>It is remarkable that there is an emerging Yale Law School view of economics that has become extremely influential on both the left and right. Our economic policymakers are increasingly Yale Law grads rather than business leaders or economists. On the Biden/Harris team: Jake Sullivan, Jennifer Harris, Mike Pyle, and Lisa Kahn. On the right, the big proponent is JD Vance.
>The tenets of the Yale Law School of economics are a skepticism of free trade, markets, and large corporations and the belief that the decline in manufacturing jobs was a policy error that needs to be remedied rather than the result of an evolving economy.
Is Yale Law School the enemy of neoliberalism?
G3OL3X on
A very interesting parallel is what happened in France in the 1870’s.
France had historically been a pioneer of Liberal theory and Economic studies since the days of Quesnay, but it had always been done by people without formal training, philosophers, journalists, ministers, … people who were genuinely curious about the way Economics worked and thought about it, learning from each other, reading other economists from around the world, …
In 1877, there was a massive education reform undertaken by the newly created IIIrd Republic, some of it was good, some of it was merely a pretext to purge anyone that disagreed with Republicanism and Left Radicalism, and start an indoctrination campaign to reshape the countryside to mirror Paris culturally, linguistically and politically.
In the Napoleonic Education system Universities were consolidated into 3 faculties:
Under those new reforms a chair of Economics was created as an offshoot of the Law Faculties. As a result, they needed teachers trained in a subject matter that hadn’t been taught until then. France had many world-class economist at the time, but they were seen by the Government as potentially hostile to their centralizing and controlling schemes, so they were not granted a honorary degree to be able to teach.
This meant that the only people that could become Economics professors were Law graduates that had never studied Math or Economics in their entire life, nor read any of the global literature on the subject.
But worse, they took with them into economics, the very intuitions that they had when practicing law, foremost among them “If there is a problem, it must be because we’re missing a law which must be passed to fix it”.
This resulted in an entire generation of economics teachings, completely divorced from the finding of previous economists and not up-to-date with the latest advances from foreign peers. This new generation of teachers advocated state interventionism to solve any and all problems, applied legal positivism to market issues, dismissed econometrics, … and basically stalled economics progress in France for half-a-century.
I find it very interesting that as Law graduates move into Economics, we see the same pattern repeat, we see them falling for the same fallacies, indulging in the same tendencies, following the same intuitions, … because they think about rules of economics, not as mathematical *rules* that expose some underlying universal truths, but as mere economics *laws*, that can be changed by a vote.
Petulant-bro on
Meh article, primarily because many advocates for industrial policy, concerns about trade imbalance, changing patterns of world trade and deficits, etc don’t per se come from Yale law graduates or whatever. The first comment of the substack outlines is well.
>I don’t think Dani Rodrick, Michael Pettis, Keynes, etc. are cranks. What I never hear from people in your camp is any acknowledgment that other countries industrial policies create a de facto US industrial policy. That was fine when the US was 50% of world GDP but with players the size of China (along with Japan, SK, Germany, etc.) conducting mass-scale industrial policies, the “free market” isn’t operating anymore. Of course the imbalances they are creating will eventually cost them in a big way but in the long run we’re all dead and the costs of those policies are born by people outside of elite areas and are massive. I’d love to see you engage in the ideas more. How can you operate as a free market when more than 50% of global GDP is produced by people conducting beggar thy neighbor policies?
Golda_M on
I agree that the majority of “opposition to neoliberalism” is cranks. That said… I think some of the cracks are cracks are in reality, not just mentality. Here’s a random selection
1. Worldwide debt/GDP ratios, their consequences and/or lack therof
2. Concepts like “*theory of the firm*” and “*capital allocation*” become very abstract when applied to modern tech firms.
3. The difficulties faced by many post-communist countries
4. The success of “picking winners” in advanced asian economies.
5. The non-liberalisation of china politically… despite the success of market liberalism. Increasingly radical breaks from “free market norms.” Still early to judge some of these, but there’s an expectation/fear of counterexamples to “neoliberalism” eventually emerging.
Also, trade agreements sort of became the main way of sneaking in industrial policy
Say what you want about Milton… but he actively addressed cracks formed between theory and reality. That hasn’t happened, in a big way, for 40+ years.
4 Comments
>It is remarkable that there is an emerging Yale Law School view of economics that has become extremely influential on both the left and right. Our economic policymakers are increasingly Yale Law grads rather than business leaders or economists. On the Biden/Harris team: Jake Sullivan, Jennifer Harris, Mike Pyle, and Lisa Kahn. On the right, the big proponent is JD Vance.
>The tenets of the Yale Law School of economics are a skepticism of free trade, markets, and large corporations and the belief that the decline in manufacturing jobs was a policy error that needs to be remedied rather than the result of an evolving economy.
Is Yale Law School the enemy of neoliberalism?
A very interesting parallel is what happened in France in the 1870’s.
France had historically been a pioneer of Liberal theory and Economic studies since the days of Quesnay, but it had always been done by people without formal training, philosophers, journalists, ministers, … people who were genuinely curious about the way Economics worked and thought about it, learning from each other, reading other economists from around the world, …
In 1877, there was a massive education reform undertaken by the newly created IIIrd Republic, some of it was good, some of it was merely a pretext to purge anyone that disagreed with Republicanism and Left Radicalism, and start an indoctrination campaign to reshape the countryside to mirror Paris culturally, linguistically and politically.
In the Napoleonic Education system Universities were consolidated into 3 faculties:
* Letters (History, Geography, Languages, Law, …)
* Sciences (Mathematics, Physics, Chemistry, Medicine, …)
* Theology
Under those new reforms a chair of Economics was created as an offshoot of the Law Faculties. As a result, they needed teachers trained in a subject matter that hadn’t been taught until then. France had many world-class economist at the time, but they were seen by the Government as potentially hostile to their centralizing and controlling schemes, so they were not granted a honorary degree to be able to teach.
This meant that the only people that could become Economics professors were Law graduates that had never studied Math or Economics in their entire life, nor read any of the global literature on the subject.
But worse, they took with them into economics, the very intuitions that they had when practicing law, foremost among them “If there is a problem, it must be because we’re missing a law which must be passed to fix it”.
This resulted in an entire generation of economics teachings, completely divorced from the finding of previous economists and not up-to-date with the latest advances from foreign peers. This new generation of teachers advocated state interventionism to solve any and all problems, applied legal positivism to market issues, dismissed econometrics, … and basically stalled economics progress in France for half-a-century.
I find it very interesting that as Law graduates move into Economics, we see the same pattern repeat, we see them falling for the same fallacies, indulging in the same tendencies, following the same intuitions, … because they think about rules of economics, not as mathematical *rules* that expose some underlying universal truths, but as mere economics *laws*, that can be changed by a vote.
Meh article, primarily because many advocates for industrial policy, concerns about trade imbalance, changing patterns of world trade and deficits, etc don’t per se come from Yale law graduates or whatever. The first comment of the substack outlines is well.
>I don’t think Dani Rodrick, Michael Pettis, Keynes, etc. are cranks. What I never hear from people in your camp is any acknowledgment that other countries industrial policies create a de facto US industrial policy. That was fine when the US was 50% of world GDP but with players the size of China (along with Japan, SK, Germany, etc.) conducting mass-scale industrial policies, the “free market” isn’t operating anymore. Of course the imbalances they are creating will eventually cost them in a big way but in the long run we’re all dead and the costs of those policies are born by people outside of elite areas and are massive. I’d love to see you engage in the ideas more. How can you operate as a free market when more than 50% of global GDP is produced by people conducting beggar thy neighbor policies?
I agree that the majority of “opposition to neoliberalism” is cranks. That said… I think some of the cracks are cracks are in reality, not just mentality. Here’s a random selection
1. Worldwide debt/GDP ratios, their consequences and/or lack therof
2. Concepts like “*theory of the firm*” and “*capital allocation*” become very abstract when applied to modern tech firms.
3. The difficulties faced by many post-communist countries
4. The success of “picking winners” in advanced asian economies.
5. The non-liberalisation of china politically… despite the success of market liberalism. Increasingly radical breaks from “free market norms.” Still early to judge some of these, but there’s an expectation/fear of counterexamples to “neoliberalism” eventually emerging.
Also, trade agreements sort of became the main way of sneaking in industrial policy
Say what you want about Milton… but he actively addressed cracks formed between theory and reality. That hasn’t happened, in a big way, for 40+ years.