Saturday 28 January 2012

Newt Doesn't Love You, Either.

Newt Gingrich [1]
In another snub to Aussie conservatives, Republican presidential candidate hopeful Newt Gingrich considers that the Moon could be the 51st State of the Union.

Speaking to a crowd of some 700 people, in Florida, Gingrich is reported as saying:
" 'By the end of my second term, we will have the first permanent base on the Moon and it will be American' (...)
" 'We will have commercial near-Earth activities that include science, tourism and manufacturing, because it is in our interest to acquire so much experience in space that we clearly have a capacity that the Chinese and the Russians will never come anywhere close to matching,' he said".
(See here)
Furthermore, according to dispatch by The Sydney Morning Herald/The Telegraph (London), "he even proposed that, when the colony's population reached 13,000, it could apply to become the 51st State of the Union."

Observers further said that Texan Republican nomination candidate, Ron Paul, although initially reluctant, perhaps could be made to support Gingrich's lunar colony initiative. Asked during a recent televised debate, Paul said: "I'd like to send some politicians up there".

Local reactions.

Local observers had mixed reactions to the Gingrich announcement.

"The new colonists could even call themselves lunatics", said local space exploration enthusiasts, who eagerly support the initiative.

Coming weeks after Gingrich's contender for the Republican nomination, Rick Santorum, ruled out "Australian school" economists in his advisory team, some observers, however, saw this as another snub to Aussie right-wingers and free-marketeers.

"Now, ANZUS or no ANZUS, even the Moon comes before Australia", said a distraught observer who opposes the Gingrich proposal and who asked his identity to be withheld.

Nevertheless, not all hope is lost for local right-of-centre fans, said the analyst.

Mitt Romney, leading candidate for the nomination, during the subsequent televised debate ruled out the project:
"I've spent 25 years in business. If I had a business executive come to me and said they want to spend a few billion dollars to put a colony on the Moon, I'd say you're fired."
Romney is known for enjoying firing people, in the best Donald Trump style.

Photo Credits:
[1] Newt Gingrich. Wikipedia.

Saturday 21 January 2012

Atlas' Happy Days.

Alan Greenspan. 2005 [A]
"If you saw Atlas, the giant who holds the world on his shoulders (...) what would you tell him to do?" (Ayn Rand, Atlas Shrugged).

The transcriptions of the Fed's Federal Open Market Committee 2001-06 meetings were released last Thursday January 12, 2012. (See here)

This is how mainstream media chronicled these meetings:

The New York Times (12-01-2012):
"As the housing bubble entered its waning hours in 2006, top Federal Reserve officials marveled at the desperate antics of home builders seeking to lure buyers.
"The officials laughed about the cars that builders were offering as signing bonuses, and about efforts to make empty homes look occupied. (...)
" 'We are getting reports that builders are now making concessions and providing upgrades, such as marble countertops and other extras, and in one case even throwing in a free Mini Cooper to sweeten the deal,' George C. Guynn (...) said at the June [2006] meeting." (See here)
The Washington Post (13-01-2012):
"The year began with adulation all around for [Alan] Greenspan. In that January [2006] meeting, Roger Ferguson (...) called Greenspan a 'monetary policy Yoda'." (See here)
All that's good and well, but it fails to capture the mood prevailing in those august meetings, where monetary policy for the US (in extension, for the free world) is decided and where the Great Moderation was generated. The Economist (Free Exchange) and DealBreaker contain a selection of witticisms, jokes, and happy anecdotes, as one would expect from Übermenschen in the best Randian/Nietzchean tradition.

But The Daily Stag Hunt went one step further and quantified it (the transcripts dutifully noted their laughter).

So thanks to that site's generosity, I'll give you without further comment:

Well, bear with me, one little comment: that blue dot corresponds to the meeting where these immortal words were uttered:
"VICE CHAIRMAN GEITHNER.  Mr. Chairman, in the interest of crispness, I've removed a substantial tribute from my remarks.  [Laughter]
"CHAIRMAN GREENSPAN.  I am most appreciative.  [Laughter]
"VICE CHAIRMAN GEITHNER.  I'd like the record to show that I think you're pretty terrific, too.  [Laughter]  And thinking in terms of probabilities, I think the risk that we decide in the future that you're even better than we think is higher than the alternative."
I haven't thought yet how I would answer Rand's question, opening this post. That is, assuming the Maestro Atlas Alan Greenspan stopped laughing and that I could be heard over the sounds of boots being licked.

Photo Credits:
[A] Former Chairman of the Federal Reserve Alan Greenspan, receiving a Presidential Medal of Freedom in 2005. 09-11-2005. Wikipedia

Thursday 19 January 2012

Einstein and Socialism.

Albert Einstein. [A]
Albert Einstein (1879-1955) needs no presentation.

Better known for his theoretical work in physics and as a teacher, Einstein also was -- although this tends to be forgotten -- a public intellectual who used his prominence to promote ideas he considered worthy: pacifism, a Jewish homeland in Palestine where Jews, Muslims and Christians would co-exist peacefully with equal rights, and socialism.

But Einstein wasn't simply a socialist, without any other adjectives. In my reading, he was a Marxist.

The first issue of the Monthly Review magazine, published in May 1949, included Einstein's "Why Socialism?" essay.

Written in a precise and direct language, without losing the warmth and intellectual honesty usually associated to Einstein's name, the piece has the feeling of an introductory lecture on Marxism and I highly recommend it to both, those who are already somewhat familiar with Marxism and those who are not.

The fragment below closes the essay and was extracted from "Why Socialism?", generously made publicly available by Monthly Review:

"Why Socialism", by A. Einstein.

"This crippling [of social consciousness] of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career.
"I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals.
"Nevertheless, it is necessary to remember that a planned economy is not yet socialism. A planned economy as such may be accompanied by the complete enslavement of the individual. The achievement of socialism requires the solution of some extremely difficult socio-political problems: how is it possible, in view of the far-reaching centralization of political and economic power, to prevent bureaucracy from becoming all-powerful and overweening? How can the rights of the individual be protected and therewith a democratic counterweight to the power of bureaucracy be assured?
"Clarity about the aims and problems of socialism is of greatest significance in our age of transition. Since, under present circumstances, free and unhindered discussion of these problems has come under a powerful taboo, I consider the foundation of this magazine to be an important public service."

Photo Credit:
[A] Albert Einstein during a lecture in Vienna in 1921, photographed by Ferdinand Schmutzer. Wikipedia.

Monday 16 January 2012

On Folly, Master Chefs and Bonhoeffer

 Dietrich Bonhoeffer. [1]
Dietrich Bonhoeffer (1906-1945) was a German pastor and theologian. Arrested for his participation in the 1944 plot to kill Hitler, Bonhoeffer was executed in April, 1945 in the Flossenburg concentration camp, after being convicted by a Nazi kangaroo court.

While in prison Bonhoeffer wrote diverse texts. This is one of them:

"Of Folly", by D. Bonhoeffer.

"Folly is a more dangerous enemy to the good than malice. You can protest against malice, you can unmask it or prevent it by force. Malice always contains the seeds of its own destruction, for it always makes men uncomfortable, if nothing worse. There is no defense against folly. Neither protests nor force are of any avail against it, and it is never amenable to reason. If facts contradict personal prejudices, there is no need to believe them, and if they are undeniable, they can simply be pushed aside as exceptions. Thus, the fool, as compared with the scoundrel, is invariably self-complacent. And he can easily become dangerous, for it does not take much to make him aggressive. Hence, folly requires much more cautious handling than malice. We shall never again try to reason with the fool, for it is both useless and dangerous.
"To deal adequately with folly it is essential to recognize it for what it is. This much is certain, it is a moral rather than an intellectual defect. There are men of great intellect who are fools, and men of low intellect who are anything but fools, a discovery we make to our surprise as a result of particular circumstances. The impression we derive is that folly is acquired rather than congenital; it is acquired in certain circumstances where men make fools of themselves or allow others to make fools of them. We observe further that folly is less common in the unsociable or the solitary than in individuals or groups who are inclined or condemned to sociability. From this it would appear that folly is a sociological problem rather than one of psychology. It is a special form of the operation of historical circumstances upon men, a psychological by-product of definite external factors. On closer inspection it would seem that any violent revolution, whether political or religious, produces an outburst of folly in a large part of mankind. Indeed, it would seem to be almost a law of psychology and sociology. The power of one needs the folly of the other. It is not that certain aptitudes of men, intellectual aptitudes for instance, become stunted or destroyed. Rather, the upsurge of power is so terrific that it deprives men of an independent judgement, and they give up trying - more or less unconsciously - to assess the new state of affairs for themselves. The fool can often be stubborn, but this must not mislead us into thinking he is independent. One feels somehow, especially in conversation with him, that it is impossible to talk to the man himself, to talk to him personally. Instead, one is confronted with a series of slogans, watchwords, and the like, which have acquired power over him. He is under a curse, he is blinded, his very humanity is being prostituted and exploited. Once he has surrendered his will and become a mere tool, there are no lengths of evil to which the fool will not go, yet all the time he is unable to see that it is evil. Here lies the danger of a diabolical exploitation of humanity, which can do irreparable damage to the human character.
"But it is just at this point that we realize that the fool cannot be saved by education. What he needs is redemption. There is nothing else for it. Until then it is no earthly good trying to convince him by rational argument. In this state of affairs we can well understand why it is no use trying to find out what 'the people' really think, and why this question is also so superfluous for the man who thinks and acts responsibly. As the Bible says, 'the fear of the Lord is the beginning of wisdom'. In other words, the only cure for folly is spiritual redemption, for that alone can enable a man to live as a responsible person in the sight of God.
"But there is a grain of consolation in these reflections on human folly. There is no reason for us to think that the majority of men are fools under all circumstances. What matters in the long run is whether our rulers hope to gain more from the folly of men, or from their independence of judgment and their shrewdness of mind." (Emphasis added. See here.)

Written by a Lutheran theologian imprisoned by the Nazis over sixty years ago, these thoughts are surprisingly relevant to the current economic policy debate in Australia.

Here I offer one example; I am sure readers (like my friends PeterC and Stubborn Mule) could easily relate:

"In short, expect unemployment to rise, job insecurity to rise, union power to increase and the federal bureaucracy to expand for the duration of the Labor-Greens-Windsor-Oakeshott government, while it blames everyone but itself." (See here)

And that catalogue of real or imaginary calamities, if you believe Paul Sheehan's unlikely narrative, will befall upon Australia because the underpaid hospitality workers want to be paid something extra for working on weekends, while some wealthy celebrity restaurateurs, who employ them and on whose behalf Sheehan seems to speak, don't want to: after all, every dollar they pay their workers is one less dollar they can deposit in their accounts.

The thing is so terrible that some of these celebrities might even have to work themselves! Imagine the outrage.

Unfortunately, I am an agnostic, skeptical about spiritual redemption. We better find another way. You know, just in case.

Image Credit:
[1] Dietrich Bonhoeffer. Wikipedia.

Brilliant blog post by Matt Cowgill debunking dodgy claims that Fair Work is strangling Australian businesses.

Friday 13 January 2012

S&P's Ratings: Good News, Bad News.

During the 19th century, people afflicted by tuberculosis/consumption were called "tísicos" in the Spanish-speaking world (tubercular, consumptive, in English).

Tísicos were easy to spot: pale complexion, weakness, thinness, fever, cough, mucus mixed with blood.

On Mediate Auscultation (1819).
Théobald Chartran. [1]
According to urban legend, shortly before dying (and most died of tuberculosis in those days) a person would regain some colour and other symptoms would briefly disappear, raising hopes that sufferers would recover.

This gave origin to an ironic expression: "alegría de tísico" (that is tubercular's/consumptive's joy/relief).

What Happened:

The BBC, two days ago:
"Spain and Italy's borrowing costs fell sharply in bond auctions on Thursday.
" 'It's a step in the right direction, but the bigger test will be the longer-dated auctions further down the road', said Nick Stamenkovic, bond strategist at RIA Capital Markets in Edinburgh". (See here)

Or The Sydney Morning Herald/Bloomberg News:
" 'For all the talk of debt downgrades, the truth is that bond auctions have shown that the most worrisome countries can access credit', said Francisco Salvador, a strategist at FGA/MG Valores in Madrid. 'This has comforted investors'." (See here)

The BBC last night (Australian time):
"France confirms loss of top AAA credit rating
"The move came after world stock markets fell on reports many Eurozone governments are being downgraded." (See here)

The Good News:

The immediate effects have been limited. Coming after Eurozone share markets had already fallen on anticipation of S&P's move (FTSE -0.46%, Dax -0.58%, Cac 40 -0.11%) it hasn't affected NYSE or Nasdaq much: Dow Jones -0.45%, Nasdaq -0.50%.

Bond yields haven't suffered much, either: "France's borrowing cost rose slightly, from 3.03% to 3.07%. Germany - considered the safest borrower in the Eurozone - saw its borrowing cost fall from 1.83% to 1.76%."

So, the good news is that this, by itself, is no reason to panic.

The Bad News:

The bad news is that Fitch and Moody's are yet to emit pronouncements.

As these events took place after our local stock exchange closed, in Australia we should wait for next week.

What Now?

From an Australian perspective and beyond next Monday, are there any guesses as to how this story might end?

If you have the stomach, time and inclination, here is a good guess: "S&P Takes Rating Actions on Euro Area Governments".

If you don't have the stomach, the time or the inclination to read a rather complex article, just let me give you this painting:

Misery (1886).
Cristóbal Rojas. [2]

18-01-2012. ABC:
"World Bank slashes growth forecasts
"The World Bank has cut its global economic growth forecasts, citing the eurozone's debt problems and weakening growth in emerging economies.
"The bank expects the global economy to expand 2.5 per cent in 2012 and 3.1 per cent in 2013, sharply lowering its June estimate of 3.6 per cent for both years."
I haven't read the report itself (it's over 180 pages long), but it allegedly mentions Australia only twice, and never in particularly terrible circumstances. (See here)

21-01-2012. ABS (19-01-2012):
"The ABS reported the number of people employed decreased by 29,300 to 11,421,300 in December. The decrease in employment was driven by a drop in part-time employment, down 53,700 people to 3,370,300, and was offset by an increase in full-time employment, up 24,500 people to 8,051,000.The decrease in seasonally adjusted part-time employment was driven by weaker than usual growth during the December period, which was particularly noticeable for women aged 15 to 24.
"The number of people unemployed decreased by 3,800 people to 629,900 in December, the ABS reported.
"The ABS monthly aggregate hours worked series showed an increase in December, up 5.6 million hours to 1,622.0 million hours.
"The ABS reported a decrease in the labour force participation rate of 0.3 percentage points in December to 65.2 per cent".
Upon hearing those news, Opposition leader Tony Abbott, commented:
"The Australian economy, for all its comparative strength, created no net new jobs in calendar 2011. This is a very disappointing result and it demonstrates how important it is that the Government urgently get debt and deficit under control". (Emphasis added. See here)
"Well, perhaps Mr. Abbott is alone in his belief on the virtues of expansionary fiscal contraction", I can almost hear readers (often more optimistic than yours truly) objecting.

Well, perhaps, but I would not hold my breath. Just eleven days ago the Employment minister and acting Treasurer, Bill Shorten (Labor, former trade unionist) commenting on the demands to increase the New Start Allowance (aka dole, currently $243 per week):

"Australia's social security system needs to provide a strong safety net for people who need financial assistance while also acting as an incentive for people to take up paid work" (...)
"Participation in the workforce is a priority the Gillard government is passionate about. Work is at the core of our beliefs.
"In the current economic climate, I believe we have got the balance about right. Particularly when delivering a surplus next year and continuing our strong economic management is an important part of this balance".
(Emphasis added. See here)
It's by no means certain how our fearless and enlightened leaders would respond to a new crisis.

If I were you, I'd start worrying about now. But, then again, I'm not you and you're not me.

Image Credits:
[1] On Mediate Auscultation. Théobald Chartran (1819). Wikipedia.
[2] Misery. Cristóbal Rojas (1886). Wikipedia.

Monday 9 January 2012

Santorum Doesn't Love You.

Rick Santorum
Lose all hope, Aussie economics graduates: Rick Santorum doesn't love you.

According to Charles P. Pierce (The Politics Blog, Esquire, 02-01-2012):
"Rick Santorum has no use for the Ivy League, or the economists produced therein".
If he has no use for them, would he rather take graduates from, say, Melbourne Uni?
"He also expressed doubts about the Republican reliance on economists from the 'Australian school'."

Photo Credit:
Rick Santorum. Wikipedia.

Dismal Science: Mill and Carlyle.

With a negative connotation, the term "dismal science" has been widely used to describe economics: a recent Google search for that string returned some 2,140,000 results.

But is that connotation appropriate?

Some have argued that it is not:
"I have outlined above the true circumstance in which Political Economy (or Economics) was first labelled 'The Dismal Science'. It is a circumstance we should draw to the attention of our students. They, like us, can be proud to be associated with the profession which was the target of Carlyle's scorn." [1]
Thomas Carlyle [A].
According to this view, the "dismal science" label may be popular, but it is unfair: it would be based on the wrong belief that Thomas Carlyle used it to oppose Malthus' population theory.

J.S. Mill [B]
In reality, proponents of this view continue, it was first used against John Stuart Mill and like-minded figures during the infamous Negro Question debate. In this controversy Mill defended the abolition of slavery on economic grounds; Carlyle opposed him, and according to this view, found economics "dismal" because Carlyle supported slavery:
"At the most trivial level, Carlyle's target was not Malthus, but economists such as John Stuart Mill, who argued that it was institutions, not race, that explained why some nations were rich and others poor. Carlyle attacked Mill, not for supporting Malthus's predictions about the dire consequences of population growth, but for supporting the emancipation of slaves. It was this fact-that economics assumed that people were basically all the same, and thus all entitled to liberty-that led Carlyle to label economics 'the dismal science'." [2] (Emphasis added).
Other, slightly less damning, more nuanced pronouncements on Carlyle have been made. According to these views, Carlyle was to some degree motivated by opposition to the political economy advocated by Mill and the classical liberals. [3]

It is not controversial that the epithet was used by Carlyle in the context of the Negro Question debate, as stated above; however, in my opinion, it does refer to Malthus' population theory, at least tangentially. Other authors have reached similar conclusions (see [4]).

Anti-slavery campaign medallion,
by Josiah Wedgwood, 1787 [C]

Nevertheless, regardless of whether it alludes to Malthus or not, that is not the key issue in the paragraph quoted above. Carlyle's alleged racism, proponents of this view seem to argue, is clearly the key issue.

In other words, Carlyle's beliefs/motivations are central in establishing whether the "dismal science" epithet is justified. At one hand, if Carlyle was motivated by a repudiation of Malthusian thought then the term "dismal science" would be justified, seems to be the premise (box A in the diagram below). But Carlyle was not motivated by a repudiation of Malthus: he was motivated solely by racism (box B). Therefore, the term "dismal science" is not justified (box D), the proponents of this view conclude.

At the other hand, if the "dismal science" epithet is not justified, then Mill and economics, by extension, are vindicated (box C), is the final but unstated assumption. Therefore, [economists] "can be proud to be associated with the profession which was the target of Carlyle's scorn".

The following diagram schematizes the whole reasoning:

It is my contention here that:
  1. Even if one were to accept that reasoning, it is easy to show that Carlyle had reasons beyond racism to consider political economy dismal. That is, I intend to show that B is false.
  2. However, the reasoning is fallacious in itself: it is logically flawed. Ultimately, Carlyle's shame does not imply Mill's virtue.
  3. Even if "Mill's virtue" could be ascertained, economics as a whole cannot be evaluated on the basis of any one single theoretician or group of individual theoreticians, regardless of merits.
  4. More importantly, both sides of the controversy were ostensibly defending high-minded positions, but in reality both sides were equally disingenuous.
In this piece I will attempt to demonstrate a valid reason to consider political economy dismal, in Carlyle's argument (i.e. point 1, above). Then, I will tackle point 2, the issue of the fallacy mentioned above. Point 3 should be obvious and requires no further elaboration. After that, I will explain why I believe both sides were equally disingenuous, that is point 4.

Finally, I will give a brief sketch of the aftermath and conclude.

Section 1: Carlyle's Motivations.

My intention is not to whitewash Carlyle's position. Consequently, I will quote him extensively, to avoid selective quoting. As Carlyle's text contains extremely offensive views, I apologize in advance.

Carlyle's Occasional Discourse on the Negro Question (see here), published anonymously in 1846, is where "dismal science" was famously used by Carlyle (my emphasis in all quotes):
"Truly, my philanthropic friends, Exeter Hall Philanthropy is wonderful; and the social science -- not a 'gay science,' but a rueful -- which finds the secret of this universe in 'supply-and-demand,' and reduces the duty of human governors to that of letting men alone, is also wonderful. not a 'gay science,' I should say, like some we have heard of; no, a dreary, desolate, and indeed quite abject and distressing one; what we might call, by way of eminence, the dismal science. These two, Exeter Hall Philanthropy and the dismal science, led by any sacred cause of Black Emancipation, or the like, to fall in love and make a wedding of it,-will give birth to progenies and prodigies; dark extensive moon-calves, unnameable abortions, wide-coiled monstrosities, such as the world has not seen hitherto!"
Apart from introducing the "dismal science" epithet, this paragraph makes clear Carlyle's views on race and is enough to convict him of the charge of racism.

However, the following paragraph explains both what was the solution proposed by the dismal science (and by Mill) and gives a reason for Carlyle's opposition:
"Science, however, has a remedy still. Since the demand is so pressing, and the supply so inadequate (equal in fact to nothing in some places, as appears), increase the supply; bring more blacks into the labour-market, then will the rate fall, says science. Not the least surprising part of our West Indian policy is this recipe of 'immigration;' of keeping down the labour-market in those islands by importing new Africans to labour and live there. If the Africans that are already there could be made to lay down their pumpkins and labour for their living, there are already Africans enough. If the new Africans, after labouring a little, take to pumpkins like the others, what remedy is there? To bring in new and ever new Africans, say you, till pumpkins themselves grow dear; till the country is crowded with Africans; and black men there, like white men here, are forced by hunger to labour for their living? That will be a consummation. To have 'emancipated' the West Indies into a Black Ireland; 'free' indeed, but an Ireland, and Black! The world may yet see prodigies; and reality be stranger than a nightmare dream."
In other words, an increase in the black West Indian population, by means of immigration of free African labourers (as advocated by economic science) would cut wages and reduce West Indians to misery levels, as it did in Ireland.

With this my first contention (point 1) is demonstrated: Carlyle's diatribe, if undeniably racist and despicable, was not solely motivated by racism. In principle, there was an apparent concern for West Indian workers: box B is shown false.

A potential and reasonable objection to this conclusion is that Carlyle could have been disingenuous. That is a valid objection, which requires further consideration and will be treated in section 3.

Before proceeding to the second section, I also would like to draw the readers' attention to the "Black Ireland" reference. This will be explained in section 3, too.

Section 2: Logical Fallacy

In symbolic terms, the first half of the argument (green boxes leading to box D) can be stated thus:

If M then J; however, not M, therefore not J.

In words: if the epithet was motivated by opposition to Malthus (i.e. M), it would be justified (hence, J); but it wasn't (not M), therefore the epithet is not justified (not J).

This argument superficially resembles Modus Tolens, but a closer look reveals it is different.

This is a symbolization of Modus Tolens:

If A then B; however, not B, therefore not A.

A simple visual inspection is enough to make the point: both forms are different. There is no logical form corresponding to the first argument, that I know of.

Putting this all in words: even if Carlyle was motivated only by racism, this does not imply that the dismal adjective is not justified. Economics should stand or fall on its own merits.

By falling into this fallacy, defenders of economics' honour turn a discussion on economics' merits into an argument about Carlyle's shame.

With this I consider my second contention (point 2) demonstrated.

Section 3: Disingenuousness

At the end of Section 1 there was a reference to a "Black Ireland", that readers might find intriguing. That is a reference to the Irish Potato Famine (1845-52).

Bridget McDonnell and her two children.
Illustrated London News, December 22, 1849 [D]

I turn to this now, starting with some background.

Since 1815, Thomas Robert Malthus and David Ricardo, friends and intellectual rivals, embodied two radically opposed views on the economy. Ricardo decried land rents, and based on the so-called Say's Law, believed general gluts were impossible, advocating laissez faire, fiscal conservatism and free trade on agricultural products; Malthus, a believer in scarcity, underconsumption and general gluts, considered land rent a way to drain excessive output; he also supported tariffs on foodstuffs, and a more active government.

Ricardo's theoretical views, also unlike Malthus', with modifications were dominant in intellectual circles, counting among his followers names like John Stuart Mill, Herbert Spencer, Harriet Martineau and John Bright.

More to the point, Ricardo's theoretical and policy recommendations became popular with the capitalist class emerging during the early phases of the Industrial Revolution. The party more closely aligned to these views was the Whigs.

At the other hand, Malthus' perspectives were shared by the landed aristocracy, that resisted the changes advocated by the Whigs and whose preferred political party was the Tories (predecessors of the Conservatives).

By 1845, Sir Robert Peel (Tory) was Prime Minister, governing also over Ireland.

The potato blight initially spread in continental Europe and the Scottish highlands, reaching Ireland that year.

With the potato crop failure and fearing a popular revolt at both sides of the Irish Sea, the government undertook a modest program of relief works, repealing also the protectionist Corn Laws (in May 15, 1846 at the Commons'; and June 29, the House of Lords).

This move, long-advocated by Ricardo and the Whigs, but firmly opposed by the Tories and Malthus, was argued on the grounds of lowering the price of food to provide some relief to the lower classes in England and Ireland. In reality, less altruistic considerations were powerfully at play:
"It has been my endeavour to shew throughout this work, that the rate of profits can never be increased but by a fall in wages (...) If, instead of growing our own corn, or manufacturing the clothing and other necessaries of the labourer, we discover a new market from which we can supply ourselves with these commodities at a cheaper price, wages will fall and profits rise." [5]
Dissent and anger swelling within the Tory ranks and with the Whigs still seething since Peel's passing of the Factories Act 1844 (reducing 9-13 year old children's shifts to 10 hours a day, six days a week), Peel found himself confronted by an unlikely alliance: Whigs, protectionist Tories and Radicals.

Ricardo's posthumous victory cost Peel dearly: his ministry ended with the defeat of the Irish Coercion Bill (designed to arrest Irish dissidents without warrant or trial).

With Peel's resignation, Lord John Russell (Whig) became Prime Minister. Peel and the Tories still loyal to him went on to merge with Whigs and Radicals, to form the Liberal Party. The protectionist Tories reformed as the Conservative Party.

Once in power, and following the dictates of laissez faire and fiscal prudence, advocated by the British Liberal intelligentsia, including Mill, Russell's Whig/Liberal ministry proceeded to cancel the relief works established by Peel.

In their place, Irish landholders, largely Tory/Conservative supporters, were to pay for workhouses and soup kitchens for their tenant peasants, as a way to redistribute the land rent landholders received. Unable or unwilling to do so, landowners did not provide much additional help, evicting their tenants instead, while cash crops were shipped to Britain uninterruptedly, as free trade recommended.

Peasants and farmers faced difficulties all over Europe, but in Ireland they were hit the hardest: the Irish population fell by between 20% and 25% (1 million deaths, half the total loss, due to starvation and disease). By most accounts, the majority of this death toll occurred under Whig/Liberal government.

Friedrich Engels [E}.
Having arrived in Manchester in 1842, a wealthy industrialist himself without any links to Whigs or Tories, Friedrich Engels' eyewitness account carries much more authority than anything I could add. Writing in 1845, on the power games played by Tories and Whigs:
(...) "In nearly every instance the Liberals try to emphasise the distress in the rural areas and to argue away that which exists in the factory districts, while the Conservatives, conversely, acknowledge the misery in the factory districts but disclaim any knowledge of it in the agricultural areas." [6]
From this one can reasonably conclude that Carlyle was pointing to a true problem: there was misery in Ireland (indeed, all over Britain) and there were good reasons to believe this would happen in the West Indies. His sincerity, however, is dubious.

With this, I rest my case on my contention of disingenuity. Principles might have played some role in this subject, but they were only a part of the discussion: the other part often remains modestly hidden.

Section 4: Aftermath

Neither Malthus nor Ricardo lived to see this episode, and the landowners v. capitalists fight for supremacy did not end with it.

While the Irish either migrated or starved to death, the novelty effect of the famine on the British public worn-out.

A new round of the fight started in 1849: the Carlyle-Mill Negro Question Debate, which so attracts the attention of contemporary economists. Ostensibly, at stake were the rights of recently liberated West Indian slaves as opposed to those of plantation owners.

From the monumental HET website:
"Carlyle's 1849-1853 work was not well-received. Although the Victorian world could entertain some degree of racism, even one as extreme as Carlyle's, it was Carlyle's attacks on the new gospels of the age that offended most. It was somewhat clear for many contemporaries that neither West Indian blacks nor Irishmen, nor prisoners, were his prime targets, but rather the evangelicals and economists themselves." [7] (My emphasis)
In the 1860s the debate expanded further, after a bloody massacre perpetrated by Edward John Eyre, governor of Jamaica, against protesting West Indian black workers. In this second stage Bright and Spencer, Thomas Huxley and Charles Darwin joined in Mill's condemnation of Eyre; while John Ruskin, Alfred Tennyson and possibly Charles Dickens took Carlyle's side.

Mill went on to become a Liberal MP, and eventually embraced the cause of women's rights, labour unions and farm cooperatives.

Spencer went on to coin another famous phrase ("survival of the fittest"), expressing his understanding of Darwinism, as applied to individual human beings living in society. With this he became the father of Social Darwinism, even though he may have never used this label himself.

Darwin himself never publicly endorsed Spencer's views, so it is likely he did not share them; although this is not certain. If the readers can offer more details, that would be appreciated.

Carlyle is currently considered a proto-fascist.


"Whig history" is an expression used by history academics to denote partisan history, written to justify a current state of affairs, by depicting historical events and characters in the light of an assumed good v evil conflict, inevitably leading to the present.

The unqualified defense some make of economics against the charge of being the "dismal science" would seem a remarkably appropriate example of "Whig history".

Nevertheless, even the more nuanced views on this matter fail. To judge this episode solely on the basis of what was openly said by its participants, without reference to what was happening and to whom benefited from these public statements, is clearly misleading.

Attentive readers might have noticed that many current issues in economic policy were already hotly debated over 160 years ago. Section 3 gives several examples. In this sense, modern economics is little more than a "fugue and variations" on a theme composed in the 19th century. If no other failure could be attributed to mainstream economics, this failure to advance and reach a consensus on vital matters would be more than enough to find economics guilty as charged.

But there are other failures illustrated in this episode: for one, economists' amenability to become spokespeople for vested interests.

The label of dismal is by no means unfair.

But, just like mainstream economics stands or fall on its own merits, so should economists: whatever pride an economist derives from his/her occupation, it will never be due to economics itself, but to what the economist in question achieves.

In other words, a degree in economics does not automatically turn one into the latest in a long lineage of bright but misunderstood benefactors of human kind. The sooner economists realize this, the sooner economics might actually deserve a different label.

[1] Dixon, Robert. 1997. "The Origin of the Term 'Dismal Science' to Describe Economics". Department of Economics, University of Melbourne. Working Paper No 1999/715.

 [2] Levy, David M. and Sandra J. Peart. 2001. "The Secret History of the Dismal Science. Past I". First featured article in a series. Library of Economics and Liberty.

[3] Dixon, Robert. 2006. "Carlyle, Malthus and Sismondi: The Origins of Carlyle's Dismal View of Political Economy". Department of Economics, University of Melbourne.

[4] Groenewegen, Peter. 2001. "Thomas Carlyle, 'The Dismal Science,' and the Contemporary Political Economy of Slavery". History of Economics Review (Canberra, Australian National University) 34.

[5] Ricardo, David. 1817. "On The Principles of Political Economy and Taxation".

[6] Engels, Friedrich. 1845. Preface to the "Condition of the Working Class in England".

[7] The Carlyle-Mill Negro Question Debate. HET. The New School for Social Research.

Image Credits:
[A] Thomas Carlyle. Wikipedia.
[B] John Stuart Mill. Wikipedia.
[C] "Am I Not A Man And A Brother?" Medallion as part of the anti-slavery campaign by Josiah Wedgwood, 1787. Wikipedia
[D] A 1849 depiction of Bridget O'Donnell and her two children during the famine. Wikipedia.
[E] Friedrich Engels. Wikipedia.