Yearly Archives: 2014

Multiculturalism and the new migrant

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Canada has not only become jaded with the effect of migration on Canadian society but has begun to take steps to limit numbers. This is a column by George Jonas the National Post with the self-explanatory title, Multiculturalism encourages a new type of immigrant who shares our wealth but not our values.

The new immigrant seemed ready to share the West’s wealth but not its values. In many ways he resembled an invader more than a settler or an asylum-seeker. Instead of making efforts to assimilate, the invader demanded changes in the host country’s culture. He called on society to accommodate his linguistic or religious requirements. . . .

It’s not a matter of where immigrants come from but where they’re going. Refugees from the East are no threat; colonizers are. That’s where non-traditional immigration and multiculturalism become a volatile mix. Extending our values to others is one thing, but modifying our values to suit the values of others is something else.

By now multiculturalism has made it difficult to safeguard our traditions and ideals against a new type of immigrant whose goal is not to fit in, but to carve out a niche for his own tribe, language, customs, or religion in what we’re no longer supposed to view as a country but something between Grand Central Station and an empty space.

It’s no longer impossible to imagine the death of the West since we see the potential before our eyes at every turn. It’s not too late to do something, but time is getting very short. Diversity is a concept of the left – themselves frequent enemies of our existing cultural traditions and economic structures – part of whose aim is to swamp own culture of tolerance and self-reliance with migrants who often do not believe in either.

Say’s Law and the business cycle at SHOE

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My likely final posting on this fascinating thread that began with my bring up Francois Hollande’s pointed comment on Say’s Law. The interesting thing for me to have seen in this instance is that others study the business cycle and find Say’s Law invisible. I began from examining Say’s Law and found its concepts an intrinsic part of the theory of the cycle.

Between Daniele Besomi and Barkley Rosser, I am beginning to get some idea why it is so hard for me to get my papers published.

But they are not the only ones who have published books on the classical theory of the cycle. I have my own as well, Free Market Economics: an Introduction for the General Reader (Elgar 2011). It’s an unusual title, perhaps, but I adopted it from Henry Clay’s Economics: an Introduction for the General Reader published in 1916, and after many reprints, with a second edition in 1942. My book is a cross between Clay, John Stuart Mill and a number of more modern features economic theory has picked up over the past century or so. I also teach Keynes, but those sections come with a skull and cross bones just so my students are warned about the dangers this kind of stuff can cause.

In this book I have a chapter on the classical theory of the cycle which is largely adopted from Haberler (1937) and then three more chapters explaining in more detail the nature of economic management using classical theory. But because I think of Say’s Law as the very core in understanding the cycle, what you see is the result of an enormous amount of additional reading on everything I could get my hands on about the pre-Keynesian theory of the cycle. In the days when I was starting my work on Say’s Law, I would tell people that I was working on classical business cycle theory because, as you know and can see from this thread, putting in a good word for Say’s Law is not apt to get you published or promoted. But I can do no other.

So let us suppose you were interested in the classical theory of the cycle, who do you think would get you closer? Someone who accepts Say’s Law, agrees with Mill on his fourth proposition on capital, thinks Keynes was right when he stated that he had introduced aggregate demand into mainstream economics where it had never been before, and uses classical reasoning to argue, at the very moment the stimulus packages were introduced, that they would lead to exactly the kind of economic stagnation we find today.

Would you trust that person, or would you trust someone who thinks you can boil most of what the classical economists had said down to deficient aggregate demand, even when Ricardo has explicitly stated that demand deficiency is not a valid explanation for recession, while Keynes had argued that what he was doing was overturning Ricardian economics and bringing demand deficiency into economic theory.

You can disagree with the classical theory of the cycle and why not, millions already do even though they have no idea what it is. But to argue that you have understood classical theory when you don’t agree with a word of it makes me have to ask why you are so sure you have it right? Some of the smartest people who ever lived were classical economists. Are you really going to set John Stuart Mill straight, or W.S. Jevons, or David Ricardo or Alfred Marshall? What will you add to their sum total of insight? That following a downturn business people become more tentative and hang onto their funds for a longer time before committing them to some project? That demand deficiency actually does cause recession? That wasteful public spending will increase employment and generate faster growth?

Does it really make any sense to believe that the Global Financial Crisis was caused by an almost overnight decision of people around the world to stop spending and start saving. What possible insight do you get by saying there was a shift to the left of an aggregate demand curve? Or that what we must now do is shift the AD curve to the right?

The GFC was a classical recession which is described almost down to its last gory details by Walter Bagehot in Lombard Street who had seen many just like it. Money and resources had been poured into the housing construction industry in the US and houses bought by people who could not make their payments. Events flowed on from there, including a financial crisis. Since demand is constituted by value adding supply, the fact that people could not afford what had been supplied, meant that resources had been misdirected. The recession was just a necessary correction with the prior lending practices the eventual disaster in waiting.

I will merely state that if you cannot incorporate the classical understanding of Say’s Law into what you write, you will have a problem understanding how classical economists analysed recessions. If you are going to reproduce the classical theory of recession, then you must begin with these words: “Recessions are, of course, never ever caused by too little demand and excessive levels of saving, but in spite of that recessions are a frequent occurrence because . . . .”

Let’s go to the policy level as well. Your explanation of recession must also help you to complete a sentence that begins with these words: “Even though the most evident signs of recession are warehouses filled with unsold goods and extremely high levels of unemployment, we cannot get out of recession by increasing public spending because . . . .”

Although we are mostly academics on this thread, this is not some academic exercise. There is an awful lot riding on this. The Japanese had their lost decade (times two) following their stimulus in the early 1990s. We are ourselves already half way into our own lost decade and there is nothing to suggest it might not go another half decade, or even stop then.

If you want to understand how I think about recessions and what needs to be done, you can read my text, or you can read Henry Clay. The one advantage you get from reading mine is that I have actually experienced Keynesian economic theory and have been taught this classical fallacy as the best economic theory we have today. I have seen the enemy, and it is us.

Say’s Law on the HES website continues

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This is a continuation of my posting on the Societies for the History of Economics (SHOE) website. It follows from this and this. And note very carefully that Keynes might have read Ricardo’s letter to Malthus.

I certainly appreciate the replies to my previous postings by Daniele Besomi and Barkley Rosser.

Let me begin with a news item reporting on my testimony to the Australian Senate Economic References Committee. They were reviewing the effects of the stimulus and had invited me because of my views on Keynesian theory and policy. This is from the Sydney Morning Herald of 21 September 2009.

“Labor senator Doug Cameron said Prof Kates’ comments had certainly embedded in his mind that you should never let an ‘academic economist run the economy’.

“‘Why have the IMF, the OECD, the ILO, the treasuries of every advanced economy, the Treasury in Australia, the business economists around the world, why have they got it so wrong and yet you in your ivory tower at RMIT have got it so right?’”

I can now more clearly see Senator Cameron’s point about academic economists, but I draw you attention to the second of his statements.

Since J.-B. Say had put together what is in English called the law of markets, it does not surprise me that the phrase “Say’s Law” may have turned up on various stray occasions. But as someone who had been curious about the origins of this term, which is used by none of the major classical economists, it did finally dawn on me that it had come from Fred Taylor, not least because he specifically states that he is inventing the term. He used the phrase in his 1909 article on teaching economics; it is in his 1911 and six subsequent student editions of his for-students-only principles text distributed at the University of Michigan and buried in a chapter he titles, “Certain Fundamental Principles of Trade”. But by the time his text is released commercially in 1921, Say’s Law is a chapter on its own, titled “Say’s Law” in big letters, and in that chapter Taylor specifically says he is giving a name to what he describes as a yet unnamed principle. That someone used the term in 1920 is not a surprise but the phrase Say’s Law does not enter into economic discourse in a big way until after that. If it pleases you to think that Keynes took the name because of one of these stray mentions picked up by Daniele, be my guest as long as you accept that he took it from somewhere else. It just seems reasonable to me that Keynes used the term because it expressed exactly the point he was trying to make. Whether he was reading Taylor directly, or someone else who had read Taylor who had used the term, we cannot know. But that he was reading the mostly American literature on Say’s Law is as near certain as any such thing can be. And the only reason anyone resists this common sense, indeed obvious point, is that it is damaging to Keynes’s reputation since it suggests that his letter to Harrod, about how he had on his own by himself thought up one idea and then another, is not what actually happened at all.

And perhaps it is Daniel who has not understood my point. His point, he writes, is that “Say’s law was not ACCEPTED throughout the 19th century by writers trying to explain crises” (his emphasis). I don’t think that’s right. If you go the Haberler’s 1937 Prosperity and Depression, which is a compendium of all of the theories of recession that were then in existence, virtually all of the theories presented are about structural dislocations. In what was probably the most common theory of recession of the time, people had used their savings all right – hoarding was not the problem – but had produced non-saleable output leading to recession, with the reason for such dislocation often but by no means always related to financial mayhem of one sort or another. To the extent that classical economists had a view about saving as a cause of recession, it was that recessions might occur because the level of saving had been insufficient to complete all of the projects that had been commenced following the previous trough. There wasn’t too much saving, there was too little. Read Haberler discussing Hobson and under-consumption if you are looking for a dismissive view of oversaving as a theory of recession.

What Say’s Law said to economists was this: when trying to explain the causes of recession, “there is no deficiency of demand” (and that is a quote from Ricardo), so you should therefore look somewhere else. I will, for a change, let Keynes be my authority.

“Malthus, indeed, had vehemently opposed Ricardo’s doctrine that it was impossible for effective demand to be deficient; but vainly. . . . The great puzzle of Effective Demand with which Malthus had wrestled vanished from economic literature.” (GT: 32)

It may seem a negative conclusion but it is a crucial one. There is no such thing as a general glut. Overproduction never occurs. Demand deficiency does not cause recessions. And so far as policy is concerned, increases in non-value-adding public spending cannot lead to a recovery but will, instead, make them worse. That is what I was trying to say to our Senate. Five years later, who has the runs on the board? Is it the IMF, the OECD, the ILO, the treasuries of every advanced economy, the Treasury in Australia, the business economists around the world, or is it our classical predecessors? Is it Keynes or Mill?

So to come back to my original post. There may well be something to what classical economists had been saying, which is the point Francois Hollande has very bravely made. And it is brave since he will be opposed by his political enemies, by his political friends and by economists who refuse to think that just maybe perhaps Keynes was wrong.

Let me finish with a quote from another politician, the former Labour Prime Minister of the UK, James Callahagn, speaking to the Labour Party Conference in 1976 during the Great Inflation, which was also a period of persistently high unemployment:

“We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.”

It’s not as if our economies, as a result of these high levels of public spending in the period after the GFC, returned to rapid rates of economic growth and low rates of unemployment. We have seen the effects of the stimulus and they are dismal. Hollande, who is a first rate economist, went into government as a Keynesian but a Keynesian he no longer is. Why anyone else still is remains the central question in economic theory today.

Say’s Law – some basic distinctions

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A few days ago I put a post onto the SHOE website on Say’s Law for which there was one reply from Daniel Besomi. My reply should make clear what he had written:

I appreciate Daniel Besomi’s comments, which I hope will help us clarify these issues. I might also mention that most of what I summarise here, as in the previous post, was discussed in my Say’s Law and the Keynesian Revolution: How Macroeconomic Theory Lost its Way (Elgar 1998).

The first point I am trying to make begins here. There are two fundamental economic questions:

1) what is the basis for demand?

2) what causes recessions, or perhaps more accurately in this case, what does not cause recessions?

What Say, and Robinet, were explaining was the origins of demand, which they argue is based on previous sales. Demand is constituted by supply. What they wrote is an answer to the first question, but it is not an answer to the second.

The second question may be rephrased in this way: can there be such a thing as a general glut? This is a completely different question from the first, and the answer, as a consequence of the general glut debate, was that no, there is no such thing as a general glut, demand deficiency does not cause recessions. James Mill’s answer to this question was, in part, premised on Say’s answer to the first but were not an answer to the first. They are separate but related issues. Mill used Say’s discussion on the basis for demand to explain why a general glut was impossible.

It is because James Mill was the first, so far as I know, to answer the second question that I see him to have been the first to frame the classical statement on what is now called Say’s Law. The General Theory is about whether demand deficiency, a general glut, is possible. And when one finally accepts the classical answer to question 2, as FH may have done, then, but only then, the economic issues revolve around 1, which is what kind of supply will actually create demand.

And then, in answering that question, we can ask ourselves whether the Keynesian notion that spending on anything at all will do the trick is a correct answer. To a classical economist, it need hardly be said, the idea that anyone would think non-value-adding production could create growth and employment is too ridiculous even to contemplate. Only a modern economist might think so, but to anyone from the classical tradition, the idea is still ridiculous.

Daniel also points out that Fred Taylor had used the phrase “Say’s Law” earlier than 1921. This is true, but 1921 nevertheless remains the significant date, which is why I chose my words very carefully. What I wrote was this:

The first thing that might be noted is that the term ‘Say’s Law’ is not classical in origin but was consciously invented by Fred Manville Taylor and introduced into general economic discourse with the publication of his Principles of Economics text in 1921.

If you go to my Say’s Law text (pp 148-149 and especially the footnote), you will find that I discuss Taylor’s invention of the term, including his first use in 1909 in an obscure article on how to teach economics. He then brings Say’s Law into his introductory text, but the first seven editions were student editions distributed only within the University of Michigan. It is only following the publication of the eighth edition as a general text with commercial distribution that the term enters general economic discourse. It is the publication of the book for sale outside the U of M campus that brings the term to a wider public, and it is only after 1921 that it enters into more general discourse.

But it is really neither here nor there whether Taylor invented the term in 1909 or 1921. What is important to understand is that the term was invented in the twentieth century and it was invented by Taylor. What is not in any way affected by the dating is the need recognise that Keynes must, as an absolute certainty, have been reading other things about the various issues that end up in The General Theory that he never mentioned to anyone else. The locked-himself-in-a-room-and-came-up-with-these-ideas-one-by-one version, as he tells the tale himself and is now repeated as gospel, is obviously untrue since Keynes had to have picked up the phrase from somewhere else. If not from Taylor than from someone who had read Taylor.

Then, on the third point raised, if it can be said, as Daniel says, that my stating that everyone accepted Say’s Law through until 1936 was only “approximately true in the English, French and Italian literature”, that’s more than good enough for me. I perfectly well understand that there were some very few and generally obscure dissenters, particularly in English. I even discuss this very weak opposition in my book, with the two (three, I guess) most important dissenters in English having been John Hobson on the one hand and Foster and Catchings on the other. Keynes can himself name only five in his “Brave Army of Heretics” (GT 371), and if you look at the list and choose only his contemporaries, aside from Hobson who is iffy, you are looking at a very dubious list of authorities, namely, Silvio Geselle and Major Douglas. During the period up until 1936, there may hardly have been a theory more universally accepted than Say’s Law.

The Superbowl and Richard Sherman

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The Superbowl is about to start and while I might have preferred Denver on other grounds, this epic rant by Richard Sherman after the NFC championship game has me totally won over. Defensive corners are seldom the stars, but Sherman in the very last minute had gone one-on-one with the star receiver of the 49ers and had tipped the ball away after an acrobatic half twist and pike that ended up with a Seahawk interception. So there he was, being interviewed, moments later.

Might just mention here the best book on North American football ever, The Blind Side, which is about how the least glamorous position in the game, left offensive tackle – which incidentally was the position I used to play – became the second highest paid position on the team. An amazing story in many ways, by the incomparable Michael Lewis.

Enjoy the game for those who enjoy the game.

Bill Ayers authored Obama’s autobiography

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That Barack Obama is not the author of his own autobiography should at least be common knowledge to anyone who comes to this site. I have discussed this myself in a previous post and I will repeat it here since when I mentioned writing Dreams from my Father as part of Bill Ayer’s cv, there seemed to be some dissent. His life story as told by himself was Obama’s only qualification for office so it should be understood that he had and still has absolutely no qualifications for president whatsoever. If you would like to hear it from the person who picked up this fraud, you can go here. What follows below is my own previous post repeated.

Only if you depend on the New York Times for your news would you be unaware that Barack Obama did not write his Dreams From My Father. It was written by Bill Ayers, that “someone in the neighbourhood”, that ex-Weatherman terrorist, who actually knows how to stitch three coherent sentences together on his own. That Dreams was literally the only qualification Obama had for the job of President, it should be clear just how hopelessly off centre the American political system has become. The prime responsibility for this lies with the American media who are more like Bill Ayers in their thoughts than they are like someone of the actual mainstream of American society.

Another book has just been published by one David Maraniss, of The Washington Post of all things, that make it almost certain that Dreams is a concoction of fantasies and lies. The book, Barack Obama: The Story, “documents the many ways — some very small, a few large — in which Mr. Obama’s youthfully constructed narrative appears to be contradicted by the people and events in his life.” It is a scandal that ought to be gigantic but will, like much else about the President, be suppressed. Still, in being by who it is and being as prominent as it is, the book is chipping away at the President’s credibility. And there is more coming out every day, drip by drip.

What did surprise me when the first pre-publication revelation from the book was made about Obama’s Australian girlfriend, was that no one to my knowledge has ever bothered to interview her to ask her for some additional detail. Especially since Obama’s girlfriend in Dreams is anyway a “composite”, it would, you think, have actually been interesting to know some true details about Obama, especially since the fictional account of this composite girlfriend is actually a description of Bill Ayer’s own true love, Diana Oughton, who blew herself up while putting a bomb together back in the 1970s.

We’ve heard your views on Peter Seeger. Now tell me about Joe McCarthy

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I have to say that reading the various comments on the death of one of the greatest folk musicians in history made me very cross. There are enough dimwitted entertainers around if you are looking for an outlet for righteous indignation. Meryl Steep or Sean Penn or our own Caite are standard issue cookie cutter lefties, who no doubt would give you chapter and verse on the excellent health system found in Cuba and who would happily wear a Che t-shirt without thinking twice. Pete Seeger was a man of the left but so far as I know, never ran a gulag, wasn’t head of the KGB or provided state secrets to the Soviet Union. And in its own way, I admire this, which is a statement he made to the House UnAmerican Activities Committee in 1955, not exceptionally brave by then but brave enough. He might well have gone to jail for a year to defend his right to free speech.

I decline to discuss, under compulsion, where I have sung, and who has sung my songs, and who else has sung with me, and the people I have known. I love my country very dearly, and I greatly resent this implication that some of the places that I have sung and some of the people that I have known, and some of my opinions, whether they are religious or philosophical, or I might be a vegetarian, make me any less of an American. I will tell you about my songs, but I am not interested in telling you who wrote them, and I will tell you about my songs, and I am not interested in who listened to them.

Stalin is, however, dead and has been since 1953. Great to see that people are such strong anti-Stalinists more than sixty years after he died but to tell the truth, that cuts little ice. So try this on. What’s your personal opinion of the greatest anti-Communist of the times when Stalin actually was alive and plotting. Tell me your thoughts on Joe McCarthy. Tell me that you think that he was one of the most admirable men who has ever lived, a man who took the immense abuse that eventually killed him but whose accusations have been confirmed with almost 100% accuracy given what has come out of the KGB archive and the Venona Papers. Doesn’t take much to stand against Stalin today.

Luckily our region is so peaceful and there are no threats of any kind anywhere

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Just something to help you sleep peacefully at night, from a post titled, “These Rumors of a Nine-Carrier Navy? Over the Long Term, They Could Be Off by Nine:

News reports indicate the U.S. Navy could eliminate one of its 10 nuclear-powered aircraft carriers starting in 2015. And according to one prominent naval writer, that single cut should be the beginning of a slow process of completely axing the giant ships from the American fleet.

“The nation must plan a graceful transition that stops building carriers, plans a path for those already built to see them through their service life and creates new means of operational effectiveness in the future,” Capt. Henry Hendrix, an historian and strategist, wrote in a 2013 study for the Center for a New American Security think tank.

The main reason is simple: money. Unless budgets increase, carriers somehow get cheaper or the Pentagon makes deep cuts elsewhere, the Navy cannot afford to maintain today’s 10-flattop force—to say nothing of the 11 carriers it’s required by law to have over the long term.

Hence the recent news that the Navy might propose an early retirement for the 22-year-old flattop USS George Washington—subject to the president’s approval and Congress’ appropriation, of course. And whether or not the sailing branch decommissions George Washington, it’s already planning on keeping just two carriers deployed at a time, down from three or four.

[From Small Dead Animals.]

Say’s Law and the law of markets are not the same

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I have belatedly come to realise that Say’s Law is not the law of markets. How weird is that, after all these years. I have put the following up on the SHOE website as a continuation of my previous post L’offre crée même la demande. Hollande, as a result of the bitter experiences in trying to manage the French economy, now has a better grip on our fundamental economic principles than pretty well the whole of the economics profession.

There are a number of facts that are relevant in any discussion of Say’s Law which I thought I might set out. What I find something of a problem is the common assumption that Say’s Law refers to something that was believed during the early parts of the nineteenth century and was of little significance thereafter. No discussion ever seems to get past Malthus, Say and Mill in looking at what was an embedded principle right up until 1936.

The first thing that might be noted is that the term “Say’s Law” is not classical in origin but was consciously invented by Fred Manville Taylor and introduced into general economic discourse with the publication of his Principles of Economics text in 1921. Before Taylor no one called this association of demand with previous supply “Say’s Law”. Taylor introduced the term because he thought economic theory needed to identify one of its most important underlying principles. The ironies of what followed next are too obvious for comment.

This continuous fixation on the early classical economists has had a number of unfortunate consequences. The first is that economists are always returning to Say as if he provided the definitive statement on Say’s Law. He did not. If you want the point of origin, it is in James Mill in his Commerce Defended published in 1807. Here is the passage that matters, although the whole of his discussion is well worth the effort:

“No proposition however in political economy seems to be more certain than this which I am going to announce, how paradoxical soever it may at first sight appear; and if it be true, none undoubtedly can be deemed of more importance. The production of commodities creates, and is the one and universal cause which creates a market for the commodities produced.”

The final sentence should be familiar but is not the actual origins of the specific words used by Keynes.

It is also important to appreciate James Mill’s role since I see his statement not only as exactly right, but he wrote his book in response to an argument in which too much saving and too little demand were seen as the causes of recession. This was the first instance in which an argument that economies are driven by demand was rejected. Mill was saying an economy could not be stimulated from the demand side. That was the point of Say’s Law, and still is.

This nameless principle was universally accepted by the mainstream. But if you would like to find Say’s Law as clearly stated as it is possible to find it in the classical literature, this is David Ricardo writing to Malthus just after the commencement of the General Glut debate in 1820. Malthus said the post-Napoleonic recessions had been caused by too much saving and too little demand. To this, Ricardo replied:

“Men err in their productions, there is no deficiency of demand.”

That’s it. Say’s Law. Recessions are caused by mis-directed production, not deficient demand. This was the foundation for the entire theory of the cycle that would develop over the following century. It is the disappearance of the theory of the cycle that may be the greatest loss economists have experienced because of the General Theory.

There is then this. At the end of the General Glut debate in 1848, John Stuart Mill published his Principles of Political Economy, which included his fourth proposition on capital. This may be the most enigmatic statement ever made by a great economist, but if you want to see the principle behind Say’s Law, whether you agree with it or not, this is what Mill wrote:

“Demand for commodities is not demand for labour.”

Or as we might put it today, an economic stimulus will not create jobs. This is a statement whose reasoning is perfectly clear to me. I teach it to my students and it is in my text and few ever have any trouble with it. Described in 1876 as “the best test of a sound economist”, in my view it still is. It was a conclusion that policy makers accepted right through until the 1930s and perhaps even for a while after. But it was an enduring concept.

So I take you back to Francois Hollande. What he said in French was this:

“Le temps est venu de régler le principal problème de la France : sa production. Oui, je dis bien sa production. Il nous faut produire plus, il nous faut produire mieux. C’est donc sur l’offre qu’il faut agir. Sur l’offre ! Ce n’est pas contradictoire avec la demande. L’offre crée même la demande.”

This is the whole thing in my free translation:

“The time has come to work through the number one problem in France: which is production. Yes, that’s what I said, production. We must produce more, we must produce better. Hence, it is upon supply that we must concentrate. On supply! This is not in opposition to demand. Supply actually creates demand.”

It is true the point Hollande makes takes you back to J.-B. Say, David Ricardo and James and John Stuart Mill, all of whom are, of course, classical. But he also takes you back to Fred Taylor whose book was published only a few years before the General Theory, where he was trying to state what every economist of his own generation knew and accepted. Today, so far as aggregate demand goes, we are all Keynesians now, with some very few exceptions.

And while we’re at it, you might also ask yourself how Taylor’s very much twentieth century phrase ended up in The General Theory. The standard story of the trek from the Treatise to the General Theory has a lot of gaps, even after the hundred million words that have been devoted to explaining what the General Theory means and how it came to be written.

What about cabinet solidarity?

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Well there’s ABC independence and then there’s cabinet solidarity. From The Age:

Communications Minister Malcolm Turnbull has strongly defended the ABC’s editorial independence in the face of Prime Minister Tony Abbott’s attack on the national broadcaster, which he says ‘instinctively takes everyone’s side but Australia’s’.

Mr Turnbull defended the Prime Minister’s right to critique the ABC but, in comments that could be interpreted as resistance to Mr Abbott, he said the ABC was rightly accountable to its board of directors, not politicians.

Do I get this right? The Government sets up a media organisation that has been captured by its ultra-left staff and staffing policies and that’s the end of it. This is not Fairfax or News Media whose life and death is dependent on earning an income in the market. This is a government-paid-for media organisation over which the government apparently has no control. Is that the point? Is that what he means? Doesn’t work for me. This works for me, from The Australian:

THE ABC’s $223 million Australia Network Asian broadcasting service is likely to be scrapped in the May budget to save money and end the pursuit of “soft diplomacy” in the region through television.

Federal cabinet has already discussed the option of dropping the ABC’s contract to broadcast Australian news and entertainment in the region, with the Government Solicitor providing advice on the ramifications of stripping the ABC of its 10-year contract.

Cabinet ministers believe the ABC’s coverage of Australia in the region is overly negative and fails to promote the nation as originally intended in the Australia Network’s charter by using the “soft diplomacy” of Australian news and cultural programs.

The ABC is unresponsive to what its market wants, more than half of whom voted for this government which the ABC is viscerally opposed to. No one says that the ABC has to be a government news service but it is also not supposed to outrage more than half the country with its approach to political issues.