Good piece here by Noah Smith who argues that economics has become significantly more left wing in the last 40 years. I think he’s right to some degree, but I don’t know how much of an impact it has really had on the broader debate.
For instance, the policy debate of the last 40 years is pretty much dominated by discussions about what the Central Bank can do. Fiscal policy just about always takes a backseat to monetary policy. This is a clearly laissez-faire policy approach. And the two men who ran the Central Bank in the last 20 years were Republicans. Ben Bernanke is a Monetarist and Friedmanite and Alan Greenspan is an Ayn Rand disciple. So, the two most important economists of the last 30 years, ie, the guys running the most important economic policy lever, were not at all left wingers.
Has this started to shift in the last few years? I guess you can say that Janet Yellen is a bit of a swing to the left, but she’s still running monetary policy, a Monetarist policy tool. And I don’t see any signs that the policy debate is shifting towards fiscal policy. It’s certainly not swinging towards discretionary fiscal policy which is where many liberal economists would like to see it.
So Noah is probably right to some degree. Fiscal policy and left wing economics is starting to get a lot more airplay than it used to, but the economics profession and policymakers are not exactly embracing the implementation of fiscal policy as the primary policy lever. At least not as far as I can tell….And since monetary policy still dominates the economic airwaves, well, it means that liberals haven’t gained the upper hand there at all.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.