Binyamin Appelbaum: The Problem With Modern Economics

Why do we have the economic policies we do today?

These policies drive decision-making on Capitol Hill, corporate boardrooms, and on Wall Street. But who made them, why, and how did they come about? And how well are they serving us?

Binyamin Appelbaum has made these questions the focus of his new book The Economists’ Hour: False Prophets, Free Markets and the Fracture of Society, which shines a bright light on the rise of modern Economics and its dominating influence on society.

From anti-trust law to central banking, Appelbaum explains how Economics has evolved (metastasized?) into its current form, where the solutions it now offers may be no better (and possibly substantially worse) than the problems it’s designed to address:

We are at a real fork in the road and there is a very plausible path ahead of us in which our ability to grapple with our problems continues to deteriorate. One of the most important consequences of the embrace of economic policies has been the huge rise in economic inequality in this country. And one of the debilitating consequences of inequality which I think is terribly underappreciated is that it makes it very difficult to have a functional democracy. It really limits the shared space in which people can get together and agree on policies that serve all of their interests because their interests have become so diverse.

So I think that inequality itself threatens our ability to constructively confront our societal problems and challenges and I worry immensely about that. And I think economics is very much to blame for us having reached this state in our affairs.

So, that’s the bleak version. I think we are in crisis. We are in crisis in terms of our ability to confront problems, in terms of our ability to make good choices, our ability to build public consensus around positive public policy. And it’s not clear how we escape from it.

These are big issues. We have caused ourselves a lot of problems in the way we have dealt with public policy over the last century. And if we don’t start doing things differently and soon it is hard to see how this all ends well.

Click the play button below to listen to Chris’ interview with Binyamin Appelbaum (52m:10s).

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This is a companion discussion topic for the original entry at

Best podcast you’ve done.
Just bought the book. I’m gonna message you on LinkedIn and see about getting a dinner/book signing together next time you are in Chicago. I’ve got a handful of smart folks that would love to rehash this live.

I believe “Capital One” should be “capital won” and in the first case of its use followed by “, workers lost”.
Admin: Thx. Corrected.

…that the less anti-trust they have, the less trust I have
Very interesting piece. Thanks Chris. Maybe I missed his point, but in the end, it seemed that despite his take on the evolution (or devolution), he put a little too much faith in the financial institutions and laid more of our situation on the politicians. Chris seemed to push him on that, and for good reason. It’s a chicken and egg problem to me… or perhaps a feedback loop. Did the philosophy change or did good old criminal greed rot the system again. Then again, it could also be a modern problem too - that the global nature of everything, along with the technology to rapidly make corporations global was merely inevitable along with their inevitable problems. As Chris and other historians remind us, when system failure and empire problems start to balloon, so do their their financial tricks and structures.
It is a great exercise to look back at how passionate we used to be in protecting ourselves from this corruption. I wonder where that went.

It was clear that there were some disagreements between the two of you, but the way you both addressed and disagreed with one another was respectful, informative, and civil, which is frankly one of the many things that keeps me coming back here.
I’m going to get his book for sure.

Mr. Appelbaum is obviously wicked smart. Way smarter than me. Yes, I will buy his book to have for posterity. The problem is …He says…
“I think these are big issues and we have caused ourselves a lot of problems by the way we have dealt with public policy over the last century. And if we don’t start doing things differently and soon, it is hard to see how this all ends well.
Ugh, another, nice, smart person contributing to paralysis by analysis. Oh dear the decisions have not been optimal. How unfortunate. How about screaming from the roof top, if the greedy idiots in charge don’t change we are all doomed. Violence, war, starvation, and disease. You know the four horsemen of the apocalypse. But its okay because we will all have detailed books to read on how we got there.
Cranky Granny

You should read The new economies,and how it can create a more just America by Jared Bernstein at also reviewed the book.I wont link it because it is a tinge political…

With all due respect to Mr Appelbaum, here is Prof Rasmus speaking to Trump’s neo-liberalism 2.0 in a more granular manner focusing on the recent decision by the European Central Bank to re-introduce QE and drive Europe’s more than $7 trillion in interest rates further into negative territory. Another $22b per month in QE and rate reduction to -0.5% when, over the past 5 yrs QE and negative rates have not stimulated the European economy. Reasons why QE and neg rates have little effect. How $17 trillion in negative rates worldwide is a growing problem and won’t stimulate the Euro economy. Lower rates as exchange rate currency/ trade move. Why Trump is now calling for US negative rates. Why central banks (including Fed) now secretly discussing new tools and tactics for the next recession, including ‘bail ins’ and calls are growing by high level capitalists for the Fed and central banks to expand their authority into fiscal policy areas (as predicted in my 2017 book, ‘Central Bankers at the End of Their Ropes’). Consequences of such for US Constitution and fiction of ‘central bank independence’. Rasmus discusses US deficit now officially projected to exceed $1 trillion a yr. The Democrat Party latest debate and opposition to Medicare for All. And what’s behind the recent ‘softening’ of US & China trade war (and why a deal may now be closer with ‘decoupling’ of technology issue). Rasmus introduces the show with brief outline of his forthcoming book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, October 2019, and shares its main themes.

Thanks Edwardlinski, my preference is blunt, direct, and as Richard Wolf says “bottom line”. In-your-face messengers like Ralph Nader, Richard Wolf, and Chris Hedges give people pause create discomfort and are a catalyst for change. However, we do need the brainy intellectuals to debate the subjects and write the books.

Really enjoyed this one - will give it a second listen. I’d love to hear this conversation continued in a longer format, or perhaps over multiple podcasts. So many interesting thoughts that I’d like to hear explored in more depth.

Majorly enlightening podcast.
For me, the highlight was the incident at the Santa Fe Institute where it was revealed that the economists thought it possible to achieve equilibrium — in an open system. That’s crazy decades behind the times.
Along with the comment by Fed chair Wm McChesney Martin that economists were kept in the basement because, while they come up with good questions, they don’t give good answers. See above about equilibrium in an open system. Also Chris’s previous reference to Ben Hunt’s essay, “The Three Body Problem” on appropriate and inappropriate ways of making predictions in a chaotic system: Chaos theory, complexity, systems theory with it’s challenging boundary issues…
Along with the comment that maybe central banks aren’t the place to deal with issues regarding such things as resources because, by their nature, they have a short-term focus. Also, see above about inappropriate understanding of the nature of the world. Interesting comments about the roles of Congress (policy makers) and the Fed.
Also a highlight - the change in the perceived purpose of anti-trust laws from protecting democracy against excesses of corporations to ensuring economic efficiency, which has resulted in enormous challenges to addressing excesses. Efficiency being measurable, democracy, not so much. That is sickening and infuriating.
I appreciate that Binyamin Appelbaum’s take doesn’t always agree with Chris Martenson’s - That enriches the context for all that is said here on Peak Prosperity.
I, too, am looking forward to reading this book.