Jamie Galbraith Speaks for the "Vulgar Keynesians"

Here's more on the series of posts on supply-side economics, what we knew in the late 1970s and early 1980s, the gulf between academia and Washington, and other issues. This is Jamie Galbraith from comments with a view from inside "the trenches," a view from a "vulgar Keynesian" who stood "against the Reagan Revolution in the early 1980s":

James Galbraith: Bruce Bartlett joined the staff of the Joint Economic Committee in 1981, when I did. I was the executive director in charge of the Democratic staff; Bruce was the deputy director in charge of the Republican staff. We set up the committee (which had ten Democrats and ten Republicans, chaired by my boss, Rep. Henry S. Reuss of Wisconsin) so that both sides could fully make their case to the Congress and public. And we battled merrily for a couple of years, and then in 1983 switched jobs, so that we could continue battling under a Senate Republican chairman.

Bruce has been a friend ever since, though neither of us yields an inch, I don't believe, on our economic differences.

This little history makes me, I believe, a useful representative of the despised sect of "vulgar Keynesians," "crude Keynesians," "discredited Keynesians" and so forth, not yet heard from in this discussion. I was in fact a product of an eclectic economics training at Harvard (Leontief, notably), a bracing year among the Old Keynesians (Kaldor, Robinson) at Cambridge, and a Ph.D. at Yale,in the environment of Tobin but not under his wing.

Paul Krugman and I became friends at Yale, and remain so, though we too have had strong differences over the years.

Those of us who were in the trenches, standing against the Reagan Revolution in the early 1980s, saw things differently from either the shock troops of that revolution, such as Bruce, or the academic bystanders, including Paul.

I and those around me -- the Democratic staff at the Joint Economic Committee -- were bitterly opposed to Reaganomics, both as economics and politics. Why?

First, because as politics Reaganomics was aimed at enriching the rich and destroying the economic life of working Americans and the poor. And this is no joke: it did exactly that. Recession, unemployment, the wanton and irreversible destruction of major industries and the fiscal base of the cities, the destruction of unions: all that happened. The cost of curing inflation in 1981-82 was enormous, far higher than the airy comments made above concede. We crude Keynesians believed then, and I believe now, that the steps taken were brutal and unnecessary, and that with hard policy work the problem could have been managed in ways that were far less costly, but that were rejected on ideological rather than economic grounds.

Brad DeLong's summary of Bruce's summary of our vulgar Keynesian policy beliefs is, here, reasonably close to the mark, except in one respect. No one in my circle doubted the capacity of monetary policy to crush the economy if pushed sufficiently far. Rather, we believed (accurately, as events would prove), that monetary policy worked against inflation *only* insofar as it brought on a brutal recession. We did not accept the monetarist/supply-side claim, which was presented at the start of the Reagan administration in official projections, that the trick could be pulled off without a recession. We were, of course, perfectly right about that.

Second, as a matter of economics, we thought that the combination of supply-side economics and monetarism was fundamentally incoherent -- and we were well aware that the supply-siders and monetarists disagreed with each other more violently than they disagreed with us. As an anti-monetarist and one of the very few Democrats willing to criticize the sainted Paul Volcker, I found myself in rough alliance with the supply-siders more than once (and I have a few handwritten notes from Jack Kemp in my files somewhere).

I ultimately came to see the supply-siders as the most effective practical Keynesians around. They were not only willing to run deficits when the situation required, but able to do so, because they skewed the benefits toward the rich, and thus brought political power into play behind the cause of fiscal expansion. This of course is also what George Bush did in 2001 and in 2003-5.

I didn't like the redistributive bias, and for that reason I fought the Reagan tax cuts. But I had no doubt, from 1981 onward, that the tax cuts and military buildup, coupled with a reversal of the tight money policy, would produce a strong recovery in time for Reagan's 1984 re-election campaign. And it's worth noting that Reagan had a Tory Keynesian (Murray Weidenbaum) as his CEA chief, who knew this very well.

Jude Wanniski was a hugely influential force in the supply-side camp, and his views were the epitome of the supply-side position in Washington. I thought Jude was a crackpot in economics and economic history (his idea that Smoot-Hawley caused the Great Depression, notably; also his passionate advocacy of the gold standard), but there is no doubt that he played a crucial role. There is no complete or accurate account of supply-siderism without Jude Wanniski; he cannot be airbrushed from history simply because sober academic types now think him inconvenient.

Notwithstanding our disagreements, Jude and I also became friends; late in his life he staged a vehement and prescient stand against the Iraq war.

Incidentally, it is not correct that we crude and vulgar Keynesians were wedded to high marginal tax rates for their own sake. The Bradley-Kemp tax bill, which had much more Bradley than Kemp in it, was endorsed by the JEC Democrats in 1984, in a report that I wrote. It became law in 1986. We made the argument for that bill, because we did understand the usefulness of a broad-based income tax, and the difference between high marginal rates per se and progressive tax system. We also understood that the previous income tax structure was politically indefensible, and that alternatives such as a VAT, which were serious threats, would be worse.

The 1986 tax reform saved the income tax, and laid the groundwork for the 1993 upper-bracket increases, which did quite a bit to restore the overall progressivity of the code, and which laid a template for future tax changes.

Turning to the monetarists, it's another forgotten fact that the lead monetarists on Capitol Hill at that time were Democrats. One of them was Bob Weintraub, who worked for Parren Mitchell, chairman of the congressional Black Caucus. Another was Bob Auerbach, a Milton Friedman student. Bob Auerbach and I both worked for Reuss, and we shared an office at the House Banking Committee for three years in the late 1970s. Bob A. abandoned monetarism when it fell apart in the 1980s; he now teaches at the LBJ School, and as a matter of fact, we had dinner together tonight.

As for the MIT and other conventional-Keynesian academics, those of us in the trenches found them sometimes helpful but often preoccupied with their models and largely unaware of the political issues within which these economic questions were embedded. For instance, we did not have a lot of use for the theoretical supply-side effects of tax policy on individual behavior that respectable liberal economists were prepared to concede. The fact was, dwelling on those supposed effects simply gave aid and comfort to the Reaganauts; there was no way to make the point in political debate and not give away the store when it came time to write a tax bill. As a technical matter, it also seemed clear that the income effects of these tax changes would dwarf the substitution effects, and the evidence I've encountered since does not incline me to change this view.

Among academic economists at that time, Bob Eisner was my hero and closest friend and ally; I think no one would call Bob either crude or vulgar, and that is perhaps why he is seldom mentioned in these discussions. (His daughter, Mary Eccles, was on my staff.)

As Brad notes, Rudi Dornbusch was, indeed, a politically- attuned advocate of the effect of monetary policy, and as he did more politics, he became more Keynesian. (Rudi's future wife, Sandra Masur, was also on my staff.)

But the idea that monetary policy worked to control inflation expectations directly seemed to us to be a gross overstatement of its powers. Bob Auerbach and I designed the Humphrey-Hawkins hearings beginning in 1975, and wrote those provisions of the HH law in 1978. We did it to extract information from the Federal Reserve and not because we thought that setting monetary targets would have some fundamental effect on the psychology of the nation. And while I'm proud of those hearings, that's because they established the constitutional authority of the Congress over the Federal Reserve, not because they somehow cured inflation expectations, as it seems some magical-thinking economists appear to believe.

To Paul, these issues were sufficiently "academic" at the time that he could in good conscience accept a staff position in the Reagan administration (on the CEA under Martin Feldstein, after the first wave of Reaganomics had passed). To him, at the time, it basically wasn't a political assignment, just a chance to see Washington under the redoubtable Feldstein.

Perhaps Paul and all the others who lined up in the Reagan camp were right - that these were academic issues to be debated and resolved among people who all shared the same larger objectives for the economy. In some ways, I accept this as a subjective matter. I came to respect the sincerity of Bruce, Jude, Murray and others working in the Reagan administration about their goals. Otherwise, I could hardly think as well of them now, as I do.

But to me and those in my camp, at the time, it would have been unthinkable to go over to their side. At the time, I saw the Reagan administration as, objectively, a vicious assault on the economic life of ordinary Americans, brought about by the willful and arbitrary rejection of useful policies that aimed to solve problems without inflicting savage harm on the weakest economic agents. I thought, also, that with honorable exceptions the academic economists on the sidelines were weak and indifferent to that harm.

I don't think I was wrong about that.

JG

Update: Bruce Bartlett, whose column in the NY Times began this discussion, responds to Jamie in comments.

Comments

[Lafayette]

New thread, re-posted comment:

Nothing being recounted in this forum’s debates, somewhat mired in nostalgia, gives a clear indication of what future policy should be, either in terms of taxation policy to correct income inequality or its counterpart, a reformation and expansion of public services that render value (to the lower and middle-classes where it is needed most).

This is where America is hurting. Assigning the blame to Reaganites, however meritorious, cannot and therefore will not address that problem/challenge.

The Democratic Party platform needs a program for the future that will obtain or approach the significant societal objectives already attained elsewhere, namely:
• Generalized basic health care services the prices (based upon fair costs), mandated by a government administration and not “what the market will bear” (based upon the process by which hospitals offer non-paid services recuperated on the bills of insured patients), and
• Pervasive skills/competency enhancement that advances the American work population further up the value-added ladder in terms of its abilities, keeping it proactive and not reactive to the advance of global innovations, and,
• A workable solution that offers first-time housing to the lower-classes, with a loan-repayment process that allows the unemployed to suspend loan repayments till another employment is found and,
• A host of other public services (drug abuse, youth obesity, neonatal care, female abuse) that America can well afford in order to bring itself up to a international standard against which it is blatantly deficient.

None of the above is rocket-science. None of it is beyond America’s financial means. All of it can be obtained if the political will is there.

To do so, an effort must be undertaken to explain convincingly the merit of such societal policies to the American public and how the social investment will better their lives. It must strike resonant chords in Dubuque. Not just ballyhoo, cheers and confetti at a party convention.

And, that effort must start NOW - not cooked up hastily six months before the elections by the presidential candidate.

Otherwise, the Republicans will cake-walk into the White House - and America will wander in the desert another eight long years.

[paine]

nice summary wrong administration

the shark got jumped in 78 -79
not 81-82

okay the real blodd ran in 82

but that's because a carter team did
such an elitist job
on hoi polloi america

jimmy's tight as bark on a tree
was dead wrong to get what jg here correctly wanted

demand management by fiscal budget busting

the new democrats started failing us long b4 clinton

jimmy was bill's st john the baptist

[anne]

Dear Paine, please, a little less cryptic on history so I can better follow the argument.

[paine]

thanks for reading it anyway anne

simple hicks macro
70's is/lm open system

carter was politically resolved to lick the deficit moniker on every dems head back then

so when the economy started heading out of control price wise
he had only one instrument he'd use

monetary policy

recall fine tuing had"failed" whatever that was supposed to mean
it meant no tax brake for shitty job level amerika
to odf set the crdit squeeze
PV was only to ready to apply

the problem required patience and a 6 year profile
and both macro instruments in combination
plus some overt fine tuning of debt relief
that was politically verboten
unless you were a farmer

and as i wrote earlier

a dollar forex policy

the triad needed all avenues working in sync
if the plebs were not to bare the hurt of a crunch that was not of their making

i say till proven otherwise
it was price wage spiraling we had
the wage rates were chasing the price increases

guys knock that down
prove me wrong

[paine]

btw to say that would have been politically
impossible
is merely to say
the duopoly party system
was broken already back then
not in the 90's

it broke in '68

and is still broken

[ken melvin]

Thanks the both for the terrific post.

[Bruce Bartlett]

As always, I find Jamie's observations illuminating. I would just make a couple of points. First, it is unfair to take the actual operations of a government as being a coherent representation of any economic philosophy. If I were to use every action taken by the Roosevelt Administration to refute Keynes, that would be just as unfair as what Jamie has done in using Reagan's actions as the sole basis for judging supply-side economics.

Second, I think he conveniently leaves out an important part of the story as far as the JEC was concerned. Before he and I joined the staff, the committee had endorsed a version of supply-side economics. The chairman, Senator Lloyd Bentsen, got every member of the committee to sign a report to that effect in 1980. So Jamie's actions were as much a counterrevolt against the position that had been adopted by the committee's Democrats as it was in opposition to what we on the Republican side were doing.

Third, by starting his commentary with 1981, Jamie goes well past the point I was trying to make in my New York Times article. I was writing about what motivated people to even think of supply-side economics in the first place, not about its operational consequences during the Reagan years. My focus was on the 1976-1980 period, when a small handfull of people were trying as best they could to grapple with an economic crisis caused by rising inflation. Just as with Keynesian economics, those who later became advocates for supply-side economics carried the arguments, the policies and the rationale off in a different direction. That was the whole point of my article. What Jamie really shows is that the bastardization of supply-side economics began much earlier than this administration, and he's certainly right about that.

Finally, if I were in Jamie's shoes, I would also be trying to make Jude Wanniski the focus of the discussion. Jude was a brilliant man, but also more than a little crazy. A much more important figure and one much more difficult to attack was Norman Ture, which is why people like Jamie tend to ignore him. But Norman was absolutely critical, not just because he was one of the leading tax economists in the U.S., but because his involvement with tax policy went well back into the 1950s.

Just as an aside, I would note that Norman had been on the JEC staff in the 1960s, where he functioned as staff economist for Wilbur Mills while he was chairman of the House Ways & Means Committee. It was Mills who really got Kennedy to propose a cut in marginal tax rates in 1963, based on Ture's ideas. Since Norman was also deeply involved in the development of the Kemp-Roth bill, he was a bridge to both major tax-cutting episodes. To the curious, I would recommend Julian Zelizer's book, "Taxing America," on both Mills and Ture.

[paine]

BB
just proved my point

the heart
of the policy macro establishment
of both parties
by 77
(carter year one)
had turned
from any thought
of using
raw fiscal keynesianism
to manage the macro economy

btw
love the bentsen moment
( bob rubin in a ten gallon hat)

[robertdfeinman]

Let's see if I've gotten this right, politicians don't use economic theories so much as misuse them for their own ends.

I think that sounds about right. Politicians even misuse reality for their own ends as our current experiences in Iraq demonstrate. Not only didn't Iraq have WMD's, but the Gulf of Tonkin incident didn't take place, nor did anyone sink the Maine. Politicians lie, so what's new?

The problem is that when academic economists get into government they think that presenting their "theories" as the basis for advice is all that is required, but they are playing the wrong game. The economists (social scientists, climate scientists, etc) are just used for window dressing so that already decided on policies can be given a veneer of respectability.

Even religious leaders are starting to realize they are being used as props.

Skip the academic debates and look at the effect of the policies put in place. Cutting taxes on the rich makes them richer. Raising taxes (or indirect expenses) on the poor makes them poorer. We don't need theories to explain this.

The issue is: is this the way we want our society to be structured, and if not, what practical steps can be taken to move in another direction?

[bakho]

Interesting history lesson. A big part of the backdrop were the oil price shocks of the 1970s. Oil shocks had major effects on the US economy and relocated the equilibrium position beyond the boundaries of traditional monetary and fiscal policy. Double digit interest rates are unusual for the US.

If the oil shocks had such a large effect on the economy, what about the response? A history of the late 70s would describe large increases in energy efficiency (including CAFE standards, appliances, buildings, etc) and companies investing in flexible fuel strategies (ability to switch between oil or gas or electric) to the point where oil use had dropped by over 20% from the late 70s to 1985, thus ending the "oil shock". Did we really improve our monetary and fiscal policy during this period? Or was there a frantic reaction as the economy tried to absorb the oil shock followed by a return to normalcy as reliance on oil diminished?

The current view (so I was taught) is that monetary policy can be used as a rapid acting tool to smooth an economy but is insufficient to address structural, infrastructure and technological problems in an economy. In this view, the oil shock set off a wave of inflation and other dislocations that made monetary policy relatively ineffective. Monetary policy was beyond the bounds of acting to fine tune the economy and instead became a sledge hammer. Technological adjustments related to decreased oil demand were necessary before the economy could recover to a position where monetary policy was once again effective. However, the oil shock and the technological changes concerned with fuel efficiency and fuel flexibility were occurring simultaneously and makes it difficult to separate effects of economic shock from monetary and fiscal policies.

Are the real lessons of the 1970s and 1980s more effective monetary policy? Or are those lessons about dislocations (caused by oil shock effects) and response to those shocks?

Another note, that is not discussed is productivity. Why did productivity increases lag so much during this period? Given the effects of productivity on income and economic growth, discussing the economy as if only fiscal and monetary policy matter (or matter most) is incomplete.

Was investment in the 70s and early 80s directed more toward energy effiiciency than to productivity increases? Is that one reason why this period had a lag in productivity? Another missing effect is the increase in the workforce participation. The number of workers increased both because of the baby boomers and because of the movement of non-minority women into the labor force. The labor force/population ratio increased from under 60% for most of the 1960s to the mid 60% for much of the 1980s and beyond. Does the availability of workers (unemployment sometimes reaching over 9%) take pressure off industries to improve productivity? The government investment in computing sciences and the internet begins to pay off starting in the 80s and in full force during the 90s. This policy is as important to economic growth as the monetary or fiscal policy, but is not part of this discussion.

I understand the roles of monetary and fiscal policy in short term management of an economy. However, claims of large long term effects, especially of monetary policy, struggle for clear evidence.

[Bruce Webb]

BB; 'First, it is unfair to take the actual operations of a government as being a coherent representation of any economic philosophy.'

Which actually is an argument against economic philosphers getting directly involved in policy to start with. But methink Mr. Bartlett doth protest too much here. I doubt his publisher put a gun to his head and demand that he title his book Reaganomics: Supply-side economics in action . The title makes an explicit claim that the "actual operations of a government" are a "coherent representation of any economic philosophy". You take Supply Side, put it into action, and you get Reaganomics. At least that was Mr. Bartlett's stated position in 1982. Inconvenient perhaps now, but there it is.

[calmo]

So Robert thinks the view by economists of their role in the policy development process is a tad inflated. [I bet former Sec Treas Snow would agree if we could get him to share a moment of his time with Cerberus Capital Management...luckily we don't have enough money for that.] Something about the contributions from Bruce and James on this thread go a long ways to adjusting that view for me...and my view of them. [In response to that political jab "Have you no decency!?"...well not compared to Mr Bartlett and Mr. Galbraith is how I feel right about now.]

Bruce kindles rdf's remark earlier with "ideologically driven" and more pointedly above with that reference to Senator Bentsen. [As paine notes, quite the moment...but no one is surprised that Marxist scholars are not part of that policy development that might detail "duopoly".]

Robert's reaction might be similarly inflated with this characterization of economists: Even religious leaders are starting to realize they are being used as props. Such a walloping line, Robert, I B reduced to tears.
I retreat to the position that economists are like engineers: all those numbers make for good bridges.

[knzn]

I’m intrigued by Bruce Bartlett’s second point in his comment above. If “every member” of the JEC signed a report in 1980 that “endorsed a version of supply-side economics,” then the phrase must mean something very different to him than it does to me, or else I have a very distorted view of what the Democratic congress was like in 1980. But is he undercutting his original argument by suggesting that Old Keynesians like James Galbraith were working against what had already become a consensus? Might I suggest that the new consensus that started to form among Keynesian academics during the 1970s could have made its way (and largely did) to Washington without much help from people who labeled themselves supply-siders?

[knzn]

BTW I think Bruce Bartlett would help his position if he would simply concede that he misspoke (or miswrote, I suppose one should say) when he listed among the Keynesian beliefs of the 1970s that “monetary policy is impotent.” This is the point that has been most widely and successfully attacked, and he hasn’t really made much attempt to defend it directly (probably because it’s indefensible).

[Bruce Bartlett]

Note to Webb: I finished writing my Reaganomics book in September 1980 and the first edition appeared in the Spring of 1981. Consequently, the book has nothing in it about Reagan's actual policies, although I did add some material to the paperback edition. Bill Niskanen's book, which was also called "Reaganomics," discusses Reagan's policies in action. I would also mention Paul Craig Roberts' book, "The Supply Side Revolution," published by Harvard University Press in 1984. These books will tell you what the supply-siders inside the administration were thinking. As Jamie notes in his post, I was working on Capitol Hill while Reagan's policies were being formulated and implemented.

[Bruce Webb]

Bruce I haven't read your book and don't intend to but the fact is that the title makes an explicit claim. That the book doesn't actually back up the title is not really my problem.

Reaganomics. That assumes a program in actual action. If you just were writing about the theoretical impacts of implementing candidate Reagan's policy then fine. It just means your title is totally misleading.

Supply Side Economics in Action. Same thing. You stated an equation that you now suggest was simply theoretical. You were making explicit claims about what Supply Side would actually accomplish once put into action. I expect you wouldn't be disavowing that if it had actually, you know, worked.

[paine]

why calmo
i've always found you most decent

(read that with a grandiose east texas accent )

[Ninjaplease]

As a vulgar keynsian true believer:

Holy Shit:

http://news.bbc.co.uk/2/hi/business/6548291.stm

I thought this kind of thing only happens in my home state of New Jersey.

[paine]

knzn:

"I think Bruce Bartlett would help his position if he would simply concede that he misspoke
(or miswrote, I suppose one should say)
when he listed among the Keynesian beliefs
of the 1970s that
“monetary policy is impotent.” "
not to be too ponderous here
but the late 60's
early 70's was the high tide
of hicks macro not keynes macro

indeed keynes could be construed
in his liquidity trap
as at least claiming
certain deep collapse stages
like apres 1929
where no amount of clever monetary policy ....alone
could refire a national economy

that's still belived

krug here being a very much bigger believer
in just that
after certain international develpoments (japan)
in the 90's

------

ps

tobin mentioned above
nicely calls this k liquidity trap stage
a sluggish dynamic argument
not a low employment equilibriumargument

long run recovery
---as k points out---
over the life horizon hardlt suffices as sound social policy
if there's a far quicker way
by means of
fiscal deficits .....

[Ninjaplease]

http://en.wikipedia.org/wiki/Bruce_Bartlett

So Mr. Bartlett, when exactly did you decided to use Stagflation as your Pearl Harbor against poor people?

[paine]

may i put in a word for jude w here

he was at least as good at
delivering on his mission
as any of his opponents

"Jude was a brilliant man,
but also more than a little crazy "

hell i'm "crazy"
what marxist economist
trying to swim in these waters isn't

so he's in my odd birds of a feather flock
and i'm proud of the association

[anne]

Suppose that from a policy perspective Bruce Bartlett did not mis-speak, and that many Keynesians gave little thought to the efficacy of monetary policy from the middle 1960s on. What would that mean in terms of the attitude to labor that developed from the middle 1960s on? Why was there, from what I am told, so much agreement among policy makers that labor push became an increasingly significant driver of inflation? Why were more liberal economists seemingly so unwilling to defend labor in the 1980s?

[ken melvin]

Ninja thanks. Nothing like a picture of Wolfie to make one's day.

[anne]

Mark or Paine, please explain what bothered Paul Krugman initially in Bruce Bartlett's article. The idea that he was bothered only because MIT surely had more flexible Keynesians in the 1970s, never struck me as particularly important. When Krugman complains however, I always pay attention. What am I missing about the initial complaint?

[Joe C.]

"First, because as politics Reaganomics was aimed at enriching the rich and destroying the economic life of working Americans and the poor. And this is no joke: it did exactly that."

I thought I was going to read a serious analysis analysis of economic theory, but once I read that I knew I wasn't. Thanks for putting this in early, though. I quit reading after that.

[paine]

anne really good questions

i read about
paul samuelson
worrying about cost push
ie supply side inflation
b4 he joined the new camelot

monetary policy is faced with a dilemma
it can't curb inflation
that is cost push by
anything short of a credit slow down
and even that unlike demand pull
is only effective indirectly
if wages are pushing at profit margins
by moderating these wage demands
by terror
terror of the sack
and indefinite jobless ness

in a nearly closed system
like amerika in ike times
foreign comp is no real curb

so one
curbs the price spiral
by upping joblessness
and idling part of
the systems
potential output capacity

not the vision samuelsonprojected in his first text book in the late 40's
where the gub could macro out
any level of jobs you want
so long as there was slack somewhere
and labor had mobility

but with wage push.....
the trade off was there always
a resrve army of unemployed
large enough to be effective
and the threat of a larger one too

in leading policy minds from the late 50's this was well understood

the static philips curve
still meant optimal employment levels
might mean serious inflation
and in the 50's
inflation
was something no one wanted even a drop more of then necessary

but then for a spell
folks thought
maybe we can learn to love inflation
like we love the bomb

till uncle milty
and my prof ned p

said sorry

expectations can adapt
inflation is inherently dynamic
when an economy is out of its "natural groove"

and whats worse
high inflation can not be cured except by a jolt of unexpected demand short fall

ie

a recession
and ...joblessness

incomes policy as mention in this thread
was the band aide Rx of the moment

recall that darkest of keynesians
dick nixon
resorting to one

jaw bone of an ass indeed eh ???

then came the deluge
our topic the later 70's

i'l tell you anne

the real issue is why did labor get blamed

and for what

obviously
not catch up wage increases
cola wage indexing
inflation proofing
for three and five year contracts

but brazil was not our idea of paradise

i guess the real core here
was this

can the grapple over economic class shares
of total value added
between labor and property
be controled without a central bank
willing and able
to act against the laboring majority

the vredict so far

NO NO NO
there's no substitute for a CB WILLING
throw the economy into higher unemployment mode

[Bruce Bartlett]

Re monetary policy in the 1970s, there were many economists who really thought that monetary policy had nothing to do with inflation. That is, they thought excessive growth of the money supply was not the fundamental cause of inflation. This doesn't mean they thought a tight monetary policy could not cure inflation. But since loose money was not the cause of the inflation, it was an inappropriate tool for dealing with the problem. It was like using a cannon instead of a flyswatter. This was Jamie's view, I think. There were many economists, among whom I think Arthur Okun and Jamie's father were most prominent, who thought that loose money was merely accomodating price increases that were essentially administered. OPEC was the key cause, but so were labor unions, greedy corporations, and even imprudent consumers. I still remember ads on TV that blamed consumers for being "piggy" as a central cause of inflation. Consequently, they were keen on the idea of an incomes policy--i.e., wage and price controls--which would directly target the fundamental cause of inflation.

The monetarists, by contrast, thought that inflation had one cause and one cause only--too much money created by the Federal Reserve. The Fed caused it and the Fed could stop it any time it wanted to.

Then there were some who were sort of in the middle. They agreed that inflation was a monetary problem, but feared that the cost of a purely monetary cure for inflation was too high. At this point, the rational expectations-types came on the scene and argued that if the monetary authority had enough credibility, then the transition from a high inflation regime to a low inflation regime could be relatively painless. Others thought that combining tight money with an incomes policy would reduce the transition cost.

The contribution of the supply-siders was in arguing that growth-oriented policies, including tax rate cuts and deregulation, could smooth this transition. The Keynesians were adament that cutting taxes while simultaneously slowing money growth was a recipe for disaster. It was like hitting the gas and the brake on a car simultaneously. That is because they viewed tax cuts purely in terms of their stimulous to aggregate spending, which was inflationary, rather than in terms of stimulating production, which was anti-inflationary.

[Alex Grey]

Sorry but I feel that this debate over the extent to which supply-side economics was camouflaged Keynesian policy or that supply was a principal concern of Keynesians misses the key point about the Reagan-Thatcher revolution.

My understanding is that Keynes focused primarily on conditions that influence Aggregate Demand. These include most importantly business expectations (so called "animal spirits") leading to investment and that supply conditions were of secondary importance. In reading The General Theory I find relatively little emphasis on supply conditions. Looked at from this perspective, one needs to ask whether the apparent success of the supply-side revolution rests more with its impact on Aggregate Demand.

In fact, I would argue that the key aspect of the supply-side revolution has relatively little to do with aggregate supply and much more with sparking more rapid growth in Aggregate Demand. The key accomplishments of the supply-side revolution were: disinflation, the deregulation of financial markets and permitting widespread financial innovation. These three factors were the main contributors to sparking a private credit boom. From a Keynesian perspective, encouraging growth in private credit has a direct effect on Aggregate Demand. Deregulation of product markets and labour markets (which were already very deregulated) had a best a much more modest impact on the growth of Aggregate Demand.

How did the “supply –side revolution spark a private credit boom? Disinflation resulted in lower nominal interest rates and financial deregulation and innovation allowed an increase in the amount of debt that could be carried by an entity (either individual or corporate) with a given level of income. Obviously if the ratio of debt to income increases the result is increased Aggregate Demand, assuming a portion of this extra debt is spent on goods and services, which it was. One has only to think of how auto financing has changed over the past twenty-five years and the potential implications this has had for car ownership.

However, boosting growth in Aggregate Demand through increasing private credit growth carries with it substantial risks. First, and most obvious, the end result is a rise in the debt to GDP ratio. This makes the economy much more difficult to manage over the business cycle. A second result is a long-term increase in asset prices. Think of the housing market and the need then for yet more credit to finance the purchase of assets. Third there must be an ultimate limit to the level of debt to GDP and as this limit is approached GDP growth must invariably slow. To my mind this is the best description of the past 25 years of economic history and of the situation the U.S. now finds itself in.

[paine]

ANNE

i think krug's gut told him
BB was trying to make
solving
the on going macro problem
easier then it really is

well to be more precise

easier but more limited too

supply bumps will be bumps
and they will not only create job dislocations
but shocking general dips too
and dips that might have a few years worth of sub par job growth performance built in

but hey
there are no ways to improve on father market
just avoid intoxicating yourself
on all that funny credit money

to make this work
u have to make
k 70's
policy really simple and really wrong

after all look at his own Rx reaganism

no better

look at his hero norman ture's take

[paine]

bb
writes like mephisto

i'm impressed

but he really is agreeing
that 70's keynesians in their several flavors
all more or less
understood the power of the credit system
and its commanding heights
the fed

after all logomachia aside

price increase acommodation
is causation

this is a circular system

so the original sinner???

an administered price
a union contract
or the loose credit that will validate it

well that's
a very important question historically
and maybe scientifically

but policy wise ???
---------
btw

bb
is still not willing to address the real keynes point

some stages of the system
no amount of liquidity(credit availiblity)
will stimulate corporate investment...period full stop

nope he just wants to cut taxes and unleash our entrepreneurs from
uncle sam's barbed reg wire

[paine]

alex g

i agree the improving credit market for households
was a very important innovation
and the sudden glut of availible funds
and low rates
did kick off a consumer not fed gub or export or corporate investment led recovery

the use of credit is the key

after all
keynes simply used the central gubmint
that controls the currency
as a perfect credit rating limitless borrower

able to pull any economy out of a slump

a shallow slump
now households can lick
but why not pay folks more
in the first place
reduce corporate surplus profits
and the lend em less

i still prefer to let uncle handle
any added debt
needed for macro recovery

[anne]

Paine, you are a gem, with a superb response and continuing discussion which is why I needed the clarity and further clarifying. Nice.

[paine]

anne
warning i'm a marxist
i could be hazardous to health if inhaled

[robertdfeinman]

Looking at the inflation of the 1970's one will find that pressure by labor for increased wages followed the rise in inflation. It is the claim that inflation is caused by labor push that is just another of those "truths" used to support a political agenda. In this case gutting organized labor.

In general labor increases failed to keep pace with rising costs. For labor to be able to force wages up would require that they have an effective monopoly on the labor market. Perhaps this was true in some limited sectors like the featherbedding in the railroads for a period of time, but this has been rare (and non-existent for the past 30 years).

Even in the case of railroads the featherbedding was not a big deal since the firms themselves had the ability to set prices pretty much as they wished.

I don't know why the inflation of the 1970's is so hard to understand. LBJ fought a war without paying for it and we had the oil shocks. Why do we need abstruse theories? Sometimes the real world really is a factor in what happens.

Anyone seeing a parallel between then and now gets a gold star. Now do a bit of research and find where the wealthy put their money last time to preserve their real wealth. Here's a hint, it wasn't in US bonds or stocks.

[paine]

rf

"It is the claim that inflation is caused by labor push that is just another of those "truths" used to support a political agenda"

i tend to agree
seems the wage earners
ought to be seen as innocent
till proven otherwise

and where's the proof their push
each time or most times back then
preceeded the price up tick

[Stormy]

I have enjoyed the history; read this thread again and again.

And I deeply appreciate both BB and JG talking frankly. I lived through those times. This thread…and all the comments…are a real treat.

Paine,

a shallow slump
now households can lick
but why not pay folks more
in the first place
reduce corporate surplus profits
and the lend em less

So sensible, so clear…but we know in a greed-eats-greed world that aint going to happen. Share? You got to be kidding. Let’em eat credit cards.

Besides, there countries that will make that credit possible, where folks work almost for nothing, really. So now we got the folks at home coming and going. “See, you can afford more…and it’s cheaper, too. Need credit. We have just the card for you. Oh, do you mind lowering your wages…pension expectations…health care…Fine. Will put the cuts in our next budget.”

But…the world has changed since those simpler days. Do wages chase prices or prices chase wages? How do you handle in inflation? Well, other than CEO salaries, wages are no longer in the inflation-ball game.

Inflation looks to be under control…to no credit of any economists, past or present. New factors have brought inflation under control.

Global labor arbitrage is the new princess in town, toasted and feted from one economist to the next, bless by none other than the WTO.

The rich get richer; we get the bill; and, the poor now dimly see the Promised Land; maybe they can get that car and white picket fence. I doubt it. And Citigroup can’t wait to give them credit cards…the last great itch to be scratched.

But the world has changed again, even while these new get-rich schemes were being played…and free-marketeers were leading the globalization parade.

There’s talk of a carbon tax…maybe even regulations…suddenly global warming is upon us, together with potable water shortages, pollution, and a squawking gaggle of other loud, and not-to-be-ignored problems.

Companies are asking a carbon tax…big corporations, even BP. And now they want regulations so that they can plan for the future. And oil…should be an interesting next couple of years for that commodity. Saudi Arabia is looking more and more anemic. And those oil sands are hell on the environment…expensive, too. (And clean coal? We are dragging our heels on that one. American Electric Power may have one IGCC commercially operated plant by 2010. By that time, the world will have brought on line hundreds of coal burning plants.)

Of course, these new taxes and regulatory costs will place an added burden on already uhhhh “overtaxed?” corporations. And then the cost will be slid to the consumer, he who already is up to his eyeballs in debt. And what will the poor Fed do then? And I have no idea what China will do.

There is no bloody vision anywhere. I am tired of people not putting all the pieces together. You can’t look at one piece and argue it to death. You have to look at all of them; otherwise, you simply react instead of plan.

[paine]

let me throw out this challenge

the 70's was a time ...we're told...
where wage earners were un afraid of the credit system clamping down
demand shocking the system
so wage increases
fully passed thru to prices
led to inventory pile ups
and then the recessionary flinch

well volcker stymied that fantasy

okay

so who's gonna stymie

the asset market bubbles

just as harmful to the system
despite claims otherwise
if a spec bubble doesn't blow itself out
i see no evidence the fed will step in to kool it before
it becomes a real hazard

stocks in 99

house lots in 04

if you get into a ponzi phase
its a great fun game
maybe we need a fed
that can look balefully
at such asset markets
"about" to go wild
like they look at job markets
and say they are "about ..."
to go wild

[knzn]

I think Bruce Bartlett’s last comment is accurate. But (as he implicitly acknowledges) nobody really though that monetary policy was impotent, only that it was not the best tool. And I (along with, perhaps, the majority of Keynesians today, who are in today’s macroeconomic mainstream) still think the circa-1980 Keynesians were right to believe that “cutting taxes while simultaneously slowing money growth was a recipe for disaster…like hitting the gas and the brake on a car simultaneously.” Consider the alternative of a huge increase in taxes combined with a moderate monetary policy. That would have given us an equally large recession, and my guess is, it would have produced the same disinflation. But with a weak dollar and moderate interest rates, the recession would not have fallen so disproportionately on the goods-producing sector, and the recovery would have been accompanied by more rapid growth in private investment. (Supply-siders may disagree with that last clause, but I just don’t find it at all plausible that short-run effect of a tax increase on aggregate supply could outweigh the reduced crowding out effect.)

[Bruce Bartlett]

I Knzn is completely wrong in thinking that a tax increase would have done anything to moderate inflation in 1981. Keep in mind that federal revenues as a share of GDP rose from 17.2 percent in 1976 to 19 percent in 1980. Yet CPI inflation rose from 4.9 percent in 1976 to 12.5 percent in 1980.

[anne]

No; there was no alternative of a tax increase and short term interest rate lowering; simply because a significant tax increase would have been politically impossible. Later, I remember my father groaning when Walter Mondale spoke at the Democratic convention and said he was going to be honest so if elected there would be a tax increase. My father said, "lie." Did Mondale become president? I forget.

says...

Remember, there are accounts of Lyndon Johnson and Richard Nixon in no uncertain terms telling Federal Reserve chairs not to raise short term interest rates to slow the economy. Johnson actually became physically intimidating, while Nixon was just tough as nails. Yes, Virginia, presidents did push about Fed chairs in them there days, Virginia.

[anne]

Sorry, I do not understand but my computer is awfully forgetful. That was me.

Accounts of Johnson and Nixon pushing about Fed chairs, accurate accounts, really do need to be considered.

[paine]

for what its worth
i like knzn's cocktail

but we needed a huge budget deficit
and a working familly tax cut in 1978

and selective credit rationing

ie not limiting plant and equipment
even though i doubt there's ever been
a factory built to hit interest rate mins

that's for credit celing-ed folks

not TNCs

[ken melvin]

The seventies were our winter of discontent. No really, they were our change in life. Our change forever whence things would never again be the same. Capital thinking would have to change. Labor was not the labor it used to be. But, we play charades. Nothing changes. Nothing has changed at all. Just everything. Nothing will ever be the same again. Nothing will ever be as it was.. Best we keep on pretending cause no one knows what the future might hold.

[gordon]

Since there has been discussion of "vulgar Keynsianism", people might be interested in some "vulgar Supply-Side" here.

[bakho]

Is Bruce's argument for wealth redistribution? Money gets squeezed out of the poor in the form of high interest rates and high unemployment. This reduces demand and helps check inflation? That is softened?? by giving tax cuts to very wealthy people in the hope that they will invest it in more production (as if)? That scenario does fit the early 80s.

Did it work? Judging by the tripling of the debt, didn't a lot of the tax cut to the wealthy end up on loan to the government? Instead of collecting the money as revenue, the government borrowed the money as bonds to be paid with interest from revenue collected by future taxpayers.

Certainly all tax cuts are not created equal and come with different multipliers. A case could be made for reducing taxes on investments in production rather than a broad untargeted tax cut that may go largely to people who produce little but collect a lot of rents. However, that is not what happened.

[calmo]

Well bakho it looks like you don't get rdf's gold star:Anyone seeing a parallel between then and now gets a gold star. Now do a bit of research and find where the wealthy put their money last time to preserve their real wealth. Here's a hint, it wasn't in US bonds or stocks.
But someone did buy those bonds and it could be that robert is right that they also bought foreign bonds and had a "balanced" portfolio.
I thought your 7:49am post too was a contribution to this "interesting history lesson". A big part of the backdrop were the oil price shocks of the 1970s. You B right --almost a galvanizing event that propelled the economists into the limelight and the lawyers' exit.

[Lafayette]

Judging by the tripling of the debt, didn't a lot of the tax cut to the wealthy end up on loan to the government?

You are showing your income class with that statement. ; ^ )

The rich do not lend (all that much) money to the government (by buying T-bills). They have asset managers to plan that the risk is spread in terms of low to high risk. Yes, T-bills are a low risk instrument but also low-return as well.

And then, there is rich and rich. Old rich have mostly real estate assets that have accumulated over very long periods and have considerable asset appreciation for which their resale is highly taxable (in terms of capital gain).

The new rich do not have this particular burden. Angelina and Brad just bought the most expensive Italian yacht possible. When they resell it, do you really think they are going to concern themselves with capital gains taxes?

I am not privy to the tax matters of either, but I would, however, bet that the resale money from that yacht will never, never see a tax man … anywhere on earth. Which is why fiscal paradises are so abundant.

When one is that rich, one is beyond the long arm of the IRS. So, a tax policy must be immediate in order to be effective.

What Reaganomic marginal tax reductions created was the possibility of the American rich to escape taxes by dislocating their assets abroad ... where they spend a great, great deal of their time.

The new twist is this: American/European jobs have been dislocated to China such that the Chinese new rich can dislocate their assets to the Caymans.

Now that's globalization!

[bakho]

Productivity, Oil Shock and Process Costs

Managers in manufacturing work to decrease costs of production to maintain the differential between product price and cost of manufacture. From the management perspective, costs of manufacture factors include raw materials, equipment, land, energy and labor. Attention is profitably given to modifying those factors that will contribute most to the bottom line.

The 1973 oil shock produced a substantial increase in energy costs. Suddenly, energy costs, efficiency, conservation and flexible fuels are elevated above labor as the most immediate production costs targeted for containment.

From 1948 to 1973, multi-factor productivity increased 1.9 percent per year in the U.S., and labor productivity grew at the rate of 2.9 percent; after 1973, these productivity growth rates were 0.2 percent and 1.1 percent. Similar slowdowns were observed in most of the industrialized economies of the OECD.

Is there a relationship between the lower productivity increases post 1973 and the oil shock? Investment in equipment and infrastructure is necessary for most increases in productivity and for improvements in energy efficiency. Unless the same investment can both improve energy efficiency and productivity, managers must choose between investment in productivity and investment in energy efficiency. Concomitant with the lower increase in productivity, were massive gains in energy efficiency. How much of the drop in productivity increase occurred because of a switch in investment from productivity to energy efficiency? In many instances, productivity increases involve replacing labor with machinery that requires energy. Is it unreasonable to consider low productivity gains as a contributor to stagflation?

In an environment with no shortage of labor, (baby boomers, non-minority women entering the workforce, increasing labor participation rates) the pressure to increase productivity is diminished. At the same time, production costs are increased because of increased energy costs. Investments in energy efficiency especially at a manufacturing facility may have multi-year lags between initial investment and saving energy (that does not start until project completion). These factors can combine to cause inflationary higher production costs due to energy and repress productivity gains. Increases in energy efficiency reduce costs but do not necessarily increase supply. A decrease in productivity gains will also decrease gains in supply.

Is this inflation due to scarcity? and not due to underlying fiscal or monetary policies? If the issue is scarcity, then the solution required increases in energy production and efficiency. These are exactly the policies pursued under Ford and Carter. The results of their policies were only fully felt by 1985 when oil consumption dropped to a relative low over 20% below the 1978 peak consumption. Once energy efficiency investments had matured and energy prices lowered, it would have favored a shift to lower resources invested in energy efficiency and more resources into productivity increases. The very low unemployment rates of the late 1990s would have increased investment into increasing productivity and we have seen that productivity increase extend into this century.

Was the monetary policy of the early 1980s an attempt to address problems that don’t respond well to monetary policy? How much did tax cuts and incentives for energy efficiency contribute to ultimate economic growth compared to untargeted supply-side tax cuts to the wealthy?

[knzn]

I think Bruce Bartlett is completely wrong to think that I’m completely wrong. A tax increase would have reduced inflation by the same mechanism that monetary policy did reduce inflation: if it were large enough, it would have produced a large recession. Surely he does not deny that sufficiently large tax increases can produce large recessions. The actual tax increase (to the extent that it can accurately be described as such) between 1976 and 1980, was clearly not large enough to produce a large recession. (There was a small recession in 1980, but it is seldom attributed to rising taxes.) The increase in revenues (relative to GDP) was largely cyclical (1976 tax receipts depended on depressed 1975 incomes, whereas 1980 tax receipts depended on booming 1979 incomes), and beyond that it was mostly the effect of rising inflation rates on the tax structure. The latter should theoretically have some depressing effect on consumption, but I imagine people were a bit confused by the inflation. Also the increase in revenues, to the extent that it was not cyclical, was largely offset by increases in spending (adjusted for the business cycle).

[calmo]

Superb knzn.I think Bruce Bartlett is completely wrong to think that I’m completely wrong. Engagement! (en francais s'il vous plait) There is ping pong and then there is the request to use your opponent's bat...and then there is the taking of his bat which at least one thinks is scoring points.

In the meantime bakho continues to make uncommon sense to me.

[James Galbraith]

Bruce in his first response concedes my basic point: Reaganomics was incoherent. We crude and vulgar Keynesians knew this at the time.

So did Murray Weidenbaum. I saw Murray frequently in those days, at hearings, social events and at meetings of the U.S. Gold Commission, a gold bug endeavor foisted on the public by Jesse Helms and treated by nearly all the participants, Democrat and Republican alike, with amused contempt.

At one such meeting, fittingly held in the Cash Room of the U.S. Treasury, in early February of 1982, Murray came up to me with a sly smile on his face.

"Did you see Leonard Silk in today's Times?" I had not.

"Well, Leonard wrote about our Economic Report. He said there was plonking in it? Do you know what plonking is?" I did not.

"Well according to Leonard, there is Plonking, Type One: 'A little wild-eyed obfuscation' -- and then he quoted something that Bill Niskanen wrote." Niskanen was the CEA's resident libertarian.

"And then Leonard said there is Plonking, Type Two: 'The stupefaction of the blindingly clear' -- and then he quoted something Jerry Jordan wrote." Jordan was the house monetarist.

"And then," Murray concluded, "Leonard said there was actually something sensible in our Report, and he quoted something I wrote."

My comments were aimed at the incoherence of Reaganomics as public policy; it was my job, then, as a policy economist to make this argument. It did not matter to me whether or not the individual pieces of the Reaganaut argument were defensible. The fact that they were at war with each other was sufficient to make the combination into bad policy.

I opposed monetarism, then and since, on the ground that the Federal Reserve could not effectively treat the money supply as a control variable, without wrecking economic growth. I believe Bruce and I agreed on this point. We were, of course, vindicated (unhappily) by the recession of 1981-2, and by the statistical and intellectual collapse of monetarism in the following years.

As for supply-side economics, Bruce is right to note that I was part of a counter-rebellion against the bipartisan consensus in its favor at the JEC in the late 1970s, when I was dividing my time between the Banking Committee and graduate school, and largely engaged on other matters. I disputed supply-side economics, then as now, on the ground that the substitution effects of tax changes were unimportant compared to the income effects.

The supply-siders seemed to pretend that income effects did not exist.

We, of course, thought that the claims made for the substitution effects were grossly overstated. Henry Reuss and I did not expect tax rate cuts to produce significant increases in saving, investment or work effort. (And, of course, none occurred.) We did oppose the upward redistribution of after-tax income that the supply-siders were pushing for. And we did suspect that this was the true impetus behind their program. When Reuss became chair and I arrived at the JEC in 1981, these arguments began to be heard in JEC work.

But, in our minds, the greater danger from the supply-siders came from the blowback of their efforts on the other side of the budget. The supply-side agenda threatened to open up large budget deficits, and in 1981 those of us whose models (accurately) predicted that result feared that the consequence would be even more crushing cuts in social programs.

Events proved out somewhat differently. We got the tax cuts, but (as David Stockman discovered to his chagrin) the Republican votes for all the spending cuts the far right wanted were not there. Social Security, notably, survived. And when the recession hit, supply-siders and Keynesians were in approximate alliance on the key issue, which was first and foremost to force the Federal Reserve to bring interest rates down.

Later on, supply-siders and vulgar Keynesians were in the minority in both parties in being skeptical of the need to make deficit reduction the principal priority of fiscal policy. However, we continued to take opposite positions on what fiscal policy should actually do.

The major joint impact of monetarism and tax cuts in 1981-83 was, I think, not fully anticipated by either side. It was the rapid appreciation of the dollar, increased trade deficit, and financial globalization. (I began to write about this in my 1989 book, Balancing Acts). The effect was the early and *permanent* elimination of domestically-generated inflation from the system.

An interesting feature of our current discourse is, of course, that twenty-five years later mainstream monetary macroeconomics has still not figured out what happened. We still hear the voices who credit the vigilance of the Federal Reserve, its "credibility" "commitment" and so forth with keeping the economy from slipping back into excessive inflation. This, despite the plain evidence of the late 1990s, that even at full employment there is no inflationary risk.

It will be very interesting to see how long it takes (if it ever happens) for reality to penetrate this particular redoubt of academic and policy thinking. Of course, when it does, the proper role of the Federal Reserve will have to be very carefully re-examined.

JG

[calmo]

Plonking, Type II: "The stupefaction of the blindly clear" --this is like when you discover the grizzly bear in your binoculars is actually the same one standing on your boots. It is knowledge alright, but the sudden stunning sort that is so disabling.
Right. Much better to aim for the "sensible" unplonking remark.
So, carefully adjusting my binoculars for plonkability"This, despite the plain evidence of the late 1990s, that even at full employment there is no inflationary risk." can we take it that your use of the present tense "is" (not the unarousable "was"), well, unmistakably not Plonking Type I?

[paine]

jg
very swell story board

but what about carter

are you waving a party flag to cover up
his admins
abject failure 77-79 ???
stagflation was induced by his team
were you a green light or a red light
and don't throw it all on burns/ford
carter was whipped in 80
because his team failed to lick
either inflation
or slow gdp growth

sluggish employment prospects
and a bounding cost of living
gave us the scurge of
new deal type white blue collar
folks voting themselves a screwing

reagan democrats
were not built entirely
on wage class racism

[James Galbraith]

Paine is quite right. After a bright beginning, the Carter team was a huge disappointment. I was a Kennedy man in 1980 for that reason.

JG

[paine]

god bless mr g

[chuck roast]

Thank you all for this wonderful dialogue.

Let me share a posting from the past that always gave me, a guy trained by committed Keynesians, a chuckle.

From The Village Voice circa 1975
A. Cockburn author

A perfectly preserved Keynesian has been unearthed by archaeologists investigating the sudden onset of the age of monetarism in the 1960s. The Keynesian was unearthed by excavators from the quadrangle of Kings College, Cambridge, where he had apparently been engaged in digging a hole. The body is in an excellent state of preservation, clad in corduroy trousers and tweed coat. The stomach contains freshly chewed cucumber sandwiches and cinnamon toast.

Archaeologists speculate that diagrams found on the Keynesian, referring to LM and IS, will shed new light on early Keynesian thought. A copy of the New Statesman, also found on the corpse, dates the sudden death of the Keynesian to the time of the British devaluation of the sterling in 1967. It is believed that the Keynesian, fearing the onset of glacial monetarism, may have fled Whitehall to his old grazing pastures in Kings. But other experts, noting the placid expression on the face of the Keynesian, believe that the catastrophe took him entirely unawares.

A portion of the Keynesian’s thigh was flown at once to a banquet held at the Chicago School. “Tasty and surprisingly fresh,” was a common verdict, though some found the meat “too fatty.”

[calmo]

chuck roast, not the main course Man (probably 'Well Done') the tag might lead us to believe, delivers this refreshing dessert...I even like the phrase "committed Keynesians".
You B alright...until you are committed.