December 26, 2018
Despite howls of protest from market participants and rumored threats from an unhinged US president, the Federal Reserve should be congratulated for its commitment to normalizing interest rates. There is simply no other way to break the US economy’s 20-year dependence on asset bubbles.
May 6, 2018
It used to be an axiom of liberalism that freedom meant inalienable self-ownership. But liberal individualism seems to have been defeated by a totalitarianism that grew out of its own success at legitimizing the encroachment of branding and commodification into our personal space.
LISBON – It used to be an axiom of liberalism that freedom meant inalienable self-ownership. You were your own property. You could lease yourself to an employer for a limited period, and for a mutually agreed price, but your property rights over yourself could not be bought or sold. Over the past two centuries, this liberal individualist perspective legitimized capitalism as a “natural” system populated by free agents.
A capacity to fence off a part of one’s life, and to remain sovereign and self-driven within those boundaries, was paramount to the liberal conception of the free agent and his or her relationship with the public sphere. To exercise freedom, individuals needed a safe haven within which to develop as genuine persons before relating – and transacting – with others. Once constituted, our personhood was to be enhanced by commerce and industry – networks of collaboration across our personal havens, constructed and revised to satisfy our material and spiritual needs.1
But the dividing line between personhood and the external world upon which liberal individualism based its concepts of autonomy, self-ownership, and, ultimately, freedom could not be maintained. The first breach appeared as industrial products became passé and were replaced by brands that captured the public’s attention, admiration, and desire. Before long, branding took a radical new turn, imparting “personality” to objects.
Once brands acquired personalities (boosting consumer loyalty immensely and profits accordingly), individuals felt compelled to re-imagine themselves as brands. And today, with colleagues, employers, clients, detractors, and “friends” constantly surveying our online life, we are under incessant pressure to evolve into a bundle of activities, images, and dispositions that amounts to an attractive, sellable brand. The personal space essential to the autonomous development of an authentic self – the condition that makes inalienable self-ownership possible – is now almost gone. The habitat of liberalism is disappearing.3
That habitat’s clear demarcation of private and public spheres also divided leisure from work. One need not be a radical critic of capitalism to see that the right to a time when one is not for sale is all but gone, too.
Consider young people striking out in the world today. For the most part, those without a trust fund or generous unearned income end up in one of two categories. The many are condemned to labor under zero-hour contracts and wages so low that they must work all available hours to make ends meet, rendering offensive any talk of personal time, space, or freedom.
The rest are told that, to avoid falling into this soul-destroying “precariat,” they must invest in their own brand every waking hour of every day. As if in a Panopticon, they cannot hide from the attention of those who might give them a break (or know others who might). Before posting any tweet, watching any movie, sharing any photograph or chat message, they must remain mindful of the networks they please or alienate.
When lucky enough to be granted a job interview, and land the job, the interviewer alludes immediately to their expendability. “We want you to be true to yourself, to follow your passions, even if this means we must let you go!” they are told. So they redouble their efforts to discover “passions” that future employers may appreciate, and to locate that mythical “true” self that people in positions of power tell them is somewhere inside them.
Their quest knows no bounds and respects no limits. John Maynard Keynes once famously used the example of a beauty contest to explain the impossibility of ever knowing the “true” value of shares. Stock-market participants are uninterested in judging who the prettiest contestant is. Instead, their choice is based on a prediction of who average opinion believes is the prettiest, and what average opinion thinks average opinion is – thus ending up like cats chasing after their own tails.
Keynes’s beauty contest sheds light on the tragedy of many young people today. They try to work out what average opinion among opinion-makers believes is the most attractive of their own potential “true” selves, and simultaneously struggle to manufacture this “true” self online and offline, at work and at home – indeed, everywhere and always. Entire industries of counselors and coaches, and varied ecosystems of substances and self-help, have emerged to guide them on this quest.
Was Plato a Liberal Totalitarian?
The irony is that liberal individualism seems to have been defeated by a totalitarianism that is neither fascist nor communist, but which grew out of its own success at legitimizing the encroachment of branding and commodification into our personal space. To defeat it, and thus rescue the liberal idea of freedom as self-ownership, may require a comprehensive reconfiguration of property rights over the increasingly digitized instruments of production, distribution, collaboration, and communication.
Would it not be a splendid paradox if, 200 years after the birth of Karl Marx, we decided that, in order to save liberalism, we must return to the idea that freedom demands the end of unfettered commodification and the socialization of property rights over capital goods?
Yanis Varoufakis, a former Finance Minister of Greece, is Professor of Economics at the University of Athens.
April 19, 2016
he mistake about Paul Ryan, the one that both friends and foes made over the years between his Obama-era ascent and his just-announced departure from the House speakership, was to imagine him as a potential protagonist for our politics, a lead actor in the drama of conservatism, a visionary or a villain poised to put his stamp upon the era.
By Ross Douthat
Opinion Columnist
This Ryan-of-the-imagination existed among conservatives who portrayed his budgetary blueprints as the G.O.P.’s answer to the New Deal, among centrist deficit hawks who looked to him to hash out their pined-for grand bargain, and among liberals for whom Ryan was the most sinister of far-right operators, part fanatic and part huckster — a Lyle Lanley with “Atlas Shrugged” in his back pocket, playing everyone for suckers while he marched the country into a libertarian dystopia.
It existed among the donors who wanted him to run for President, the pundits who encouraged Mitt Romney to choose him as a running mate, the big names who pressured him into the speakership. And it existed among anti-Trump conservatives, finally, who looked to Ryan to be the Republican of principle standing athwart Trumpism yelling stop.
But the real Ryan was never suited for these roles. He was miscast as a visionary when he was fundamentally a party man — a diligent and policy-oriented champion for whatever the institutional G.O.P. appeared to want, a pilot who ultimately let the party choose the vessel’s course. And because the institutional G.O.P. during his years was like a bayou airboat with a fire in its propeller and several alligators wrestling midship, an unhappy end for his career was all-but-foreordained.
This is not to say that he lacked principles. The frequent descriptions of Ryan as a Jack Kemp acolyte — a supply-side tax cutter and entitlement reformer and free trader who imagined a more immigrant-welcoming and minority-friendly G.O.P. — were accurate enough; there was no question that the more a policy reflected Ryan’s deepest preferences, the more Kempist it would be.
But even there, he came to those principles at a time when they were ascendant within the party — in the period between the supply-side ’80s and the late-1990s window when centrist liberals seemed open to entitlement reform. And then as Republicans moved away from them, tacking now more compassionate-conservative, now more libertarian, now more Trumpist, his resistance to the drift was always gentle, eclipsed by his willingness to turn.
Thus the Ryan of the George W. Bush era cast votes for the pillars of compassionate conservatism, No Child Left Behind and Medicare Part D. Then the Ryan of the Tea Party era championed austerity, talking about “makers and takers” and tossing out the Ayn Rand references that persuaded many liberals that he was an ideological fanatic. But that Ryan gave way to Ryan the dutiful running mate, which gave way in turn to the more moderate Ryan of Obama’s second term, who negotiated a budget deal with Democrats and moved toward so-called “reform conservatism” in his policy proposals at a time when that seemed like that might be the party’s future.
Then came the 2016 election, in which Ryan temporarily resisted Trump and then surrendered lest he break the party (which a party man could never do), and after that the Trump administration, in which Ryan has obviously steered Trump toward standard Republican policies — but has just as obviously been steered as well. Most of Ryan’s past big-picture goals (entitlement reform, free trade, minority outreach) are compromised or gone, and while he attempted Obamacare repeal and achieved a butchered version of corporate tax reform, he’s accepted spending policies that make a mockery of any sort of libertarian or limited-government goal.
If you look at all this and see an obsessive ideologue working tirelessly for Randian ends, I think you’re being daft. But it’s equally daft to see this as the story of a great visionary brought low by Trump. The truth is that Ryan probably could have thrived as a legislator in a variety of dispensations: As a Reaganite if he’d been born early enough; as a Kempian or compassionate conservative if the late-1990s boom had continued; as a bipartisan dealmaker in a world where his base supported compromises (the blueprints he drew up with Democrats like Ron Wyden were usually interesting); as some sort of reform-conservative-inflected figure under a President Rubio or Kasich.
But in a dispensation where the G.O.P. was leaderless, rudderless, yawing between libertarian and populist extremes, he was never the kind of figure who could impose a vision on the party — nor would he would break with the party when it seemed to go insane.
Instead, he only knew how to work within the system, which because the system had turned into a madhouse meant that his career could only end where it ended this past week: in a record of failure on policy and principle that he chose for himself, believing — as party men always do — that there wasn’t any choice.
Nicholas Kristof is off today.
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Din Merican: the Malaysian DJ Blogger 
NEW HAVEN – I have not been a fan of the policies of the US Federal Reserve for many years. Despite great personal fondness for my first employer, and appreciation of all that working there gave me in terms of professional training and intellectual stimulation, the Fed had lost its way. From bubble to bubble, from crisis to crisis, there were increasingly compelling reasons to question the Fed’s stewardship of the US economy.
That now appears to be changing. Notwithstanding howls of protest from market participants and rumored That now appears to be changing. Notwithstanding howls of protest from market participants and rumored unconstitutional threats from an unhinged US President, the Fed should be congratulated for its steadfast commitment to policy “normalization.” It is finally confronting the beast that former Fed Chairman Alan Greenspan unleashed over 30 years ago: the “Greenspan put” that provided asymmetric support to financial markets by easing policy aggressively during periods of market distress while condoning froth during upswings.
Since the October 19, 1987 stock-market crash, investors have learned to count on the Fed’s unfailing support, which was justified as being consistent with what is widely viewed as the anchor of its dual mandate: price stability. With inflation as measured by the Consumer Price Index averaging a mandate-compliant 2.1% in the 20-year period ending in 2017, the Fed was, in effect, liberated to go for growth.
And so it did. But the problem with the growth gambit is that it was built on the quicksand of an increasingly asset-dependent and ultimately bubble- and crisis-prone US economy.
Greenspan, as a market-focused disciple of Ayn Rand, set this trap. Drawing comfort from his tactical successes in addressing the 1987 crash, he upped the ante in the late 1990s, arguing that the dot-com bubble reflected a new paradigm of productivity-led growth in the US. Then, in the early 2000s, he committed a far more serious blunder, insisting that a credit-fueled housing bubble, inflated by “innovative” financial products, posed no threat to the US economy’s fundamentals. As one error compounded the other, the asset-dependent economy took on a life of its own.
As the Fed’s leadership passed to Ben Bernanke in 2006, market-friendly monetary policy entered an even braver new era. The bursting of the Greenspan housing bubble triggered a financial crisis and recession the likes of which had not been seen since the 1930s. As an academic expert on the Great Depression, Bernanke had argued that the Fed was to blame back then. As Fed Chair, he quickly put his theories to the test as America stared into another abyss. Alas, there was a serious complication: with interest rates already low, the Fed had little leeway to ease monetary policy with traditional tools. So it had to invent a new tool: liquidity injections from its balance sheet through unprecedented asset purchases.
The experiment, now known as quantitative easing, was a success – or so we thought. But the Fed mistakenly believed that what worked for markets in distress would also spur meaningful recovery in the real economy. It raised the stakes with additional rounds of quantitative easing, QE2 and QE3, but real GDP growth remained stuck at around 2% from 2010 through 2017 — half the norm of past recoveries. Moreover, just as it did when the dot-com bubble burst in 2000, the Fed kept monetary policy highly accommodative well into the post-crisis expansion. In both cases, when the Fed finally began to normalize, it did so slowly, thereby continuing to fuel market froth.
Here, too, the Fed’s tactics owe their origins to Bernanke’s academic work. With his colleague Mark Gertler of NYU, he argued that while monetary policy was far too blunt an instrument to prevent asset-bubbles, the Fed’s tools were far more effective in cleaning up the mess after they burst. And what a mess there was! As Fed governor in the early 2000s, Bernanke maintained that this approach was needed to avoid the pitfalls of Japanese-like deflation. Greenspan concurred with his famous “mission accomplished” speech in 2004. And as Fed Chair in the late 2000s, Bernanke doubled down on this strategy.
For financial markets, this was nirvana. The Fed had investors’ backs on the downside and, with inflation under control, would do little to constrain the upside. The resulting “wealth effects” of asset appreciation became an important source of growth in the real economy. Not only was there the psychological boost that comes from feeling richer, but also the realization of capital gains from an equity bubble and the direct extraction of wealth from the housing bubble through a profusion of secondary mortgages and home equity loans. And, of course, in the early 2000s, the Fed’s easy-money bias spawned a monstrous credit bubble, which subsidized the leveraged monetization of housing-market froth.
And so it went, from bubble to bubble. The more the real economy became dependent on the asset economy, the tougher it became for the Fed to break the daisy chain. Until now. Predictably, the current equity market rout has left many aghast that the Fed would dare continue its current normalization campaign. That criticism is ill-founded. It’s not that the Fed is simply replenishing its arsenal for the next downturn. The subtext of normalization is that economic fundamentals, not market-friendly monetary policy, will finally determine asset values.
The Fed, it is to be hoped, is finally coming clean on the perils of asset-dependent growth and the long string of financial bubbles that has done great damage to the US economy over the past 20 years. Just as Paul Volcker had the courage to tackle the Great Inflation, Jerome Powell may well be remembered for taking an equally courageous stand against the insidious perils of the Asset Economy. It is great to be a fan of the Fed again.
Stephen S. Roach, former Chairman of Morgan Stanley Asia and the firm’s chief economist, is a senior fellow at Yale University’s Jackson Institute of Global Affairs and a senior lecturer at Yale’s School of Management. He is the author of Unbalanced: The Codependency of America and China.