Economics Needs to Reckon With What It Doesn’t Know

<p>“The world discovered that John Maynard Keynes was right when he declared during World War II that ‘anything we can actually do, we can afford,’”<a href="https://www.nytimes.com/2021/09/01/opinion/covid-pandemic-global-economy-politics.html?smid=tw-nytopinion&smtyp=cur"> writes</a> Adam Tooze. “Budget constraints don’t seem to exist; money is a mere technicality. The hard limits of financial sustainability, policed, we used to think, by ferocious bond markets, were blurred by the 2008 financial crisis. In 2020, they were erased.”</p><p>Tooze is an economic historian at Columbia University, co-hosts the podcast “Ones and Tooze,” writes the brilliant<a href="https://adamtooze.substack.com/"> Chartbook</a> blog and is the author of<a href="https://www.penguinrandomhouse.com/books/301357/crashed-by-adam-tooze/"> “Crashed,”</a> the single best history of the 2008 financial crisis. He’s now out with a new book,<a href="https://www.penguinrandomhouse.com/books/669575/shutdown-by-adam-tooze/"> “Shutdown: How Covid Shook the World’s Economy,”</a> which tells the story of the unprecedented global economic response to the pandemic.</p><p>The central thread of Tooze’s work is how the past decade of crises has upended many of the core assumptions that have guided economic policymaking for the past 50 years — including ones that many contemporary economists and policymakers continue to cling to. So that’s what we mainly talk about here. But we also discuss how the boundaries of acceptable thought in the economics profession are policed, the actual risk of runaway inflation, the limits of green monetary policy, the fight over Jerome Powell’s reappointment as Fed chair, what the Covid crisis reveals about our ability to respond to the climate crisis, the need for a supply-side progressivism and more.</p><p>Mentioned: </p><p><a href="https://www.brookings.edu/bpea-articles/declining-worker-power-and-american-economic-performance/">“Declining worker power and American economic performance”</a> by Anna Stansbury and Larry Summer