Scott Sumner's Full Throated Defense of Neoliberalism

You got to admit, he doesn't let ephemeral stuff change his priors.

"I am seeing more and more articles, even at respectable outlets such as the Economist and the Financial Times, suggesting that the rise of right-wing and left-wing populism shows that something is wrong with the neoliberal model. Nothing could be further from the truth. The past two decades have been by far the best two decades in human history, and that’s what really matters."

http://www.themoneyillusion.com/?p=31603

That may be the case, but not many in America believe that today. Trump spoke for many when he declared 'The American Dream is dead.'

"Naysayers will sometimes acknowledge that hundreds of millions of people have recently risen out of poverty, but then claim that living standards have stagnated in America. That’s also nonsense, as I explained in this post. The next fallback position is that while real incomes in America have risen, the gains of gone to corporations, not workers. That’s also nonsense, as I explained in this post. The share of national income going to workers today is the same as it was 50 years ago, the supposed heyday of the working class."

"The next fallback position is that while wages have done fine, even in real terms, wage income is becoming less equal. Bingo! Finally we get to an accurate statement. Fifty years ago, blue-collar workers at General Motors often made more than college professors. People with short attention spans sometimes act like this period was “normal”, ignoring 10,000 years of human history. They seem to suggest that our most pressing problem is that young men who don’t study in school and just shoot rubber bands across classroom should be able to earn an income that (in relative terms) was never possible in any period of world history before the 1950s and has never been possible in any period of world history after the 1970s. It reminds me of when farmers used to set the “parity” of farm prices with other goods prices based on the relatively high levels of 1909-14, treating that ratio as normal for purposes of farm subsidies."

As Sumner's a college professor-or was one until Ken Duda started paying his bills-it may be understandable why he is contemptuous of a time that blue collar workers made more than college professors.

But many might look back on this golden age and try to figure out the policies that could give us such well compensated blue collar workers again.

Again, voters don't buy the Scott Sumner argument.

"In this post I am going to argue that college dormitories provide a better way of estimating real income than the CPI."

http://www.themoneyillusion.com/?p=3516

Most voters go with CPI.

Sumner's trouble is he wants to somehow neutralize politics via pure technocratic theory. But this isn't how people vote. And votes are what counts in terms of where we're going.

Public policy has never followed neoclassical econ theory and it's not going to start now.