James Galbraith, author of THE PREDATOR STATE, featured in the New York Times

Ivory Tower Unswayed by Crashing Economy
By PATRICIA COHEN
New York Times, March 4, 2009

For years economists who have challenged free market theory have been the Rodney Dangerfields of the profession. Often ignored or belittled because they questioned the orthodoxy, they say, they have been shut out of many economics departments and the most prestigious economics journals. They got no respect.

That was before last fall’s crash took the economics establishment by surprise. Since then the former Federal Reserve chairman Alan Greenspan has admitted that he was shocked to discover a flaw in the free market model and has even begun talking about temporarily nationalizing some banks. A Newsweek cover last month declared, “We Are All Socialists Now.” And at the latest annual meeting of the American Economic Association, Janet Yellen, president of the Federal Reserve Bank of San Francisco, said, “The new enthusiasm for fiscal stimulus, and particularly government spending, represents a huge evolution in mainstream thinking.”

Yet prominent economics professors say their academic discipline isn’t shifting nearly as much as some people might think. Free market theory, mathematical models and hostility to government regulation still reign in most economics departments at colleges and universities around the country. True, some new approaches have been explored in recent years, particularly by behavioral economists who argue that human psychology is a crucial element in economic decision making. But the belief that people make rational economic decisions and the market automatically adjusts to respond to them still prevails.

The financial crash happened very quickly while “things in academia change very, very slowly,” said David Card, a leading labor economist at the University of California, Berkeley. During the 1960s, he recalled, nearly all economists believed in what was known as the Phillips curve, which posited that unemployment and inflation were like the two ends of a seesaw: as one went up, the other went down. Then in the 1970s stagflation — high unemployment and high inflation — hit. But it took 10 years before academia let go of the Phillips curve.

James K. Galbraith, an economist at the Lyndon B. Johnson School of Public Affairs at the University of Texas, who has frequently been at odds with free marketers, said, “I don’t detect any change at all.” Academic economists are “like an ostrich with its head in the sand.”

“It’s business as usual,” he said. “I’m not conscious that there is a fundamental re-examination going on in journals.”

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James Galbraith, author of THE PREDATOR STATE, featured in Fortune Magazine

James Galbraith picks up the argument for government intervention where his father left off. His prescription: Spend now, spend a lot, and spend some more.


By Pat Regnier
February 4, 2009

(Fortune Magazine) -- Until about Sept. 20, 2008, the day Henry Paulson asked Congress for a $700 billion blank check, most of us probably thought we had a decent layman's grasp of how the economy works and how it grows.

Something like this: Buyers and sellers meet in the marketplace and strike their best bargains. Those may not always turn out to be perfectly fair or wise, but consumers generally know better than the government. Growth comes from the efforts of savers and entrepreneurs, so taxes on them must be kept low. Few argued about this stuff. Liberals just wanted to put a bigger social safety net underneath the markets; conservatives, not so much.

Now that all hell has broken loose, none of that seems obvious anymore. Consumers and businesses know what's best for them? Allow us to introduce the erstwhile homeowners of San Diego and Las Vegas, and the MBAs of Citigroup (C, Fortune 500) and Lehman Brothers.

The conventional wisdom about economics is up for grabs right now. We're not speaking here of the conventional wisdom in the economics profession - that moves pretty slowly, and is anyway less wedded to a caricature of infallibly rational markets than most people think. We mean the assumptions that lawmakers, businesspeople, journalists, and educated voters use when they talk about economic problems. Ideas that had been banished to the dustbin are suddenly back on the table, and last year's gadflies now seem as if they were ahead of the curve. Exhibit A: James K. Galbraith, go-to economist of Nation magazine-style liberalism, unabashed market skeptic, and rock-ribbed Keynesian since before Keynesianism was cool (again).

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James Galbraith, author of THE PREDATOR STATE, guest on KCRW's Stimulating the Economy, Now and in the Future

Thursday, February 5, 2009; KCRW News

Stimulating the Economy, Now and in the Future

Stimulating the Economy, Now and in the Future (12:07P)

The President and the Congress are prepared to break records for government spending, with consequences for America and the rest of the world. The stimulus package is supposed to move fast enough to have immediate impact, but not so fast that it's reckless or wasteful. The House bill calls for prohibiting foreign steel and iron from infrastructure projects. The Senate version being debated this week goes further, with few exceptions to the requirement for American-made goods and equipment. Republicans, including Minority Leader Mitch McConnell, call that "protectionism." Could such provisions lead to foreign retaliation? Do other elements advance the Democrats' social agenda, rather than focusing on creating jobs. What should be the long-term objectives? Can past levels of growth and prosperity be restored or will Americans have to tighten their belts permanently?

To listen to Stimulating the Economy, click here for the podcast.

James Galbraith discusses THE PREDATOR STATE with The New York Times Magazine

The Populist
Deborah Solomon
The New York Times Magazine, October 31

The progressive economist talks about why economics is useless, why Henry Paulson’s bailout fell short and how the Bush administration replaced free markets with a “predator state.”

To read the interview, click here.

James Galbraith and THE PREDATOR STATE on NPR's On Point

The Super-Bailout
NPR, On Point with Tom Ashbrook, September 22

George W. Bush pushed what he and others called the “ownership society,” the privatization of nearly everything.

Now, instead, what the country is getting may be the biggest public bailout of private industry in American history.

Seven hundred billion dollars would be on the line, says Treasury Secretary Hank Paulson. It may be a trillion. Public money. To staunch private losses.

It may save the economy, but the economy — and financial facts of life — will be different on the other side. And what should taxpayers get for stepping up?

This hour, On Point: The mother of all bailouts for Wall Street — and what comes with it...

Guests:
Dennis Berman, editor and reporter for The Wall Street Journal. He also writes for the paper’s Deal Journal blog.

James K. Galbraith, Lloyd M. Bentsen Jr. Chair in Government and Business Relations and Professor of Government at the University of Texas at Austin. His new book is “The Predator State: How Conservatives Abandoned the Free Market and Why Liberals should Too.”

Kenneth Rogoff, professor of economics at Harvard University. He was chief economist and director of research at the International Monetary Fund from 2001 to 2003.

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James Galbraith's THE PREDATOR STATE in USA Today

'Predator' Urges Change in Definition of 'Free Market'
Steve Weinberg
USA Today, September 8, 2008

James Galbraith used to work inside Congress, as executive director of the Joint Economic Committee. Then he settled in as a professor at the University of Texas.

Like his renowned father, economist John Kenneth Galbraith, James is an iconoclast. In previous books, polemics for national magazines and research studies for academic journals, he questions the central tenets of economic policy and the underpinnings of waging imperialistic wars on behalf of capitalism and democracy.

In a book published two years ago, Galbraith showed what he considered the intellectual dishonesty of Republican Party — and supposedly, "conservative" — economic policy. That book, Unbearable Cost: Bush, Greenspan and the Economics of Empire, sought to demonstrate the devotion of President Bush, Vice President Cheney and then-Federal Reserve Board chairman Alan Greenspan to helping the wealthy (including themselves) at the expense of equity (or at least a semblance of fairness) in American society.

Galbraith's new book, The Predator State, takes plenty of well-aimed, well-deserved shots at Republicans and conservatives, Democrats and liberals. Mostly, though, as the subtitle suggests, it is a denuding of an idea — the idea of how vital "free markets" are to a capitalistic, democratic nation.

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James Galbraith's PREDATOR STATE reviewed in the Austin American Statesman

James Galbraith's 'Predator State': damning, incisive
The UT professor and son of a famous economist denounces the 'free market' that has created a vulture-like capitalist culture

By Roger Gathman
SPECIAL TO THE AMERICAN-STATESMAN
Sunday, August 03, 2008

Since John Stuart Mill wrote "The Principles of Political Economy" in 1848, economists have generally believed that free trade and free markets arise universally from the principle that supply and demand eventually meet in an equilibrium, which is why markets are self-correcting, and government action is self-defeating.

But there have been brilliant dissenters. For instance, Thorstein Veblen, in "The Theory of the Leisure Class" (1899), observed the robber barons of his time, who flaunted their art collections and stripped their workers and their companies of wealth, and was reminded of the warriors, kings and priests of the "barbaric" ages who spent their time competing for prestige and preying on the artisans and peasants who made up the productive classes.

Decades later, there was John Kenneth Galbraith, who, in his 1952 book "American Capitalism," coined the term "countervailing power," which he defined as a concentration of power that allows an agent to influence prices over and above the "market." Wal-Mart, for instance, has countervailing power over its suppliers.

Galbraith passed away in 2006. Before he died, he challenged his son James, himself a prominent economist and a professor at the University of Texas, to write a book on "predatory" capitalism. The word "predatory" is taken here from Veblen's classic book. It was long thought that Veblen's predatory capitalists and the system of laissez faire that made them possible disappeared after the New Deal was created in the 1930s. But the predatory capitalist culture emerged, again, at the end of the 1980s. The narrative Galbraith lays out in "The Predator State" is an explanation of why it resurfaced and how it has mutated.

Galbraith makes the most of his material in the first section of the book, which criticizes the many shibboleths of economics, including the slipperiness of the concept of the "market." The reader might, however, find it difficult to see these self-contained chapters in terms of the larger narrative, which comes into focus only in the second section. That narrative takes its bearing not just from Veblen, but from Galbraith's father's 1969 best-seller "The New Industrial State," which argued that the postwar era was defined by a three-way alliance between big business, the government and labor. During that era, the Fortune 500 corporations accepted and exploited government regulation and tax rates that supported a growing social net. The government passed back and forth between Democrats and Republicans, but both parties shared a modestly progressive agenda and a sense of good governance. Unions, the wild card, had settled down, demanding better wages and benefits, rather than the public takeover of major industries.

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James Galbraith's THE PREDATOR STATE in Reuters

Galbraith takes on the predator
Fri Jul 25, 2008 10:59am EDT

NEW YORK (Reuters) - Like father, Like son. In his new book, "The Predator State," James Galbraith does justice to the late John Kenneth Galbraith's tradition of flipping conventional wisdom on its head -- and offering bold prescriptions for a more socially just economy.

He attempts to do so, in large part, by revisiting key moments in U.S. economic history and casting them in a radically new light: one that gets away from an inherent faith in the market and allows for some measure of planning on the part of government.

James Galbraith acknowledges the intellectual appeal of the conservative notion that unfettered markets produce optimal economic results. But he argues theory has failed to find any grounding in practice.

Yet while conservatives have long discarded their own ideology in the real world, its principles still imprison liberal economists and policy-makers, preventing them from offering constructive alternatives, he says.

In one fell swoop Galbraith questions the effectiveness of monetary policy, derides strict adherence to balanced budgets and sets out to debunk what he sees as the myth that America's economic might has its roots in free trade.

"My aim, in this exercise, is to free up the liberal mind," writes Galbraith, a professor of economics and public policy at the University of Texas at Austin.

Galbraith traces the success of the American economy over the years to public institutions like Social Security, Medicare and public education, which date back to the New Deal of the 1930s.

"In a properly designed system," he says, "planning and markets do not contradict each other."

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James Galbraith's THE PREDATOR STATE in Publishers Weekly

Nonfiction Reviews: Week of 5/19/2008
-- Publishers Weekly, 5/19/2008

The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should, Too
James K. Galbraith. Free Press, $25 (228p) ISBN 978-1-4165-6683-0

In this involved but highly readable manifesto, economist Galbraith (Created Unequal) argues that only liberals remain in thrall to conservative economics, insisting that doctrines such as monetarism, supply-side economics and balanced budgets have failed the test of evidence and time. Republicans, he contends, have tacitly dropped them to create a swollen “predator state” that plunders public resources for corporate profit through such nostrums as private health insurance, No Child Left Behind, and Social Security privatization. He exhorts liberals to stop kowtowing to market solutions and budget-balancing and embrace a bold (though frustratingly nonspecific) New Deal featuring aggressive government planning and regulation and massive growth-promoting federal deficits. Galbraith's tour of economics abounds in arresting facts and opinions (tax cuts do not stimulate savings or investment, he argues), but his conclusions are not always clear: after demolishing justifications for free trade, he then urges readers not to worry about America's vast trade deficits—even though they threaten, he notes, to cause a catastrophic collapse of the dollar. His is a stimulating if sometimes scattershot challenge to conventional wisdom. (Aug. 5)

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