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Do UK universities harm foreign countries?

So farewell, Yanis Varoufakis. You used to be Greece’s finance minister. Then you resigned, or were you sacked? You took control of the Greek economy six months ago when it was growing. Yes, honestly! Growth last year ran at 0.8 per cent, with forecasts of 3 per cent this year. The government had a primary budget surplus. Unemployment was falling. Until you came along.

Varoufakis was a product of British universities. He read economics at Essex and mathematical statistics at Birmingham, returning to Essex to do a PhD in economics. With the benefit of his British university education he returned to Greece and, during his short time in office, obliterated the nascent recovery. The economy is now expected to contract by 4 per cent this year — an amazing transformation. Greece’s debt burden has increased by tens of billions and many people have emigrated.

But Varoufakis is not alone. Plenty of other visitors to our universities have been influenced by the teaching here and returned to their countries to wreak havoc.

James Bartholomew, on the malign effect, as he sees it, of UK education. My problem with this article is that it is inevitably selective and I wonder, for example, what would happen if you randomly selected a group of postgraduates from UK universities, now living abroad in countries such as India or Singapore, and polled them on their economic and political views. It seems from entirely anecdotal experience that most graduates, especially in the liberal arts, tilt left; I am not sure about the leanings in economics today – although I get the impression that the ideas of Milton Friedman, Hayek, von Mises et al are still seen as quite “extreme”. But there have, for example, been pro-market lecturers at places such as the London School of Economics, for all its socialist origins: Lionel Robbins and FA Hayek, to take two examples. Arthur Seldon, one of the original men at the pro-market Institute of Economic Affairs – an enormously influential think tank in its time – was educated at the LSE, and I know quite a few LSE alumni who are pro-market.

So yes, during certain periods of UK history when socialism/collectivism was fashionable, the folk who came out of university often carried terrible ideas with them. Today, though, I think the problem is more about culture and philosophy. Post-modernism still exerts a big influence, for example, and the damage wrought is not always as easy to chart as with economics.

Of course, these points lead us back to that thorny subject of the PPE (politics, economics and philosophy) degrees which several UK politicians possess.  The PPE is very much an exam crafted to give a sort of rounded set of subjects that an administrator/political leader was expected to understand, and I have no firm views about this sort of degree – there is no reason why having one cannot be a very thorough form of degree at all. But studying a subject does not seem to correlate a lot to understanding – the current UK government is led by a man with a PPE and it wants to push up the UK national minimum wage, a form of economic illiteracy, if supposed political cunning.

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40 comments to Do UK universities harm foreign countries?

  • There are also Oxford PPE Samizdatistas, so not everyone draws the same conclusions when they sip the Kool Aid 😀

    Oh and when people talk about “political economy”, the truth is the politics bit always trumps the economy bit.

  • Kevin B

    The author of the linked piece is James Bartholomew, not Dellers.

  • Johnathan Pearce (London)

    Kevin B, fixed. Brain fart.

  • Paul Marks

    There used to be an unofficial policy at many British universities of having a token free market supporter in each economics and politics department.

    That policy ended some time ago – for example when Jack Wiseman went at York he was not replaced by a free market supporter, and the library he had built up (for the use of the students) was tossed away to provide more admin space.

    It is quite logical actually.

    British universities depend on government funding via so called “student loans” and so on.

    So it does not make sense to have pro capitalist people in the politics and economics departments – teaching the students the case of opposition to government subsidies.

    So even if there was no ideological factor (and there is an ideological factor – a massive one) it would still make no sense for universities to employ people to oppose the case of government subsidies (when they depend on government subsidies).

    After all Robbins gave up the Austrian School in order to advance his chances of promotion (he became a Keynesian) – and he ended up being the author of the infamous “Robbins Report” of the early 1960s demanding even more government subsidies – in order to create lots more universities.

    This does not mean that people should not go to a British university – but they should not study “political subjects” as I did.

    If you are not a leftist a string of degrees in the “social sciences” are unlikely to be of much use to you.

    I know – as I have such qualifications (and work in Wicksteed Park).

  • Stuck-Record

    Talking of the dead hand of universities. You have to see the clip of Paul Mason talking at a Guardian event: Is Capitalism dead.

    He paraphrases the following quote from Cromwell in Wolf Hall. Cromwell educating a noble about the real world:

    ““Let’s say I will rip your life apart. Me and my banker friends.
    How can he explain that to him? The world is not run from where he thinks. Not from border fortresses, not even from Whitehall. The world is run from Antwerp, from Florence, from places he has never imagined; from Lisbon, from where the ships with sails of silk drift west and are burned up in the sun. Not from the castle walls, but from counting houses, not be the call of the bugle, but by the click of the abacus, not by the grate and click of the mechanism of the gun but by the scrape of the pen on the page of the promissory note that pays for the gun and the gunsmith and the powder and shot.”

    And then Mason says – wait for it – that today the global markets are all like the noble being educated in the ‘true’ ways of the world. Paul and his revolutionary progressives can just, at will, turn the market off.

    180 degrees wrong. Less than a month since his idiot friends in Greece demonstrated that if you don’t pay the bank back you can’t borrow anymore money.

    It’s a sign of how deluded the left have become that he says it in a hall full of grown-ups with university degress and nobody laughs out loud at him.

  • Rich Rostrom

    AIUI, the “License Raj” which Nehru and his party saddled India with was the result of LSE influence.

  • Snorri Godhi

    Admittedly, i enjoy reading articles that confirm me in my Anglophobia, such as the one at the link. Still, i try to read them critically, asking myself: what could prove this article wrong?
    James Bartholomew anticipates criticism by asking: Are there any exceptions to the rule that British universities cause misery abroad? and he notes the not-quite exceptions of Lee Kuan Yew and Goh Keng Swee. He could also have remarked on JJ Cowperthwaite and Thatcher; but then, to be balanced, he should also have listed British leaders corrupted by a British education, and the article would have become much longer.

    Still, there are sampling problems.
    For one thing, future leaders of less developed countries are more likely to study in the UK or US than in Germany or even France. (Though coming to think of it, Pol Pot studied in France iirc.)
    For another thing, people who are turned socialist by a British education are probably more likely to get to power than people who are turned libertarian by a British education.

    Anyway, if Bartholomew makes people skeptical about paper qualifications, that is all to the good.

  • JohnW

    Indeed, indeed…politics trumps economics and ethics trumps politics!

    It is the same sorry situation in the USA, as Yaron Brook enjoins: do not give money to your alma mater [applause… 17.45.]

  • Mr Ed

    Are there any exceptions to the rule that British universities cause misery abroad?

    Well there was Isaac Newton at Cambridge.

  • Paul Marks

    Naughty Mr Ed – you know well that we were not talking about the physical sciences, and that universities were basically independent and self funding till the First World War.

    And the humanities are not unimportant.

  • JohnW

    Education in the USA was heavily politicised in the 1960’s – and the physical sciences are by no means invulnerable to the toxic consequences of state control either, see: global warming etc., etc..

    Some of the “brightest” American students should not be trusted with simple electrical circuits!

  • JohnW

    @Stuck-Record,
    Paul Mason is the Economics Editor for Channel 4 News so you can wash your filthy mouth out…you…you…CAPITALIST!

  • Paul Marks

    Stuck-Record – is “Wolf Hall” really that bad?

    I know it is a leftist propaganda work (which is why the BBC made it into a television series) by the “writer” Hillary Mantel who says we should “fucking rejoice” at the end of a story about the murder of Margaret Thatcher….

    But “Me and my banker friends”???

    Still you do say that the academic was paraphrasing.

    However, it does show the state of the mind of the “non Marxist” left.

    The “feudal stage of production” (represented by the baron in his castle) is being replaced by “capitalist mode of production” – with Thomas Cromwell representing the latter.

    Nothing to do with the real Thomas Cromwell or Henry VIII

    But the kiddies are still taught Marxist “history” – without even being told it is Marxism.

  • Paul Marks

    Just in case anyone does not know……

    The English economy has been cash based for centuries – with nobles managing their estates and engaging in trade (domestic and foreign).

    See M.M. Poston “Medieval Economy and Society” and Alan McFarlane “The Origins of English Individualism”.

    Thomas Cromwell did not represent “the capitalists” he represented the state.

    As for the idea (that of the “reformist” left) that his proposed “reforms” (setting up government departments covering X,Y,Z – rather like the ideas of Jeremy Bentham a few centuries later) would have been good news……

    Oh bleeping, bleep bleep.

  • Scooby

    Before Varoufakis’s short tenure for the Greek gov’t, he was befouling my alma mater as a visiting professor. Fortunately, it was in the School of Public Affairs, which is attended primarily by career (or wannabe) bureaucrats (therefore little or no harm was done to the minds of productive citizenry).

  • JohnW

    Wake up spambot…

  • AndrewZ

    Before his brief spell as Greek Finance Minister, Varoufakis was mainly known for his time as Valve Software’s in-house economist. What’ s particularly interesting about this is that Valve owes much of its success to harnessing the power of markets. The company has a flat management structure in which employees can choose which projects to work on. So the most promising projects attract the most resources and the least promising projects get starved. If a project has trouble attracting a particular type of talent, e.g. animators or sound designers, that highlights its weaknesses and shows the project’s owners where they need to improve.

    If you think you have a great idea you can start working on it. All you have to do is convince your colleagues that it really is worth their time. The fact that they have to commit some of their own time to the project in order to support it means that their support is always a revealed preference rather than a stated preference. But the employees are also competing for spots on the best projects so there is both a market in ideas and a market in talent, resulting in the best possible allocation of resources. It’s a great example of an internal market aggregating distributed knowledge to produce optimal decisions, and a reminder that centralised authoritarian systems like the EU are neither rational nor efficient.

  • Snorri Godhi

    Paul:

    Naughty Mr Ed – you know well that we were not talking about the physical sciences, and that universities were basically independent and self funding till the First World War.

    Right on about the subjects that we are talking about.
    As for the time period we are talking about, i just looked at the wikipedia entry for Nehru and was surprised to find that his British education was completed before ww1. I am not sure as to what to make of this.

  • Mr Ed

    Snorri,

    Perhaps it indicates that he was born in 1889 and was of graduation age before WW1? (in a UK that was turning very statist).

  • Patrick Crozier

    Presumably British universities are just as dangerous to the natives as they are to foreigners.

  • veryretired

    The intellectual record of Britain, and Europe in general, is decidedly mixed between startlingly good and horribly bad.

    The Reformation began the process of ennobling the individual against centralized authority, starting with the idea that each person could reach salvation through their own faith, and then, logically, reaching the idea that each person was the repository of other capacities, including rights and powers, as well.

    It is no accident that the concept of individual rights developed in the western cultural mix, as it was the direct descendant of one of western civilization’s most unique and revolutionary religious thoughts, which naturally led to other social and political permutations.

    Having said that, however, it is necessary to also note the growth of some of the most toxic ideas to ever plague humanity in the European garden, poisonous weeds which have often threatened to choke the brilliant flowers of the philosophical justifications for human rights, political representation, and freedom of conscience.

    As opposed to the commenter above who stated he was an anglophobe, I am an anglophile, albeit one who is very much in mourning for the death of a great culture, especially as it is so clearly a case of self-inflicted wounds.

    As it was in the 19th and 20th centuries, it appears the 21st will be another extended conflict between the concepts of individual rights and liberties that were fostered by the spread of British culture around the globe, and the collectivism that has had so many influential apostles among European, and, lamentably, British theorists of the last few centuries.

    Into this volatile mix now comes a rejuvenated declaration of ancient theocratic totalitarianism, with it’s doctrinal support for wholesale murder and political repression of all divergent thoughts and beliefs.

    It appears, at least for the current era, that the Pax Americana that extended around the globe, for well and ill, has ended. It also appears that, due to the abandonment of the universities, as well as the rest of the educational system, by the proponents of individual rights to the tender mercies of those who advocate only collective identities and collective rights, that the next generation will be facing some very difficult trials without the philosophical and cultural underpinnings that helped the west through the ferocious conflicts of the 20th century.

    Many in Britain and Europe actively sought the end of that Pax, and are now facing the consequences of achieving their desires. Good luck. You’re going to need all you can get.

  • James Hargrave

    The problem is also one of university expansion – too many students and lecturers of less than scintillating intellectual ability, so they fall for whichever fad has the status of the current orthodoxy. They can be led to a limited understanding of it but not to challenge it; they can be led to challenge ideas but only a limited way from a particular perspective. Universities now seem to be more monocultural than ever, and those in charge of them have swallowed a form of managerialism (coupled, almost inevitably, with declining literacy) in which words such as education, research, etc. are seldom to be found – and then only in some debased context. Australian universities, from personal experience, seem to be in the vanguard: they have perfected a sort of narrow, self-satisfied monocultural ‘multiculturalism’, peppered by grand apologies for nothing specific to Aborigines and God knows whom else. The stuff offered to students on the Arts/Social Sciences side is mainly gilded poppycock.

  • Ljh

    On coming to power in 1994, the external wing of the ANC, led by Thabo Mbeki (Sussex University) dumped the progressive agenda regarding labour law and education on South Africa which is why it has failed to thrive given its resources (human and physical) and infrastructure.

  • Mal Reynolds

    As a Economics grad from Cambridge (which has a Keynesian/New-Keynesian bend thanks to the famous Alumni) I broadly agree. Our best (read: most engaging/entertaining) lecturer was Ha-Joon Chang despite his lack of substance and most students end up with his kind of economics worldview. Friedman is touched on briefly for one or two of his models but never his overall philosophy. Austrian school never mentioned. I found my island of sanity in my visits to the university library where I could find every “alternative” economics viewpoint to the uni line I wanted including all the extremely interesting variants of socialist 19th century political economy before socialism degenerated into neo-Marxism.

  • Runcie Balspune

    It is no accident that the concept of individual rights developed in the western cultural mix, as it was the direct descendant of one of western civilization’s most unique and revolutionary religious thoughts, which naturally led to other social and political permutations.

    Having said that, however, it is necessary to also note the growth of some of the most toxic ideas to ever plague humanity in the European garden, poisonous weeds which have often threatened to choke the brilliant flowers of the philosophical justifications for human rights, political representation, and freedom of conscience.

    It’s all about control, deprived of an uneducated underclass to easily dominate with magic and fairies, you need a harsher and consequently more violent approach with those who’d question.

    Libertarians have a hard task, opposing both those who wish to force the enlightenment genie (djinn?) back into the bottle, and those who twist free thinking into a perverse authoritarian mindset of restricted logic, ultimately backed by violence, preferably against an unarmed and weakened proletariat.

  • Paul Marks writes:

    Naughty Mr Ed – you know well that we were not talking about the physical sciences, … And the humanities are not unimportant.

    Well, I must agree with Paul: those posting/commenting here (at least to this comment) are indeed not talking about the physical sciences, but perhaps they should be – at least in balance. Also, I agree that the humanities are important – though not dominant.

    The world continues, over time and with very few (though not zero) setbacks, to become a better place. This is demonstrated, in particular and most simply and obviously, by increasing life expectancy and by increasing GDP per capita.

    The main reasons for these improvements are the contributions of science, engineering, medicine and other technology.

    The main source and promotion of these good things is the availability of tertiary education in the appropriate subjects, and the inspiration and hard work of those subsequently contributing in these fields. That pretty much means universities and their positive contribution.

    Let’s move on to JohnW’s video link:

    Some of the “brightest” American students should not be trusted with simple electrical circuits!

    I have to admit initially to being as confused by what was shown as were those failing graduates with their battery, wire and bulb. Though I do see, on my second viewing, that the candidates were passed a bulb much bigger than those usually powered by 1.5volts, and very different from the bulb eventually shown being lit successfully. So this seems to me to be a video based on a trick question. An equivalent would be “Can you ride a bicycle?” And then offering a penny farthing. Having been conned, I can see many people would be flummoxed into failing to make an immediate and appropriate challenge – and strongly suspect that those who did so challenge would not (of course) appear in this particular video. Also, obviously, those filmed were volunteers – ones (at their young age) as worldly-wise as those who, accosted in the street, do not walk away from chuggers and life assurance salespersons.

    Back to the original question: “Do UK universities harm foreign countries?”

    It is as good a question as “Does the existence of legally held handguns cause gun massacres?”

    Best regards

  • Snorri Godhi

    As opposed to the commenter above who stated he was an anglophobe, I am an anglophile, albeit one who is very much in mourning for the death of a great culture, especially as it is so clearly a case of self-inflicted wounds.

    That is pretty much my view, too; so you could say that i am both an anglophile and an anglophobe, an inner conflict that i have not completely resolved.
    I feel equally conflicted about the other 2 cultures that most influenced me: Italian and American. (Not necessarily in that order.) Which goes a long way to explaining why i adopted a Viking nom d’internet.
    It must be said that there are still fine things in all 3 countries. For instance, i can write about my anglophobia on a British blog, trusting that most readers detect the irony.

  • Tedd

    Most media people and intellectuals in the anglosphere assume a baseline of industriousness and innovation in society, leaving the question of what to do with its fruits as the only serious question of economic policy. They’ve joined forces with labour, which assumes the benefits of capital investment as a baseline. The resulting culture is not unlike a person who completely misunderstands which aspects of his own nature are responsible for his good fortune and which for his bad fortune. Greece, in this analogy, is like the less talented friend who tries to follow his mentor’s ill-conceived advice without the inherited traits that mitigate their worst effects.

  • JohnW

    @Nigel,
    I did notice that but either way the ‘problem’ should not generate those responses – you can clearly see that they have not got a clue and their diagnostic capabilities are zero.
    The video is only an illustration – not a proof – of Prof. Sadler’s point but I think he is right, only the solution to the problem he identifies lies in philosophy not the philosophy of education.

  • Joe Hooker

    “Comrade Bob” Mugabe got an economics degree from U. of London (by correspondence, he was in prison for being a terrorist); Pol Pot and many of the Khmer Rouge principals were the products of the best universities of France. Coincidence?

  • JohnW

    Joe, it is ineed not a coincidence nor is it a coincidence that the founding father of modern Islamic terrorism was eucated at the University of Northern Colorado, USA.

  • Chester Draws

    One man ruined Greece all by himself? The conceit is impressive.

    I think generations of Greeks have got themselves into this position. Hundreds of politicians, bankers etc, supported by millions of voters. That the final straw was a man educated in vaguely left-wing economics says more about who picked him than anything else. They could have picked some “dry” — but they don’t think like that.

    It’s not like Varoufakis is to the left in Greek terms. They still have plenty of old-school Marxists, let alone neo- ones.

  • Laird

    I can’t see that Varoufakis is (was) particularly worse than any other formally-educated economist having political power today. They’re all Keynesians, operating out of the same playbook. Varoufakis may be a little more overt in his socialism, and Greece is certainly farther down the road to perdition than most of the rest of the west, but those are more differences in degree than in kind. So I wouldn’t say that UK universities harm foreign countries; the crap they peddle harms the UK, too. And that’s true for all major western universities; they’re all equally culpable.

  • JohnW

    “So I wouldn’t say that UK universities harm foreign countries; the crap they peddle harms the UK, too. And that’s true for all major western universities; they’re all equally culpable.”

    Sad, but true.

  • Snorri Godhi

    Just wanted to put on record my disagreement with both Chester Draws and Laird.
    But first i note that they are themselves in disagreement: Chester blames Marx, Laird blames Keynes.
    The reason i submit that both are wrong, is the very first sentence in the Bartholomew quote:

    So farewell, Yanis Varoufakis. […] You took control of the Greek economy six months ago when it was growing. Yes, honestly! Growth last year ran at 0.8 per cent, with forecasts of 3 per cent this year. The government had a primary budget surplus. Unemployment was falling. Until you came along.

    Chester claims that Varoufakis is not “to the left in Greek terms”; yet the previous Greek government was much more sensible than Tsipras/Varoufakis.
    Laird claims that all economists having political power are Keynesians today; but then, who “imposed” on Greece the “austerity” that led to growth before Tsipras/Varoufakis took over?

    Allow me to link again to a WSJ article to which i already linked in another Samizdata thread, but i see that Jonathan Pearce, Chester Draws, and Laird did not comment in that thread:
    http://www.wsj.com/articles/in-greek-talks-why-its-18-versus-one-1426800979
    Unfortunately there seems to be a paywall in place now; although i remember being able to read the full article, in fact i was able to download it.

  • Laird

    Snorri, thanks for that link (the paywall doesn’t bother me; I subscribe to the Journal), but I’m not sure how it refutes my argument. That article specifically blames the Greek mess on Keynesian economics (as do I), and although by saying “18 to 1” it implies that the other Eurozone finance ministers are not Keynesians it never actually says so. And indeed that would be wrong; they are all Kenyesians. Their insistence that the Greeks practice what is risibly called “austerity”, while perhaps not orthodox Keynesian doctrine on its face, is forced on them by political necessity: their taxpayers won’t stand for more Greek assistance, and they (or their governments) all want to be reelected.

    At its heart, Keynesianism is the ultimate in economic sophistry; it advocates whatever is politically expedient. That is why it is the dominant economic philosophy today: not because it is correct (quite the opposite is true: it is demonstrably incorrect and has no coherent logical foundation) but because it applies a veneer of intellectual cover for what politicians want to do anyway. But when political reality precludes a “normal” Keynesian approach it is quite happy to follow another path.

  • Snorri Godhi

    Laird: your secondary thesis, that Keynesianism does not necessarily follow a “normal” Keynesian approach, makes your main thesis, that “we are all Keynesians today” (to quote M.Friedman) irrefutable.
    Note however that the WSJ article is not the only reason for disbelieving that we are all Keynesians, arguably not even the main reason. For one thing, there is Krugman’s stamp of disapproval, and iirc Krugman disapproved not only of the policies “imposed” on Greece, but also of the domestic policies of Germany and other eurozone countries, most notably the Baltics.
    You could say that Krugman advocates “normal” Keynesian policies, and that eurozone governments are closet Keynesians even though do not follow such “normal” policies, and i think i see some evidence for this claim in the insistence of Italians that “austerity” is hampering growth (although what Italian politicians actually mean to say, is never clear to me). But then, how do you explain that the “stability” and “growth” pact was designed to prevent the use of “normal” Keynesian policies in the first place? And there is also the fact that, since 2008, countries that have followed Keynesian policies, such as the US and Greece, have seen a decrease in credit rating, while the Baltics have seen an increase: apparently, people in finance are not Keynesians.
    NB: the moment i read the “stability” and “growth” pact, i knew that it was unenforceable, hence my use of the scare quotes; but the intent is clear, and it was and is effective in imposing fiscal discipline to some extent, at least on countries that are not willing to cook the books as an alternative.

  • Laird

    Snorri, perhaps you are correct that not all economists having political power today are doctrinaire Keynesians. But I think most are, especially in the larger, more economically important countries. (Whether rating agency analysts are, or are merely pragmatists, is a separate issue.) And you are certainly correct that Krugman and others have been vocal opponents of Greek “austerity”. So the reason why the rest of the Eurozone has imposed austerity on Greece must be one of the following: (1) they are not Keynesians at all; (2) they are Keynesians, but recognize that there are limits to the effectiveness of Keynesian stimulus, and Greece has reached that limit; or (3) they are political realists, and understand that the public back home won’t stand for their pouring more tax money down the Greek rathole. I suspect that it is a combination of the three. Certainly the other 18 Eurozone finance ministers aren’t a monolithic bloc; probably some from the Balkan nations who have seen the benefits of an anti-Keynesian approach are no longer under the sway of that pernicious doctrine. But I still think that, for the most part, the German et al approach is driven by simple political realism. Whether that someday translates into an awakening to the fallacies of Keynesian doctrine remains to be seen. I’m not holding my breath.

    But the original question posed in this post is whether UK universities harm foreign countries, and I remain of the opinion that (a) the harm is universal (i.e., both to Britain and abroad), and (b) it is not confined to UK universities, but rather is a failing common to all major western universities.

  • JohnW

    Ah, but holding contradictory ideas at the same time is no problem.

    Here’s Krugman on the minimum wage:

    So what are the effects of increasing minimum wages? Any Econ 101 student can tell you the answer: The higher wage reduces the quantity of labor demanded, and hence leads to unemployment. This theoretical prediction has, however, been hard to confirm with actual data. Indeed, much-cited studies by two well-regarded labor economists, David Card and Alan Krueger, find that where there have been more or less controlled experiments, for example when New Jersey raised minimum wages but Pennsylvania did not, the effects of the increase on employment have been negligible or even positive. Exactly what to make of this result is a source of great dispute. Card and Krueger offered some complex theoretical rationales, but most of their colleagues are unconvinced; the centrist view is probably that minimum wages “do,” in fact, reduce employment, but that the effects are small and swamped by other forces.

    What is remarkable, however, is how this rather iffy result has been seized upon by some liberals as a rationale for making large minimum wage increases a core component of the liberal agenda–for arguing that living wages “can play an important role in reversing the 25-year decline in wages experienced by most working people in America”… Clearly these advocates very much want to believe that the price of labor–unlike that of gasoline, or Manhattan apartments–can be set based on considerations of justice, not supply and demand, without unpleasant side effects.

    And here is the same creature on the “benefits” of the minimum wage in the New York Times:

    What this means, in turn, is that engineering a significant pay raise for tens of millions of Americans would almost surely be much easier than conventional wisdom suggests. Raise minimum wages by a substantial amount; make it easier for workers to organize, increasing their bargaining power; direct monetary and fiscal policy toward full employment, as opposed to keeping the economy depressed out of fear that we’ll suddenly turn into Weimar Germany. It’s not a hard list to implement — and if we did these things we could make major strides back toward the kind of society most of us want to live in.

    Again in his economics books:

    They also argue that because there are cases in which companies paying above-market wages reap offsetting gains in the form of lower turnover and greater worker loyalty, raising minimum wages will lead to similar gains. The obvious economist’s reply is, if paying higher wages is such a good idea, why aren’t companies doing it voluntarily? But in any case there is a fundamental flaw in the argument: Surely the benefits of low turnover and high morale in your work force come not from paying a high wage, but from paying a high wage “compared with other companies” — and that is precisely what mandating an increase in the minimum wage for all companies cannot accomplish.

    And once more in the New York Times:

    What’s interesting, however, is that these pressures don’t seem all that severe, at least so far — yet Walmart is ready to raise wages anyway. And its justification for the move echoes what critics of its low-wage policy have been saying for years: Paying workers better will lead to reduced turnover, better morale and higher productivity.

    Tim Worstall summed up this difference as a case of “incentives” – Krugman’s books are written for economists, people who actually understood the subject whereas his column in the New York Times is aimed at those whose “liberal” ideology is rather more important than reality.

    Nothing new there – ask Alan Greenspan!

  • Snorri Godhi

    Laird: just wanted to point out that you are ignoring a crucial fact: none of the eurozone countries other than Greece seems to have followed Keynesian policies; which is why the US credit rating has been downgraded, but the German rating has not. (And Germany is one of the “larger, more economically important countries”).
    Last time i checked, the Dutch, Austrian, and Finnish ratings were still AAA, while the Estonian rating was moving up; not that it matters much to the Estonian government, since public debt is below 10% of GDP, much to Krugman’s annoyance.

    As for British universities, i have already given my opinion, for what it’s worth: the main reason why they are so pernicious, is that more foreign students are educated there than, for instance, at German universities. It might be that German universities are significantly better or worse, when it comes to political indoctrination: i certainly would not know.