February 25, 2020

Off the Shelf: ‘Keynes Hayek’ Views Origins of an Economics Debate — Review

What these men actually thought — about the economy and each other — is more complicated, as Nicholas Wapshott demonstrates in “Keynes Hayek: The Clash That Defined Modern Economics” (W. W. Norton, $28.95). This lively book explores one of the most pressing economic questions of our time: To what extent should government intervene in markets? And in that search, it traces the interaction of the two men most responsible for the way we approach this question: the British economist Keynes and the Austrian economist Hayek.

Both men came of intellectual age in the aftermath of World War I. They lived through the boom of the 1920s and through the Great Depression and arrived at radically different views of the wisdom of letting free-market capitalism run its course.

Keynes concluded that markets would not automatically provide full employment and that during downturns there could be long periods of large-scale unemployment. He argued that it was the government’s duty to relieve the plight of the jobless by increasing aggregate demand for goods and services.

Mr. Wapshott, a Reuters contributing columnist and a former senior editor at The Times of London, skillfully reconstructs the context in which Keynes formulated his theory. During the 1920s, Britain endured persistently high unemployment. Successive policy makers, worried about rising expenditures and falling tax revenue, ignored Keynes’s calls for public spending, setting off what he called a “vicious circle.”

“We do nothing because we have not the money,” Keynes said in 1930 to a government committee investigating the causes of the economic crisis. “But it is precisely because we do not do anything that we have not the money.” With the unemployment rate now at 9.1 percent, I gulped long and hard as I read these pages.

Hayek came to a very different conclusion. After serving in World War I, he found his beloved Vienna “devastated and its people’s confidence broken,” Mr. Wapshott writes. During the ensuing decade, hyperinflation pummeled the Austrian economy, melting away the savings of millions of people.

This experience, Mr. Wapshott argues, hardened Hayek “against those who advocated inflation as a cure for a broken economy.” And he came to believe “that those who advocated large-scale public spending programs to cure unemployment were inviting not just uncontrollable inflation but political tyranny.”

Thus, the author writes, the battle lines between Keynes and Hayek were drawn. Yet it was a duel characterized by mutual respect. Keynes, for example, shared Hayek’s distrust of socialism, while Hayek conceded that in the case of chronic unemployment, planning might play a role without leading to oppression.

But it was still a duel. In 1936, Keynes published “The General Theory of Employment, Interest and Money,” which took on classical economics and people like Hayek who subscribed to its tenets. Keynes’s targets included several long-accepted ideas: that employment levels are determined by the price of labor, that supply creates its own demand and that savings automatically translate into investment.

Keynes didn’t expect that his findings would lead to an infringement of personal liberty. Instead, the author writes, Keynes believed “that a prosperous society in which everyone is employed was the surest way of maintaining the independence of thought and action he considered the guarantor of true democracy.”

Hayek did not publicly detail any criticisms of “The General Theory.” But in 1944, he brought out “The Road to Serfdom,” which has become a libertarian classic. Hayek aimed to expose socialism and fascism as twin evils, warning of the potential dangers of central economic planning in the aftermath of World War II.

“It is Germany whose fate we are in some danger of repeating,” Hayek wrote.

Keynes was swift to respond, reminding Hayek that the rise of National Socialism was fueled not by big government but by mass unemployment and a failure of capitalism.

Article source: http://feeds.nytimes.com/click.phdo?i=3cb1c4facdf74e2e52866cc7eabf2629

The Media Equation: A Tabloid Shame, Exposed by Earnest Rivals

In America, newspapers have been seen as an expensive hobby for Mr. Murdoch, the bane of the News Corporation’s shareholders, but as it turns out, the newspapers in Britain may end up being more costly to him in the long run.

So useful in wielding influence, if not producing revenue, his newspapers are the very thing that brought his company into the cross hairs, and delayed, at least temporarily, his efforts to expand it by gaining full control of British Sky Broadcasting, the largest pay television company in Britain.

Logic and fairness would suggest that it was folly to concentrate so much power in the hands of someone who already controlled many national media assets. So where was the outrage? Well, check who owns the megaphone. The News Corporation has historically used its four newspapers — it also owns The Sun, The Times of London, and The Sunday Times — to shape and quash public debate, routinely helping to elect prime ministers with timely endorsements while punishing enemies at every turn.

Don’t take my word for it. After David Cameron was elected prime minister, one of the first visitors he received at 10 Downing Street was Mr. Murdoch — discreetly through a back entrance — and Mr. Cameron spoke plainly last week about the corrosively close relationship. “The truth is, we’ve all been in this together,” he said.

“The press, the politicians and leaders of all parties.” To which a dumb Yank like me might say, “Duh.”

The only thing Mr. Cameron didn’t do was point to Mr. Murdoch himself. But he didn’t really have to after the tactical ruthlessness of Mr. Murdoch’s familiars was laid bare for all to see.

Newspapers, as anybody will tell you, aren’t what they used to be. Part of the reason that the News Corporation was willing to close down a paper with a circulation of about 2.7 million copies every Sunday was that its revenue was under $1 billion. (The News Corporation’s heir apparent, James Murdoch, has always seemed eager to shed some of the company’s newspapers, though I doubt that putting the nail gun to this paper was what he had in mind.)

Still, how did we find out that a British tabloid was hacking thousands of voice mails of private citizens? Not from the British government, with its wan, inconclusive investigations, but from other newspapers.

Think of it. There was Mr. Murdoch, tying on a napkin and ready to dine on the other 60 percent of BSkyB that he did not already have. But just as he was about to swallow yet another tasty morsel, the hands at his throat belonged to, yes, newspaper journalists.

Newspapers, it turns out, are still powerful things, and not just in the way that Mr. Murdoch has historically deployed them.

The Guardian stayed on the phone-hacking story like a dog on a meat bone, acting very much in the British tradition of a crusading press, and goosing the story back to life after years of dormancy. Other papers, including The New York Times, reported executive and police complicity that gave the lie to the company’s “few bad apples” explanation. As recently as last week, Vanity Fair broke stories about police complicity.

Mr. Murdoch, ever the populist, prefers his crusades to be built on chronic ridicule and bombast. But as The Guardian has shown, the steady accretion of fact — an exercise Mr. Murdoch has historically regarded as bland and elitist — can have a profound effect.

His corporation may be able to pick governments, but holding them accountable is also in the realm of newspaper journalism, an earnest concept of public service that has rarely been of much interest to him.

The coverage last week, on a suddenly fast-moving story that had been moving only in increments, destabilized the ledge that the News Corporation had been standing on. James Murdoch regretted everything and took responsibility for almost nothing. What looked like an opportunity for him to prove his mettle as a manager of crisis might yet engulf him.

Andy Coulson, the former editor of News of the World who became the chief spokesman for Mr. Cameron, has been arrested. And Rebekah Brooks, chief executive of News International and previous editor of The News of the World, responded by saying that it was “inconceivable” that she knew of the hacking.

E-mail: carr@nytimes.com; Twitter.com/carr2n

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Murdoch to Close Tabloid Amid Fury Over Hacking

The scandal had been taking a toll on the News Corporation, with stock prices falling, some advertisers fleeing The News of the World, and new doubts emerging about Mr. Murdoch’s proposed $12 billion takeover of the pay-television company British Sky Broadcasting, in which he already owns a large stake. Many legislators have now criticized the deal and any government decision appears unlikely to be made before the end of the summer.

The Times of London, itself a News Corporation newspaper, said five journalists and the newspaper executives suspected of involvement in the scandal were expected to be arrested within days.

The move to close The News of the World was also seen by media analysts as a potentially shrewd decision to jettison a newspaper in order to preserve the more lucrative broadcasting deal and possibly expand its other tabloid, The Sun, to publish seven days a week.

The announcement came from Mr. Murdoch’s son and likely heir apparent, James, in a broad and apologetic statement delivered so suddenly that The News of the World was still advertising a subscription deal on its Web site.

“Wrongdoers turned a good newsroom bad and this was not fully understood or adequately pursued,” he said, admitting that the paper and its British parent, News International, had “failed to get to the bottom of repeated wrongdoing that occurred without conscience or legitimate purpose,” despite a police investigation in 2006 that sent two men to jail.

As a result, he said, the paper and company “wrongly maintained that these issues were confined to one reporter. We have now voluntarily given evidence to the police that I believe will prove that this was untrue and those who acted wrongly will have to face the consequences.” The announcement raised immediate speculation that The Sun, another News International paper, might begin publishing on Sundays. Company executives had discussed earlier this year whether to merge some of the two papers’ operations as a way to save money, and the domain name thesunonsunday.co.uk was registered on Tuesday.

When asked about the possibility, a News International spokeswoman said, “There is no comment beyond the statement today which does not mention any future plans.” Other Murdoch holdings in Britain include The Sunday Times of London and SkyNews.

In an on-camera interview with the BBC, James Murdoch said the paper was being shut down because “we fundamentally breached a trust with our readers.” He defended News International’s embattled chief, Rebekah Brooks, saying he was convinced that her leadership was “the right thing” for the company and “absolutely crucial right now.”

On Wednesday, Rupert Murdoch made his first direct public comment on the phone hacking scandal, fiercely defending Ms. Brooks from accusations over serious phone hacking cases while she was editor at The News of the World and saying the company would continue cooperating with the police “under Rebekah Brooks’s leadership.”

The leader of the opposition Labour Party, Ed Miliband, told the BBC that the closing of the paper was a defensive move on the part of News International, “a concession to members of the public up and down the country who have been appalled by what has happened.” But he said that only Ms. Brooks’s resignation would show that the organization was taking responsibility for its actions.

“Some people are losing their jobs, but one person who is keeping her job is the person who was editor of The News of the World at the time of the Milly Dowler episode,” Mr. Miliband said, referring to the case of the 13-year-old murder victim. On Monday, lawyers for her family said the paper hacked her phone after she was abducted in 2002, deleting some messages to make room for more in a move that confused police investigators and created false hope that she might still be alive. Her killer remained at large for years, killing two more young women before being captured, and was convicted in all three deaths; the verdict in Ms. Dowler’s case came only last month.

Ms. Brooks was the paper’s editor during the Dowler case, and was promoted from there to The Sun before taking over News International.

On Wednesday, a member of Parliament also raised allegations that nine years ago, The News of the World had participated in efforts to disrupt a murder investigation, as the members collectively turned on Mr. Murdoch, and the tabloid culture he represents, using a debate about the widening phone hacking scandal to denounce reporting tactics by newspapers once seen as too politically influential to challenge.

Sarah Lyall reported from London, and Brian Stelter from New York. Reporting was contributed by Alan Cowell from Paris, Eric Pfanner and Ravi Somaiya from London, and Jeremy W. Peters from New York.

Article source: http://www.nytimes.com/2011/07/08/world/europe/08britain.html?partner=rss&emc=rss