Nick Hanauer's piece in Politico generated a great deal of talk around IDEAeconomics this week. "Here is a guy who gets it, and he's right there in Seattle!"
The Politico piece and others, for example at Democracy, show that, yes, he does get it. And here is a person who could really make a difference. Economics is broken. He has put his finger directly on it. IDEA is dedicated to the reform of economics. We have one of the great economists in the world leading the effort -- Steve Keen.
Economics is broken along the lines he describes. An ecosystem is treated as a machine. The measurements do not reflect the realities. The institutions are corrupted. Academic economics is like Ptolemaic astronomy, and reformers get the same treatment Galileo got. Public policy has settled on austerity on the fiscal side and an ever-easier credit on the monetary side. Both are convicted by the failure of outcomes.
That is the What. There is also the Where. His piece mentions pitchforks. A real economic reform occurs in the minds of people. While IDEA has the dynamics, the realistic analysis of money, and the necessary focus on debt, it is all an intellectual nicety unless it occurs in the minds of more than a few. When the day-to-day strains get too much, people will not be looking on the shelf in a think tank, they will be looking to their neighbors and colleagues and the local political leaders and the guy on the radio.
Thought leaders are essential. A person like Nick Hanauer, who can see past narrow self-interest to an enlightened self-interest and a longer view is a traitor to his class. (I have heard that they are already out with their own pitchforks, the "Give us no taxes, and make sure our money is cheap, because we are the jobs producers." Sorry. You have low taxes, you have five years of easy credit, and we don't see the prosperity, or the prospect. Your only confirmation is that you personally are richer.) But that courage and vision is exactly what the broader society needs. Things are already falling apart, in Greece and Spain, in the generation now turning thirty, in the middle class. The tipping point for the environment is all too near.
IDEA has the technical and theoretical substance to complete Hanauer's work. The dynamics being pioneered by Steve Keen is convincing and applicable to complex adaptive systems, ecosystems. The measurements we use are not GDP. Money and credit are treated as they operate in the real world. the pathology of Austerity is exposed.
Provoking change comes not only from promising prosperity and stability, but from puncturing the orthodox stay-the-course regimes which promise the same "just around the corner." Dynamics is sound math, as opposed to the bad math which is so much the pride of academics. Endogenous money is real money, as opposed to the fantasy of the money multiplier that fascinates the Fed. Real measures of growth and stability are needed, as Hanauer says, not GDP, which is a measure of monetized activity, not any kind of accounting for what actually goes on. Debt and the burdens and uses of debt create economic decline and financial fragility. These are in the core of IDEA's work
Our constituencies break into four: the well-educated professional from other disciplines (often environmentalists) who realize something is wrong and it is the economics, those who are already suffering (as in Greece), many in the finance profession who are close enough to see contradictions and the young -- who have the most to lose.
When you see somebody step up with courage and eloquence and without the prospect of personal gain, you have to applaud and encourage and hope that he will continue. You also have to hope you can collaborate with and partner with such a person.
PS: If you think this is a good idea, tweet or like or whatever @NickHanauer