Scott Sumner on Growth and Economic Policy

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4.7 • 4.3K Ratings

🗓️ 21 June 2010

⏱️ 70 minutes

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Summary

Scott Sumner of Bentley University and the blog, The Money Illusion, talks with EconTalk host Russ Roberts about the last 30 years of economic policy and macroeconomic success and failure. Sumner argues that there was a neoliberalism revolution beginning in the 1980s around the world, an era of deregulation, privatization and falling marginal tax rates. Sumner argues that the states that liberalized the most had the most successful economic results. Roberts argues that it is difficult to assess the independent effect of various policy changes and points to many areas--in the United States at least--where government involvement increased in important parts of the economy, and Sumner responds. Sumner also talks about the importance of culture in economic performance.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	another information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you. Today is June 10, 2010 and my guest is Scott Sumner of Bentley University. His
0:43.8	blog is the Money Illusion. Scott, welcome back to Econ Talk. Thanks for inviting me, Russ. Our topic
0:50.7	for today is growth, very broadly defined. Why do some countries do better than others? What role does
0:57.3	public policy play in determining or affecting growth? And you've written a lot on the topic recently
1:02.7	at your blog and you've written a very interesting paper on the topic as well. We're interested as
1:07.6	economists and citizens in the relation between economic policies and outcomes of various kinds. So I
1:14.3	want to start by trying to clarify some language about how we might describe different policy regimes,
1:20.0	different rules of the game, and inevitably these are crude definitions because there's so much
1:25.6	variation, but it's helpful to categorize things broadly and you've been doing that lately. In
1:30.8	particular, you make a distinction between different kinds of liberalism. Can you describe those?
1:37.2	Okay. I distinguish between what I call classical liberalism, which is sort of belief in small
1:45.5	government in economic sense, and modern liberalism, which is more socialist in orientation, and then
1:54.9	neoliberalism, which I see is sort of a postmodern synthesis of the two, where it combines relatively
2:01.5	free markets with a sizable government in terms of social welfare spending especially. So if you
2:09.8	break down government activities into two broad groups, one would be social welfare spending,
2:16.3	which forms a large chunk of total government spending, and the other set of government
2:21.9	activities is sort of a catch all I call stateism, which involves things like price controls,
2:27.8	market entry controls, trade barriers, ownership of companies, high marginal tax rates, all sorts
	...

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