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01/28/2008

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The Ecology Narrative

My guess is that many of the people who read TAS also regularly read the David Brooks column in the New York Times. In Friday’s column, he names potential explanations for instability in the financial markets as the “Ecology Narrative” and the “Greed Narrative”. He cites me as a proponent of the Ecology Narrative. This is correct, except for the fact that I’m a pretty workaday writer and David Brooks is an exceptional writer, so that I’ve never conceptualized these ideas as broadly as he has, presented them as well, nor come up with a great name for them like Ecology Narrative.

He obliquely references ideas that I presented in a couple of articles that I wrote for National Review last year that touch on the capital markets regulation and executive compensation elements of the Ecology Narrative. I’ve linked to them here for anyone interested in more detail (likely, I recognize, to be a pretty short list of people).

An outstanding column, and also an excellent pair of articles. This passage:

If the U.S. of that time wanted to escape economic stagnation, the corporation of that time had to go. As I started my business career in the mid-1980s I had a ringside seat for the titanic struggle to reform American business. While an economy is constantly evolving, there was an economic Twenty Years’ War that began in roughly 1980; by 2000 it was largely complete, and we now live in the new economy that it created. This wasn’t a pretty struggle. It was trench warfare to force corporations to be more aggressive, entrepreneurial, and risk-taking, and it was fought out one company at a time. Change was fiercely resisted by incumbent managers, who often draped their resistance in appeals to tradition, corporate loyalty, or the public interest.

Is part of why I find the Krugman take on the Reagan years so frustrating, and perhaps willfully obtuse. The War you describe yielded that productivity boom Krugman celebrates, and it began with deregulation under Carter. But the idea that Reagan-era deregulation deserves none of the credit strikes me, at least, as absurd. To paraphrase, Krugman says “I don’t know what this dynamism is, but if it’s productivity growth it clearly only began with a Democratic administration,” as though productivity booms were spigots to be turned on and off rather than products of the kind of grinding wars — involving entrenched management, regulatory agencies, etc. — you describe.

— Reihan · Jan 28, 04:58 AM · #

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