What Hath the Revolution Wrought?
By Amy Willis
In his recent book, The Economist’s Hour, New York Times columnist Binyamin Appelbaum argues that free-market ideology has triumphed… unfortunately. In this episode, EconTalk host Russ Roberts welcomes Appelbaum to discuss whether faith in free markets has indeed gone too far.
Appelbaum casts Milton Friedman as the villain in his story. According to Appelbaum, Friedman’s influence on government policy has had three big (and bad) consequences: a negative effect on economic growth, an increase in inequality, and inequality at the expense of democracy.
1- Early in the conversation, Roberts challenges the basic thesis of book- that there has been an ideological revolution. He asks, are economists actually the cause of revolution, or do they only supply the rhetoric? Roberts argues that Friedman would have thought that this ‘revolution’ had failed. How does Appelbaum reply? With whom do you agree more, and why?
2- Roberts and Appelbaum employ the usual glass half-full versus empty analogy. Contrary to Roberts, Appelbaum suggests the revolution of which he speaks wrought two glasses. What does he mean by this? Which metaphorical glass does Appelbaum regard as half-full, and which half-empty? To what extent do you agree with his characterization?
3- Roberts challenges Appelbaum by suggesting a very mixed history of growth via government investment in infrastructure and education. Why blame free market ideology, he asks? How does Appelbaum respond, and again, to what extent does he convince you? Is Appelbaum correct about the “golden age” of public investment and macroeconomic policy? Explain.
4- With regard to economic inequality, Appelbaum insists it’s a clear story. In the free-market age, policy shifted away from equality of opportunity and distribution of output to efficiency. As a result, millions of Americans have been forced out of work unnecessarily. How does Roberts react to this telling? To what extent do you agree that calls for policies such as price controls will continue to surface?
5- Have we focused the economy too much on consumption? Roberts and Appelbaum both agree that there can be very real human costs to productivity gains. Take the Huffy bike factory example Appelbaum uses. What would Appelbaum have done in this situation? How does it differ from what Roberts would suggest? Who has the better narrative, and why?