Sunday, 18 November 2018
Mariana Mazzucato the evangelist.
Far as I can see, all she does is to put the basic left of centre point of view, but with the difference that she uses semi-technical language to do so. That fools everyone into thinking she’s saying something new. But then fooling people (especially intellectuals) has always been the easiest thing in the World. I’ll run thru this interview with her published by The Wharton School at the University of Pennsylvania.
First, she deals with the defects in the way GDP is measured. She says (para starting “What we include…”) that if you marry your cleaner, GDP as conventionally measured, declines because a cleaner gets paid cash, whereas a wife does not, and that allegedly proves that conventional measure is flawed. Well economists have always known that housework done by the conventional “stay at home wife” is not included in GDP, and that that is a flaw in the way GDP is measured. Nothing new there.
The $64k question is: exactly what do we do about that flaw? Do we take it to the point that the time people spend tending their gardens is added to GDP? No easy answers there, and Mazzucato does not provide any answers.
Second, in answer to the question “Do you think the next recession….”, Mazzacato claims the next financial crises will be worse because Europe has a number of anti-immigration parties in power or nearly in power.
The logic there eludes me. Why does wanting tighter controls on immigration mean your knowledge about running the finance sector is defective? I’m baffled.
Moreover, the bank crisis ten years ago (the worst in living memory) took place under relatively pro-immigration regimes. That’s hardly evidence that pro-immigration folk are good at bank regulation.
Third, Mazzacato makes the point (which any half educated person has always known) namely that government funds nearly all basic research (mainly at universities). That research has, as Mazzacato says, made possible smart phones and other technological improvements.
The explanation for that is of course that basic research is very expensive and risky: the only institution likely to fund it is government. But that again is not news.
Next, in this Medium article she claims that private debts have become excessive and that the “only” way out of that problem is to find a better way of valuing publically produced stuff, like the output of the UK’s National Health Service. Again, I’m baffled. Just assuming some magic way can be found of valuing the output of the NHS (and there’s nothing on the horizon in that regard that I’m aware of), why would that cut bank’s tendency to lend and build up private debt? In contrast, Positive Money (and other advocates of full reserve banking) have a very SPECIFIC proposal for cutting private debts: those debts would decline under a full reserve banking regime.
Positive Money and its supporters, of which I’m one, have done a hundred times more than Mazzucato to get private debts down. (Incidentally there’s a paper by me, with what I think is a new idea on that subject, due to be published in the next day or two. I’ll do an article about it this coming week all being well.)
One of Mazzucato’s main ideas is “mission orientation”. That’s the idea that government should spent astronomic sums on projects or types of research with a SPECIFIC AIM. She gives two examples: the Appolo moon shot and the recent German Energiewende (research into new forms of green energy production).
Well now there are major problems with both those examples. Re Apollo, that was a complete farce from the strictly economic point of view. The basic purpose of Apollo, as was made clear by President Kennedy when he first announced it, was to enable the US to get one up on the Russians. If that’s Mazzucato’s idea of a sensible way of spending money, it’s not mine.
Of course Appolo brought FINITE benefits. Given the billions that it cost, it could hardly fail to. For example it improved our understanding of the geology of the Moon. But it was a LUDICROUSLY expensive way of doing that, given that had the US waited a few decades, it would have been able to do the same thing with unmanned robots sent to the Moon.
Apollo also improved rocketry. But there was no need to go to the Moon to do that.
As for the German Energiewende, that addresses a problem which is unique in the last million years or so during which humans have been on planet Earth: the fact that humans are about to wreck the climate of the planet they live on. Clearly that calls for some sort of spending on the scale of the Marshall Plan or World War II. But what other areas justify that sort of spending? Darned if I know.