Sam Uretsky

The Duel of the Economic Titans

Comic book fans love crossovers – fights between good guys and good guys. It came about 70 years too late, but Justice League Unlimited finally gave us Superman vs. Captain Marvel, the original and only real Captain Marvel. The result was a tie. In an earlier special, which matched heroes from DC against Marvel, Supes took on Spider-Man – Superman won. Fans have already filled the Internet with a hypothetical Hawkeye Vs. Green Arrow match up.

For those who prefer something more sedate, the field of economics offers two matches, both exciting, or at least as exciting as these things ever get. The opening match is taking place in New York where the Stiglitz-Krugman competition is taking up a life of its own. Joseph Stiglitz, a bearded, tweedy, liberal, Nobel Prize-winning Ivy League professor has written a book in which he claims that most of our economic malaise can be traced to the severe inequality that causes a severe imbalance in assets and disposable income. In reply, Paul Krugman, a bearded, tweedy, liberal, Nobel Prize-winning Ivy League professor has expressed some mild reservations. Essentially, Prof. Stiglitz is saying that in order to have an economic recovery, we need more spending, and the super-rich, while taking a vastly oversized share of assets, do not spend proportionately. Krugman agrees to the solution, but is resistant to blaming inequality in part because it implies that we have to solve a long-term problem before we can revive the economy. Rather than blame inequality for rising debt levels, Prof. Krugman writes, “What’s the alternative? Minsky: debt exploded because the Great Depression was receding into the mists of forgetfulness, and both lenders and borrowers — enabled and encouraged by financial deregulation — forgot the dangers of leverage.”

This is the type of thing that would normally never move out of the faculty lounge. It’s Thor vs Hercules, but they’re thumb wrestling for Heavens’ sake. Even so, every Keynesian economist with aspirations of tenure has blogged on the outcome.

In order to judge, it’s worth looking at the MIT Living Wage Calculator. According to the US Census Bureau, the median household income (2007-2011) was $52,762. This is enough for a family of four to live in just about every state – with one critical caveat. The Living Wage calculator is just that, and doesn’t have adequate provision for savings, either for education or retirement. If those expenses are factored in, half the nation is falling into a long term debt trap. Since the ultra-rich have corralled all the economic benefits of the recovery, Prof. Stiglitz may have a slight edge. But, since both economists agree on general principles and immediate needs, it seems to be a tie.

The main event, however, is being held in Washington, where Larry Summers and Janet Yellin are both in contention for the position of Chair of the Federal Reserve. Other names have been mentioned, and President Obama might select a dark horse. Mr. Summers seems to be favored by the center right while Ms. Yellin is favored by the center left. The discussion has gotten down to a personal level, with Mr. Summers advocates asking whether Ms. Yellin has enough gravitas for the job. Gravitas is evidently a euphemism for “Y chromosome.”

And that, when you get down to it, is a powerful political reason for selecting Ms. Yellin. Mr. Summers was president of Harvard University, but encountered serious problems for a speech in which he was reported to have said that women were under-represented in the sciences because of lack of aptitude. A review of the transcript shows that Mr. Summers was discussing theories rather than alleging facts, but Mr. Summers’ reported comments will rank alongside Uncle Don’s infamous radio sign-off “That ought to hold the little b_______s.” Mr. Summers remarks will stay with him, regardless of whether he said them or not.

In fact the American Enterprise Institute blog wrote, “Summers’s comments demonstrated his dependence on hard data, propensity for problem-solving, and willingness to voice unpopular views. All of these are important qualities in a leader.” The American Enterprise Institute is a think tank that in the past has employed John Bolton and Newt Gingrich. According to the Huffington Post. Mr. Summers has been on the wrong side of every fiscal and monetary mistake from deregulation to the Susan B. Anthony dollar, so that President Obama has had to defend Mr. Summers as “rock of stability who deserved credit for helping to steer the American economy back from the financial crisis of 2008 and the ensuing recession.”

Meanwhile there’s strong liberal support for Ms. Yellin, and a chance for President Obama to do his bit to hold the women’s vote in 2014, not to mention 2016. Mr. Summers may not be a misogynist, and he may have been outvoted on all the bad economic decisions, but this is politics. Winner: Yellin, or should be. In politics, who knows?

Sam Uretsky is a writer and pharmacist living on Long Island, N.Y. Email sdu01@mail.com.

From The Progressive Populist, September 1, 2013