In the end, everything comes down to supply and demand, right? That's why the minimum wage shouldn't be increased, or even exist at all. That's why the solution to America's ongoing healthcare calamity is not more insurance, but less. It's why income inequality and stratospheric CEO pay are inevitabilities.

Or, maybe not.

In his latest book, Economism: Bad Economics and the Rise of Inequality, former technology executive and current University of Connecticut business law professor James Kwak argues that the lessons of Economics 101 have transcended their role as a useful framework to begin understanding economics, and instead have become something close to an ideology.

Kwak asserts that "Economism" has contributed to the massive rise in inequality by justifying a winner-take-all economy as something close to a natural law. Where economic elites in previous centuries may have used social Darwinism and even religion to explain away economic inequality, from the 1950s on economic elites have intentionally and strategically spread the gospel of Economics 101 throughout American political and popular culture in a similar way.

Economism isn't just restricted to one political party (though Paul Ryan seems to be a particular fan of using Econ 101 ideas as a basis for policy). Kwak notes that Obamacare is a market-oriented approach to universal healthcare, and is ideologically far more conservative than Bill Clinton's 1993 attempt at healthcare reform.

So, if an idea can reshape the dialogue of America's two political parties, there must be something to it, right?

As an idea, Economism has been remarkably effective. Econ 101--even for people who've never attended an economics class--has become a fundamental part of our vocabulary. Economism has also become the basis for much of our political dialogue, and any deviation from basic 101 principles is considered radical or fringe, two words often used to describe Bernie Sanders--whose popularity illustrates a growing skepticism about the world according to Econ 101.

While Economism has succeeded as an idea--the same way the virus in a disaster movie "succeeds" during the inevitable scene where the generals and the CDC show the entire map being overwhelmed by one color--its success in creating a world of shared prosperity is debatable, at best.

And that's Kwak's point.

Since the 1970s the share of wealth captured by the top 1% of Americans has grown dramatically.

But, when we talk about America becoming great again--defined, in a vague way, by a greater degree of upward mobility--what decade most often gets referenced?

The 1950s.

And the 1950s saw the top 1% capturing a historically small amount of national wealth. Not coincidentally, Kwak's book shows that the '50s were the beginning of a strategic and well-funded effort by large corporations, think tanks, intellectuals, and politicians to spread the gospel of Economism, which in some cases involved developing curriculum for adults, children, and even judges to learn the supposedly immutable laws of Econ 101.

Of course, the study of economics has value. And for an economist, Econ 101 is just the beginning. But unfortunately, as Kwak shows, for politicians, policymakers, and a decent percentage of the public, Econ 101 is the beginning and the end of any debate.

It may also be no coincidence that as Economism has spread, support for democracy has declined. If the majority of people fall further and further behind--while others in society become unbelievably rich--the notion that the most important value in a country is its citizens having the ability to select their leaders will lose sway.

In other words, it's easy to see how a perspective could develop where voting is a low-priority luxury in a society built on economic ideas that make giving birth a good way to go bankrupt.

That creates a dangerous world for everyone, including the 1%, and that's ultimately why we need to take James Kwak's arguments on Economism seriously.

Published on: May 12, 2017
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