At least five interesting things for the middle of your week (#7)

The decline of New Socialism, Europe's economic struggles, progressive power, manufacturing vs. finance, and a Japanese fertility experiment

Photo by Peter Geo on Unsplash

The second episode of my new podcast Econ 102, with Erik Torenberg, is out! In this episode, we talk about the libertarian movement — why it fragmented, where it goes next, and why some libertarian ideas can help America do industrial policy. Here’s a Spotify link?

Here’s Apple, and here’s YouTube if you prefer to see my talking head.

Anyway, on to this week’s roundup of interesting stuff! Remember, if you’re a paid subscriber and you’d like me to add something to next week’s roundup, leave it in the comments.

1. The new socialist movement staggers to some sort of…something

In 2012 I joked that socialists in America were effectively invisible. By 2019, “abolish billionaires” had become a mainstream policy position. By 2021, people knew what a tankie was. The fall of communism had driven the socialist movement underground for a while, but in the late 2010s, buoyed by the Bernie Sanders campaign and by general social unrest, it came roaring back.

I never hopped on that bandwagon. I think the socialist movement of the 20th century did a lot of good for the world (and obviously ran off the rails in some places), but the 21st century version always seemed transparently ridiculous to me. The new socialists couldn’t seem to decide whether they wanted a fantasy of centrally planned abundance or a fantasy of degrowth; all that seemed certain was that they were dealing in fantasy. Everybody in the movement seemed to think Hugo Chavez was great, even after he and his cronies created one of the worst peacetime economic disasters the world has ever seen. Bernie’s economic program seemed like it was designed to be unworkable, a deliberately ephemeral fantasy crafted to ensnare the passions of a downwardly mobile educated Millennial “precariat”. The whole thing seemed completely silly.

In the early 2020s, the new socialist movement started to flounder. The Bernie campaign flopped hard in 2020, and the few “socialists” in Congress started to look like garden-variety progressives who were slightly less favorable toward Israel. Leftist figures like Noam Chomsky came down on the wrong side of the Ukraine war, and started to look like tankie sympathizers. Inflation stymied the dreams of the macroleftists who wanted unrestrained deficit spending. Everyone started to get frustrated with the Left-NIMBYs who would come up with any excuse to avoid building housing. A few of the Bernie people started flirting with the Right. Slowly, young people started to walk away from the movement.

This week’s discourse drove this home to a lot of people. Malcolm Harris went on a bizarre Twitter rant about how under socialism, we would not eat bananas:

A ton of people rightfully made fun of this, but a surprising number of socialists jumped out of the woodwork to defend the idea that banana consumption is unacceptable. Things got sillier and sillier, with one prominent banana opponent declaring that having fewer “treats” would make Americans appreciate life more, before revealing that she had a cocaine habit. Others mused that degrowth would enrich our lives by allowing us to take months of leisure time (not really thinking about who would pay for this vacation). If you want to read a more complete writeup of what happened, Eric Levitz has a good one.

All in all, this contretemps was a great deal of fun, because it made it very clear to a lot of people what many of us had realized for a very long time: the new socialist movement is a fundamentally silly thing. The idea that narcissistic shitposters should decide which commodities Americans are allowed to consume — and that this would somehow make life better for the developing-country agricultural workers who produce bananas as their means of livelihood — is so laughable on its face that it should force even those progressives who were deeply sympathetic to the Bernie campaign to reevaluate the idea that the new socialist movement represents anything remotely resembling a live political program.

There is a “steelman” case for the new socialist movement, which is that the idea of a “Green New Deal” might have focused the Biden administration on green industrial policy. The original GND was ridiculous in its particulars and was obviously just a way to backdoor a laundry list of new-socialist policy ideas, but the Inflation Reduction Act that it inspired is a serious and meaningful attempt to push the U.S. into the new energy era. Perhaps this would have happened without the Bernie people, or perhaps they came along at exactly the right time to nudge the Democrats into thinking that green industrial policy was what all the kids really cared about. It’s possible, anyway.

Overall, though, the new socialist movement seems to be staggering, if not to an end, than at least to some sort of well-deserved diminution.

2. South Europe is struggling; North Europe is OK

I’m generally not a big fan of Europe-vs.-America discourse. In general, all developed countries are about equally nice places to live; Americans enjoy higher material consumption than North Europeans, while North Europeans enjoy lower crime, longer lifespans, and more leisure. Both places have important things to learn from each other, and the frequent sniping that goes on about whose economic model is better could be more productively channeled into seeking out and adopting best practices in specific domains.

But over time it is possible for some countries or regions to fall behind so comprehensively that they no longer really fit into the top tier of developed countries. That’s why when I first saw this graph, it worried me greatly:

Source: WSJ

Europe has certainly endured three big shocks in the last 15 years — the euro crisis of the early 2010s, Covid, and then the cutoff of Russian natural gas. Quite apart from any consideration of Europe’s social model or industrial policy, it’s reasonable to worry that these shocks proved too much to endure.

But thinking about this chart a bit, I’m less concerned than at first glance. 2008-2019 is a much longer period than 2019-2022, and the latter involves a lot of short-term disruptions. When we look at 2008-2019, we see that Germany and France saw very substantial wage gains — on par with the U.S. — while the UK saw modest gains. The last three years don’t concern me as much.

Let’s look at somewhat clearer chart: the difference in per capita GDP growth since 2008:

Source: OWID

You do see a bit of divergence here between the top performers — the U.S., Sweden, and Germany — and the middle tier of the UK, Switzerland, France and the Netherlands. But the cumulative difference between these groups is not that large, and about half of it just looks like Covid.

(And no, the difference between median and average is not going to be a big deal here, since inequality would have to change by vast amounts in a very short space of time in order for median and mean to tell substantively different stories.)

But when we look at the graph — or at the WSJ’s chart above — we notice that the South European countries have done much worse than anyone else. Spain, Italy, and especially Greece have not yet recovered from the financial crisis, and Italy and Greece hadn’t recovered even before Covid. Greece is more than 20% poorer than it was a decade and a half ago. That’s economic development in reverse.

My general conclusion is that we need to focus less attention on what Germany or France is doing wrong relative to the United States, and focus more attention on what South Europe is doing wrong relative to North Europe. Expect some posts about that in the near future.

3. Progressives can’t build power if they don’t build success

Ezra Klein, one of the champions of supply-side progressivism, has taken some heat for urging progressives to prioritize material abundance over special interest groups. On the right, conservatives like Reihan Salam have argued that progressivism is simply a gaggle of special interests looking for their own slice of the pie, so the changes Ezra wants can never happen. On the left, progressives like David Dayen maintain that increasing the power of Democratic-aligned interest groups should be a major goal in and of itself.