opinion, within the ‘sworn duty’ of the currently ‘duly elected officials’ unless you mean they can do anything they wish because they hold office. Would you give any liberal administration the same latitude?
The elected representatives of the Wisconsin voter decided to build the utilities (not the unions). The voters benefited by having the utilities and if you imply that only corporations should have the constitutional right to build utilities then I would point out that the word ‘corporation’ does not appear in the constitution. What does appear twice in the constitution is the term ‘common good’. Can we assume that ‘common good’ is more important than the good of corporations, so far as the constitution is concerned? Can we make a case that ‘individual liberty’ may allow citizens to use the state to benefit themselves by investing in the ‘common good’ ?
Thanks for your reply.
Hey, where did you guys, (Ken and Tian) go?
Krugman is already bad enough, he doesn’t need to be recycling garbage from Naomi Klein.
If anything Krugman writes leaves you feeling “disappointed”, it’s probably a safe assumption that your expectations of him are way too high.
As Kevin Carson points out, Naomi Klein’s equation of the existing corporate economy we live under with the “free market” is just another example of left-conflationism.
“torture has been a silent partner in the global free market crusade.”
Leaving aside her erroneous association of free markets with right-wing fascist corporatism, does she seriously believe that left-wing socialist crusades are not associated with mass imprisonment, torture and murder?
Apparently these guys missed the Mises blog post that pointed out that 8 of the top 10 “industries” in Wisconsin are government or proto-government bodies (health care). Hard to call anything about that situation free market.
It never ceases to amaze me the way the odious methods of Cultural Marxism seeps into the public debate about free vs. planned economies.. Collectivists such as Klein and Krugman always seem to be spotlighted in the public discourse yet believers in a truly free market economic system are either left out of the discussion or their ideas are misrepresented . The only reason why economic fools like Klein and Krugman ever get their ideas put across,is because most of the Main Stream Media and Academia ,especially the social sciences are either owned or controlled by the megalomaniac world Elites who want to rule the world.
Its now going on on three months since my March 8th posting and I have had no substantive response to anything I have said in three posts. So ‘Mises’ is where rhetoric and ad hominem reigns but dialogue is unknown. How about one example of a supply-sider success? Klein provides chapter and verse of its many failures. If ‘free market’ means that a multinational corporation can go anywhere and do anything it wants without limit, then you might try to think a bit more.
Its been five months and within the ‘Mises’ website no participant can come up with a thoughtful response or actual rebuttal to my posts.
Gee, its been seven months. Does anyone have a response to my comments which would defend Mises/Hayek muddled thinking within a real world context? Maybe you need more time?
Property rights. Everything stems from this. How can anyone come to the conclusion that the full ownership of one’s own property is not all that’s relevant? I own me, and my stuff. I will fight that to the death.
Debate that.
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