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Zombie Economics: What a gentleman John Quiggin is

John Quiggin\’s new book, Zombie Economics, has just landed in my post box.

I\’ve not read it yet so cannot comment in detail, except to point out that John Quiggin is indeed a gent.

The book was trialled in large part over at Crooked Timber and I did perhaps more than my fair share of sniping at (what I perceived to be ) errors in the comments sections. In return I\’ve been thanked in the intro (along with many others of course) for aiding in the writing of the book.

That\’s a remarkably generous comment on someone who was most of the time doing little more than pulling faces and shouting that \”Neener, neener, Teh Keynesian social democracy just sucks! LOL!\”.

So, hat off there.

Unfortunately, even on that rare occasion that I was actually correct I don\’t seem to have swayed the great man (yes, of course I peeked at this specific section).

There\’s an oddity in the way that US poverty statistics are calculated which means that comparing anything about them pre-1970ish with anything after 1980-ish is fraught with peril. For when calculating who is in poverty (\”the poverty line\”) only market income plus direct cash handouts are included. Benefits in kind and the influence of the tax system are not included. Generally, as long as we know this, it\’s not a great problem: as long as we recall that the poverty line measures those who would be in poverty if we didn\’t help them rather than those who are in poverty after we have done so.

However, starting in the early 70s there was a deliberate (and bi-partisan) move to reduce the amount of poverty alleviation that came in cash transfers and move to a system much more reliant upon benfits in kind and through the tax system (the EITC, for example, came into being in 1975).

So poverty rates before 1970 cannot really be compared to poverty rates after 1980. Yes, sadly, despite my pointing this out, this is exactly what JQ does. Poverty fell from the 50s to 1974 then just fluctuated with the economy he tells us. But part of this is because we no longer, as we did pre 74, count much of what we do to alleviate poverty as actually alleviating poverty. That $40 billion a year (from memory that\’s the federal number, the States add as much again I think and yes, we do generally reckon that this alone lifts 5 million households out of poverty) of the EITC for example, that arrives through the tax system, is measured as not having any impact upon the poverty level at all.

Now, if what you wanted to show was that abandoning post-war Keynesianism and moving to, horrors, neo-liberalism, (this is in a chapter entitled \”trickle down\” do note) then noting that poverty reduction shuddered to a halt* as post-war Keynesianism was abandoned and neo-liberalism embraced and not noting this change in the composition of poverty statistics is highly useful.

But not, I would submit, entirely fair.

I shall be reading the rest of this book with a somewhat jaundiced eye therefore: while I would very definitely recommend that you read it also (I have no doubt at all that it\’s going to become part of the standard conversation in economic/political circles) I would similarly suggest an appreciative eye for the details being used to support the case being made.

*The actual numbers are, from memory, that poverty was 25% in the 50s, 11, 11.5% in the mid 70s, and then the official poverty level has bounced around that 11-13% level since. However, Census did once redo all the figures including that tax system and benefits in kind stuff and the poverty level, properly corrected, then stood at about 8% in 2004. So the argument that poverty reduction did not continue at the same rate as before is correct: but that it flatlined is not.

2 thoughts on “Zombie Economics: What a gentleman John Quiggin is”

  1. From memory, during the discussions on crooked timber, he has some sort of odd interest in the EMH. Firstly he subtly misrepresented the theory, then he attributed it as a serious driving force behind the economic reforms. When I started digging up contrary quotations, he revised his claim to a “conscious or unconscious” which is non-disprovable.

    It’s odd, you think the more market-skeptic branch of economists would have jumped on an argument that much of the financial sector was wasting their clients’ money.

  2. Pingback: Club Troppo » Missing Link Friday – 5 November 2010

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