There Is Still Good In Him. I've Felt It.

by publius

Richard Posner just wrote one of those "read the whole thing" essays in TNR.  And it's the clearest and most persuasive theoretical grounding of recent Democratic economic policies that I've seen.

It's dense in a few places, but he generally lays out pretty clearly the logic of things like the fiscal stimulus, policies that increase wages, and public investment.  The essay doesn't say so explicitly, but it also illustrates the fundamental errors of Mark Sanford-style "tighten your belt" macroeconomics.

The logic of Posner's essay also strikes at the very heart of trickle-down economics.  I know that economists don't take trickle-down to be a rigorous theory or anything.  But I think the basic idea has a lingering hold on the minds of elected officials.  At the least, it helps justify in people's minds why concentrations of wealth (estate tax) and income (tax cuts for rich) are good policy rather than things that should trigger pitchforked mobs.

Posner's essay, by contrast, spells out the basic Keynesian idea that "trickle-up" is a much sounder policy.  And, as it turns out, this type of trickle-up, multiplier-seeking policy approach is exactly what the stimulus adopts.  The essay also illustrates (by describing Keynes in plain English) why the various federal banking interventions were important -- namely, to produce the stability needed to stop people from hoarding.

Anyway, if you're an "interested amateur" like me, you'll enjoy it.

[UPDATE 2:35 PM:  I should have made this more clear -- so thanks to Adam in the comments.  Posner is one of the most important Chicago School figures of the 20th Century.  Currently a federal judge, he was law-and-econish before it was cool.  Accordingly, this essay is roughly equivalent to Glenn Beck embracing ACORN because "they help poor people."  Or maybe Mr. Burns opening a public hospital.  Or the Kagan family joining MoveOn.]

Comments

[Adam Collyer]

I'm about to read the essay right now, but if it is as you say it is, publius, then you've failed to mention the most important point. Posner is one of the most influential legal voices of the 20th century, a major Chicago school thinker, and one of the most pro-business/laissez-faire-esque judges of the past generation.

For Judge Posner to attack trickle-down theory is a major sea change, just like his latest book was.

[publius]

Yep - I shouldn't assume people know that. I'll add an update. thx

[Hogan]

I always like John Kenneth Galbraith's summary of trickle-down: if you feed enough oats to the horses, some will pass down the road for the sparrows.

[Zifnab]

Accordingly, this essay is roughly equivalent to Glenn Beck embracing ACORN because "they help poor people." Or maybe Mr. Burns opening a public hospital. Or the Kagan family joining MoveOn.

So unnatural, perverse, and very possibly a trick. I say kill it. Kill it with fire.

[Jason]

I agree with Zifnab. This must be a trap. Everyone become Objectivists, quick!!

[Jacob Davies]

One thing he doesn't explicitly address is the differential interest in consumption between low- and high-income workers. Low-income workers have not much choice but to spend what they make. As income increases, they dedicate more to saving (which is okay in moderation); but once they make very large amounts of money, almost all of it is saved and very little is spent. It's hard to spend $10 million a year! And even if you get in the habit of spending $1 million a year, you are likely to be so cautious about your ability to replace that income that you will want to save most of what you make. The marginal propensity to spend each additional dollar becomes very small.

There are at least three distinct ways this is a problem: the first is that almost all the income that goes to very wealthy people effectively hits a "dead end" in the consumption economy. No multiplier.

The second is that the work-motivating effect of income is greatly reduced when someone has far more money than they need. Worse yet, their children & hangers-on will be handed enormous amounts of money, completely negating their need to work for a living. High income tends makes the recipients into a deadweight loss on the economy, rather than motivating them to work. And it also serves to divert the talents of people from things that might be useful towards active management of their investments, which is pretty much a zero-sum exercise.

The third effect is what they called "The Giant Pile of Money" on several This American Life episodes talking about the housing bubble. The massive savings glut produced by having a concentration of income to very highly-paid individuals results in a demand for return on investment out of proportion to what is actually possible based on the underlying levels of consumption & economic activity. Naturally, the result is Ponzi schemes like the housing bubble and Madoff's scheme - situations where the appearance of high returns derives solely from the (eventually) unsustainable pumping-in of new money. The rest of us, of course, get to suffer from the instability in prices & disruption in investment allocation caused by this big pile of money flopping around from one bubble to the next. Houses! Oil! Tech stocks!

What irritates me is that the high-income people seem not to recognize the source of their wealth as the circulation of money, rather than the accumulation of money. They are lucky enough to be in positions where this circulation deposits large amounts of wealth with them, and I don't begrudge them that, but to keep that machine running smoothly so that it can keep producing that wealth, there is a need to keep the degree of inequality and of long-term savings accumulation under control. But suggest that and you're a socialist somehow.

Anyway, if the result of this economic excursion into disaster is a resurgence of Keynesian economics that would certainly be a good thing. In Britain we named a city after him. Over here in the US he seems to be a dirty word, except when things go to hell and he has to be pulled out of the closet to fix things again.

[Michael Cain]

Publius,
The link provided in your 4:15 posting takes one to a proxy server, and at least as my browser is set up, without the necessary information to get to the target content.

[Ugh]

Sigh.

[Fledermaus]

Jd,

i agree with the giant pile of money theory. The problem is there are only so many ways to invest say $50M. No one would want to hand out 100 small business loans. But one nice fat security with aaa rating? Wall street has nearly abandoned its function to allocate capital to increase production.

It is nice to see Posner come around.

[baf]

I've long felt that "trickle-down" metaphor is a strange one, because it's based on two conflicting ideas: the idea of liquid trickling from a high place to a low place, and the idea of the well-to-do as "higher up" than the poor. When liquids trickle downward, they move from high places without much liquid to low places where liquid accumulates in quantity. That's not a bad metaphor for how money moves, but it makes it clear why expecting things to trickle "down" from the oceans is backward.

[russell]

From Posner's piece:

The dominant conception of economics today, and one that has guided my own academic work in the economics of law, is that economics is the study of rational choice. People are assumed to make rational decisions across the entire range of human choice, including but not limited to market transactions, by employing a form (usually truncated and informal) of cost-benefit analysis.

I think we've uncovered the fly in the ointment.

[Moses]

I read his essay this morning. I was struck by the fact that he, like so much of wing-nuttia, is just a shallow, crowd-follower who was decidedly ignorant about the subject on which he routinely pontificated. While I'd like to pretend I was amazed that the man never read the book, and yet has spent a lot of time over the years spouting-off on his various libertarian/fresh-water theories in opposition to Keynes while mocking those who do esteem Keynes and his theories, I am not surprised in the slightest.

I see this all the time with "Darwin caused the Nazis" and other strange crap written about the Theory of Evolution. Even from (second and third rate) academicians who should know that they should read the source materials first-hand, not rely on an obvious partisan audience to tell them what the author said.

[Free Lunch]

Frankly, I don't think that Posner or Mankiw would have been willing to look that the old man's ideas until their shiny new ones were shown to contain defects. The fact that they hadn't read The General Theory wasn't particularly surprising since it didn't address things in the way economists had become used to.

If the fantasy that you could ignore the tail of risk had managed to hold on until sometime after today, neither one would benefit from the exercise.

I'm glad Posner is willing to change his mind. We need everyone possible to stop being stupid.

[tgirsch]

In case others haven't seen it, Krugman also discusses the Skidelsky book that Posner mentions.

[cleek]

People are assumed to make rational decisions across the entire range of human choice, including but not limited to market transactions, by employing a form (usually truncated and informal) of cost-benefit analysis.

i believe that's 100% true. the problem for economists is everybody has completely different ideas of what those costs and benefits are, so there really no way to accurately predict what a group of strangers will do except in very narrow scenarios. there is simply have no way to capture enough information about everyone in a large group to be able to predict what they'll do in something as large as the economy.

in other words: it's not that people are irrational, it's that rationality is basically personal .

[CharlesWT]

"the problem for economists [and government]..."

[russell]

in other words: it's not that people are irrational, it's that rationality is basically personal .

I guess that's one way to look at it.

Especially if "personal" can be read to include fear, extreme greed, toxic "mine's bigger" competitiveness, and an utter lack of responsibility or concern for consequences, in particular where other people are concerned.

Posner makes the comment that Keynes made no particular assumptions about people's motivations, and simply sought to analyze what people actually did. That seems wiser, and more reflective of real life, to me.

There are certainly mathematics involved in economic analysis, but ultimately the thing you're analyzing is social human behavior. Buying, selling, and making decisions about how to use capital are subject to the same range of bizarre motivations and impulses as any other social behavior.

[John Thullen]

Rats make rational choices, too.

Rats are good people.

It's just that they are placed in bad situations sometimes.

Say, you have one piece of cheese hidden at the end of the maze and you introduce ten rats (all good people during normal times) into the maze.

One rat gets to the cheese first having made more seemingly rational choices getting there. Maybe the tax incentives were better for the rats in his tax bracket.

Now what? Does the rat eat one tenth of the cheese and kindly split the remaining cheese into nine portions to await and share with his fellow rats, who by this time are coming up with their own personal rational choices?

Maybe. Maybe not, rational choices being personal.

What about the second rat who gets to the cheese? His rational choice might be to join league with the first rat and start a radio talk show, in exchange for one and a half pieces of cheese.

His rational choice, having spied the main chance, otherwise called the rational choice, is to spread lies about the other eight rats and their motivations, to justify his and the first rat's dining as quickly as possible on the entire piece of cheese.

Then there is the third rat. He arrives at the cheese too late for cheese, but he's been listening on his short-wave rat radio to the second rat's talk show. His rational choice is to join the rat NRA and decide that if he ever gets to the cheese first in his life, he's going to shoot the first ratf--ker who comes around the corner sniffing cheese.

Three rats. One to eat most of the cheese. One to eat a little bit of cheese for fame and to spread lies about the other eight rats. And one to shoot the other seven rats, so that the first two rats have their rational way.

In the meantime, what of the other seven rats?

Maybe one comes up with rat program to distribute the cheese (No doubt this is the ratf--ker)

Maybe one becomes a performance artist.

Maybe another becomes a Census worker.

Maybe another becomes a zombie rat.

And no doubt maybe the first rat decides to eat some of the cheese and then employ the other nine rats to make more cheese in exchange for, well, cheese.

That last rat scenario is probably what would happen during normal times.

But there's always one rat among the rats to spoil things and make things miserable for the other rats during the bad times.

Maybe the quant rat.

But I maintain my faith that most rats are good people.

Until I lose my health insurance. Then I catch the plague and rats everywhere have a problem with the crazy rat with the plague.

[AndrewBW]

Shorter Richard Posner: D'oh!

[sekaijin]

I'm not well-versed in economics, and my knee-jerk reaction, especially lately, is that economics is a suspect area occupied by academic hacks that never should have been theorized into existence - but since I'm some 300 years or so late in the day on that score, well, my reaction is just that - knee-jerk, which is to say, pointless.

The notion of economic movement as based on rational action is an interesting one to me though. Is it entirely possible that Keynes, in what I understand of him in terms of his descriptive sense of economic action (as per some of the comments above), was leaving room for the fact that such action might ideally be rooted in rationalism, but is often done more out of the right to choose? By describing what people "did" in terms of their economic choices, he was taking the view that freedom, rather than rationality, was where the seat of deliberation was in the choices people made in any economic nexus. As Russell pointed out:

"There are certainly mathematics involved in economic analysis, but ultimately the thing you're analyzing is social human behavior. Buying, selling, and making decisions about how to use capital are subject to the same range of bizarre motivations and impulses as any other social behavior."

Since Keynes' time, though, the expansion of choice, and what it means to act from it, surely outstripped what he imagined would have been possible in a market. Is it just as much that with the freedom made possible from the expansion of choice, irrationality could outstrip rationality? Yet I'm getting the impression that so much of what seems to pass for conventional wisdom in market economic theory, at least in the U.S., doesn't consider that irrationality also follows a curve, and that the freedom to choose could mean just as much the freedom to be as irresponsible as one likes.

Again, my knowledge of economics is scant - but I fail to see anything "rational" in the deliberate accumulation of the kind of gratuitous debt we've seen culminate in the credit crunch, or for that matter, anything "rational" about a government deliberately running a deficit year-after-year. It would seem to me that Keynes has been vindicated, though not for what I'm certain he would have preferred to have been.

[Pithlord]

There is not now and never has been a school pf "trickle down" economics. AFAICT, that was always an unfriendly labe by the left for Reagan's tax policies (policies every social democracy in the OECD ultimately imitated).

Mankiw HAS ALWAYS been a Keynesian of a certain type.

Keynes agreed with classical liberal policies outside of demand-side depressions. Or at least he sometimes did. He said a lot of things, many of which would be heresy in these parts.

Posner never read The General Theory because he never purported to be a macroeconomist. As he has done in so many areas, he quickly boned up and wrote a book on the subject. There are downsides with this method, and I suspect his account of the current field is an example.

To Posner's credity, he's not an ideologue and is willing to take ideas where they go. Naturally, that makes him an object of contempt around here where team loyalty is the summum bonum.

[CharlesWT]

"Keynes was a brilliant man. Much of what he wrote he wrote in tongue-in-cheek, for the pleasure of paradox, to épater le bourgois[shock the middle class], in the spirit of Wilde, Shaw, and the Bloomsbury circle. Perhaps the whole of the General Theory was intended as a huge (400-page) joke, and Keynes was appalled to find disciples who took it all literally."

Keynes the Jokester?

[Marty]

I would only add to this discussion that Keynes (and others) evaluate what people do, in context of the current and past cultural norms and expectations of society etc.

People have not acted "rationally" in the context of a post-depression society for at least twenty years. Our concepts of individual savings and leverage and corporate and individual investment have changed since the evaluation of "rational" was done.

I find much of our economic challenge reasonably predictable in that we have "managed" the economy against a set of rational expectations that are not culturally consistent.

[McManus]

A lot of the comments here are unfair, for example:

While I'd like to pretend I was amazed that the man never read the book, and yet has spent a lot of time over the years spouting-off on his various libertarian/fresh-water theories in opposition to Keynes

Posner is a judge and law professor. He has written about law and economics, but that relates exclusively to microeconomics, not macroeconomics. Posner is not an economics professor and has done no work whatsoever in macroeconomics. So the idea that he's spent years "opposing Keynes" is nonsense.

Also, Publius' Glenn Beck analogy is ridiculous. Posner is a leading figure in legal academia and is taken seriously by people across the political spectrum. Glenn Beck is an uneducated crackpot.

[russell]

Naturally, that makes him an object of contempt around here where team loyalty is the summum bonum.

23 posts on this thread. This one makes 24.

By my count 7 mention Posner at all. 3 do so negatively, and that's including AndrewBW's "Short Richard Posner: D'oh!".

At least two very specifically give Posner credit, or even praise, for re-evaluating his earlier positions.

Welcome to the hive mind.

[John Thullen]

"Posner is a leading figure in legal academia and is taken seriously by people across the political spectrum. Glenn Beck is an uneducated crackpot."

Yes, but Beck has better ratings.

Or, to rephrase" "Posner is a leading figure in legal academia. Glenn Beck is an uneducated crackpot, who, along with the other uneducated crackpots, is taken seriously by people across one side of the political spectrum."

Kind of trickle-up stupidity.

Which is probably, ipso fatso, why groups of rats (the ones who know Latin) make team loyalty the summum bonum.

Conditioning.

[ThatLeftTurnInABQ]

"in other words: it's not that people are irrational, it's that rationality is basically personal."

This is a rare occasion such that I'm going to dissent from one of cleek's comments. I don't think the problem is so much the subjectivity of different people's sense of cost and benefit, as it is that people rely heavily on heuristics to make decisions, and there is a continuous spectrum between an empirical cost/benefit analysis and gut hunches/the devil made me do it.

If our problem were widely varying subjective senses of what is cost and what is benefit, then we could test that by checking to see if variations in decision making correlate with a break down in social consensus on how to value things. Yet behavioral economists have demonstrated non-optimal decision making even in very simple wagering situations.

Our intuitive judgments are well suited for the ecological and social environment which was characteristic of most of the evolutionary history of our species, but most of us aren't living in small hunter-gatherer bands. As a result our heuristics are not well adapted to the complexities of modern life and we are really bad at evaluating situational statistical probabilities for example, especially when highly non-Gaussian distributions are involved.

This is an especially serious problem when our economic life is dominated by highly interconnected and potentially chaotic systemic relationship between things well outside of our own personal circle of experiences. Taleb did a good job in his book Black Swans of summing up the problems of living in a non-linear world (what he calls “extremistan”) where our intuitive senses just don’t work very well, and it is notable that the recent period of economic integration and extended leverage which we’ve gone thru in the last several decades under the name "globalization" has amplified those dysfunctional aspects of our world to which we are maladapted, and probably done so past a tipping point beyond which our economic system was doomed to collapse at some point.

So it seems to me that part of the breakdown of neo-classical economics is self-inflicted. They succeeded in creating an economic world where their assumptions about human decision making processes are even less valid now than they were in a simpler and less interconnected period. Sort of like a bunch of Newtonian physicists who succeed at building a rocketship which gets up to 0.99 c and then falls apart because their rules don’t work at that speed.

[Free Lunch]

TLTABQ,

I have to agree that there is a problem with the assumptions is that people actually know what is in their best interests. It also fails to take into account that people weigh deferred benefits differently. Some folks don't mind going to the paycheck lenders to have a good night out tonight while others are horrified that anyone is silly enough to patronize such establishments.

I don't think there are any economists who have found a way to take impulsiveness into account when developing a model.

[mattH]

I was struck by the fact that he, like so much of wing-nuttia, is just a shallow, crowd-follower who was decidedly ignorant about the subject on which he routinely pontificated.

Something (at least neo-classical) economics itself has had real troubles explaining.

I really hope everyone has read or reads Krugman's blog posts and magazine article he labels the freshwater/saltwater divide amongst economists. That a large, and very influential segment of the discipline has rejected theory, even in addressing it as conflicting with their own, is just absurd. This is paradigmatic; they have removed themselves so much from other functioning theory that they can't even get a critique of it right, and they can't even see where they get it wrong. I blame physics envy in economics, but I've known that for years, and in talking about the "elegance" of neo-classical theory and methodology, it gets to the heart of what is wrong with their approach.

[McManus]

mattH,

I agree with you about the economics profession. But I hope you also understand that Posner works for the law school, not the econ dep't, and has nothing to do with any of the "freshwater" stuff you're talking about.

[AndrewBW]

I'm willing to give Posner credit. He's always been an eclectic thinker, and in the last couple of years he has indeed been moving away from some of the more reflexive positions he's held in the past. The TNR essay publius cites is good.

Nonetheless, you'd think that the guy who was one of the founding fathers of the "law and economics" school of thought would have some reasonable grounding, not only in law, but, well, in economics. I mean, how can you apply the methods of economics to the law if you don't know what those methods are? The law and economics movement generally has operated within the framework of neoclassical economics, and the state of neoclassical economics is precisely the issue Krugman and others have questioned. Just look at the spanking Brad DeLong, Menzie Chinn, and numerous others have given him lately over his comments on Christie Romer. Add to that what appears to be an understanding of Keynes based on, shall we say, hearsay evidence, and you have to wonder how firm the ground he was standing on really was.

If Posner is seriously rethinking some of his positions then good on him. But I stand by my original comment.

[McManus]

AndrewBW,

There's a sharp distinction in economics between macro and micro. Law & Econ deals with microeconomics. Posner's work centers on how individual people and businesses react to legal incentives. It has nothing to do with macro concepts like unemployment rates and the money supply. When Krugman writes about the neoclassical framework, he's talking macro. Posner makes clear in the linked article that the reason he never read Keynes before is because his work never involved macroeconomics.

[Sebastian]

I'm confused about why we have to drag Palin into this.

Publius, did you find Posner's essay unconvincing? Did it have evidence of hidden motive that you needed to find? I don't understand why his clearly stated, strongly supported reasons can't be enough.

[mattH]

Posner makes clear in the linked article that the reason he never read Keynes before is because his work never involved macroeconomics.

Yet Posner himself admits that the leading macro arguments in "freshwater" economics are essentially the same as his:

The dominant conception of economics today, and one that has guided my own academic work in the economics of law, is that economics is the study of rational choice.

Maybe I'm reading too much into this, but it certainly says to me that his own work has been informed by neo-classical economics, regardless of his work being micro oriented. Like I said, I have bigger complaints about economics than just this one discussion. This is just one more datapoint in the forest.

[McManus]

mattH,

I agree with you that the false assumption that people are always rational plagues both macro and micro. In many ways this is a much bigger problem in micro because micro is more concerned with individual behavior. I wish law & econ would try to incorporate the work of people like Tversky and Kahneman about cognitive biases that lead to irrational behavior. I don't think Posner's ever tried to do that.

But the problems with the freshwater macro go beyond simply assuming that individual people are rational. There's a conceptual leap in going from the assumption that individuals rationally pursue their own interests to the assumption that markets must be perfect and recessions are actually good and unemployed people don't want jobs. Posner never played a part in that stuff.

My only point was that you don't need Keynes to do law & econ, so it's not that surprising that Posner hadn't read him. It's also not that surprising that Posner would like Keynes because he's never taken any explicitly anti-Keynesian positions in the past.

[CharlesWT]

[...]
Judge Posner, alas, misses some vital points of economic history. For instance, it’s untrue that “a general fall in the price level – deflation – imperils economic stability.” In the U.S. the price-level fell pretty steadily from 1865 through 1898 – a period of rapid economic growth unmarred by any unusual instability. Deflation is desirable if it is caused by rising productivity (as was the case in the late 19th century) and not by contractions of the money supply (as happened in the early 1930s).

Judge Posner also gives undue credit to Keynes for two insights that are not original to Keynes. First, Adam Smith beat Keynes to the punch in emphasizing that the ultimate goal of economic activity is not production, but consumption. Second, the importance of uncertainty was brought to economists’ attention, not by Keynes, but by Frank Knight. In 1921 Knight argued that profit is entrepreneurs’ reward for dealing with uncertainty. Unlike Keynes, Knight understood that uncertainty poses no special threat to free markets operating with sound money.
[...]
On Posner the Keynesian

[Jacob Davies]

"Deflation is desirable if it is caused by rising productivity (as was the case in the late 19th century) and not by contractions of the money supply (as happened in the early 1930s)."

Pop quiz: is the current deflation caused by, one, rising productivity, or two, a contraction of the money supply?

[Fair Economist]

CharlesWT citing from Cafe Hayek:

In the U.S. the price-level fell pretty steadily from 1865 through 1898 – a period of rapid economic growth unmarred by any unusual instability.

You have to gape at the hutzpah of Cafe Hayek describing a period with not one but two major depressions (1873 and 1893) as "unmarred by any unusual instability."

CharlesWT, I don't understand why somebody interested in informed and honest discussion would cite a site like that.

[russell]

You have to gape at the hutzpah of Cafe Hayek describing a period with not one but two major depressions (1873 and 1893) as "unmarred by any unusual instability."

The key word here may be unusual.

[liberal japonicus]

The word I always associate with the period immediately following the American Civil War is stability...

[CharlesWT]

"You have to gape at the hutzpah of Cafe Hayek describing a period with not one but two major depressions (1873 and 1893) as 'unmarred by any unusual instability.'"

Someone in the comments there called the author of the on that point. I'll keep an eye out to see if the author or someone gives a reasonable explanation.

"I don't understand why somebody interested in informed and honest discussion would cite a site like that."

That's an easy condemnation to make for any opinion site including this one.

[CharlesWT]

[...]
So we have a 4.3% decline from 1873 to 1874, recovery in 1875, by 1876 GNP is above 1873, and in 1879 GNP is 30% above 1873 (approximately 5% growth annually!).

The years following the Panic of 1893 look similar, except that the recovery came quicker -- 1895 is already above 1893, followed by another slight dip in 1896. By 1899, GNP is 28.5% above 1893. Now it is true that unemployment, by most estimates, remained high throughout the 1890s (perhaps 11-12% or higher for 5 years, although the natural rate also seems to be higher in this era), and this certainly calls for explanation.

But in comparison to the Great Depression, whether we use GNP or Unemployment, these two economic downturns were quite mild.
New Deal Revisionism: Jeremy H. at Apr 4, 2009 11:11:14 AM

[russell]

1873:

The failure of several important eastern firms in September 1873—including the New York Warehouse and Securities Company; Kenyon, Cox and Company; and the famous banking house, Jay Cooke and Company—precipitated this panic. The stock exchange closed for ten days, and bankruptcy overtook a host of other companies and individuals. Some causes of the panic and ensuing depression were international, including a series of wars and excessive railroad construction in central Europe, Russia, South America, and the United States. Domestic factors included currency and credit inflation, losses from fires in Boston and Chicago, an adverse trade balance, and overinvestment in railroads, factories, and buildings. In the following depression, 18,000 firms failed during 1876 and 1877, a majority of the American railroads declined into bankruptcy, and more than two-thirds of the nation's iron mills and furnaces fell idle. Wage reductions led to strikes among Pennsylvania coal miners and New England textile workers, and to a railroad walkout in 1877. In 1878 the depression began to lift.

1893:

A series of bank failures followed, and the Northern Pacific Railway, the Union Pacific Railroad and the Atchison, Topeka & Santa Fe Railroad failed. This was followed by the bankruptcy of many other companies; in total over 15,000 companies and 500 banks failed (many in the west). According to high estimates, about 17%-19% of the workforce was unemployed at the Panic's peak. The huge spike in unemployment, combined with the loss of life savings by failed banks, meant that a once-secure middle-class could not meet their mortgage obligations. As a result, many walked away from recently built homes. From this, the sight of the vacant Victorian (haunted) house entered the American mindset

No revisionism like the new revisionism.

But of course, we don't do informed and honest around here.

[Free Lunch]

One thing that we need to keep in mind, particularly for the 1873 panic, is that the US population grew about 30% in that decade.

[Barry]

Also, as one goes from the 1870's to the 1890's to the 1930's, the percent of the population not on farms increases quite a bit. If the 'industrial' population is 10%, then an 'industrial' depression has more limited effects than if the 'industrial' population is over 50%.

[mattH]

Barry, you do know that farmers carry huge debt loads, and if credit markets crash, it has a very negative effect on farmer's ability to maintain their activities, right?

[bellatrys.livejournal.com]

So what if the nekulturny contingent of Conservativism - which has been part of it longer than I was a Reaganite "prolife" theocon, longer than I've been alive even, q.v. the mocking of it in the person of Sen. Joseph McCarthy in The Manchurian Candidate (1962) not to mention the depictions of the Coughlin-inspired anti-intellectuallism in Sinclair Lewis' 1935 book and play It Can't Happen Here which last was denounced and suppressed as un-American by McCarthy - has finally got stuck in Posner's craw thanks to this latest production model of Mrs. Schlafly (whom my mother positively adored) which turns out to be the one camel in the past seventy-odd years he cannot manage to swallow.

So he has finally awakened to the fact that grinding the poor underfoot for too long to profit a few results in the kind of widespread financial desperation that leads to tumbrils, unchecked - wow, he's only almost two and a half-centuries behind the curve, at best (paging Rev. John Ball!)

This makes Posner a Good Guy, by the standards of the hour, so low have they slipped, and so we must roll out the red carpet and give him our house keys and turn our backs trustingly to him, I guess. I'd wait for him to prove his bonafides like David Brock, myself, but as someone who grew up amid the sophistry of these Culture Wars heroes, I don't have that liberal tendency to gushingly trust sans verification, yet.

--For has he rejected his many & articulate defenses of retconning permissions for government torture and suspension of habeas corpus in the face of the Ticking Time Bomb, though? Some "civil libertarian" he turned out to be when the chips were down, grass in shallowest soil in the noonday sun - but again, as the reviewer notes, in an age when the oubliette is back in style, saying "maybe we should keep some sort of figleaf on so when our adversaries get into power they can't use it against us" counts as being a moderate...

Perhaps, as some have in the past accused, it is the truth that it's only my not-so-ex-conservativeness that makes me so stern about demanding actual evidence of repentance and reform, and considers support for the old ways to put Posner as far beyond the pale of decency as Judges Corwin & Hathorne - neither of whom personally put the weights on Mr. Corey, either.

But Posner's "both sides are equally uncivil & bad!" bleats during the Bush years don't inspire me to consider him a likely genuine fellow traveler: the fact that he has (apparently) only now realized what anyone with half a brain who wasn't indoctrinated and sheltered - i.e. ignorant - knew back in the early Eighties about conservative economics (my teachers tried to tell us, indeed they did, but of course I, at age 15, knew that the only thing politics required of us was Ending The Holocaust of Abortion, so what mattered it that the rich were growing richer as the poor grew poorer?) leads inevitably to the conclusion that he is either very, very stupid (something that his boast of never having bothered to read such a major source as Keynes despite having strong opinions on economics until the crash does suggest) - or very, very opportunistic.

And I trust opportunists no farther than I can throw them, and see small value in allies so dense that it takes the house burning down around their ears for them to finally realize that smoking in bed is a dangerous thing...