Lessons from Argentina

The title link goes to the PDF file of the report from CEPR entitled Lessons from Argentina: New Paper Looks at Economic Policy in Argentina's High-Growth Recovery. While I appreciate the Center for Economic and Policy Research work at bringing economic issues from Lower Income Countries (LICs), I see their literature as promoting isolationism and autocracy for all countries even if to the detriment to other regional countries. Import substitution policies have not done a good job even if the goals are well intentioned. I also think that Dean Baker is a Dweeb and also P2. Although Dean's latest report on the health of the USA was pretty balanced at Exports and Structures Drive Third Quarter GDP Growth.

Argentina’s current economic expansion is now more than five and a half years old, and has far exceeded the expectations of most economists and the business media. Despite a record sovereign debt default of $100 billion in December 2001 and a financial collapse, the economy began growing just three months after the default and has enjoyed uninterrupted growth since then. The country's GDP during this period has grown by more than 50 percent, making Argentina the fastest growing economy in the western hemisphere during this time. In the process, more than 11 million people, in a country of 39 million have been pulled back onto the positive side of the poverty line. Furthermore, this recovery was accomplished without any help from the international financial institutions that had (led by the International Monetary Fund) provided tens of billions of dollars in
loans prior to the collapse; and with the use of unorthodox macroeconomic policies.

Yes, the numbers look simply spectacular as the graphs and data in the paper show. But let us look further at the analysis...

It was one of the worst economic crises in the history of Argentina, and was not resolvable under the economic policies to which the government at that time was committed.2 Most importantly, the "convertibility system" under which the Argentine peso was fixed at a one-to-one exchange rate with the dollar, had long been an unbearable burden for the economy, a strait-jacket with regard to monetary policy, and had become unsustainable. Both the exchange rate and the economy were being maintained through increasing international borrowing, which piled up an unsustainable public debt burden.

I can not imagine that the IMF would be promoting such policies. Most of the reports I read says the IMF would like to see floating exchange rates or at least a peg that is tied to a basket of currencies. And especially not a hard peg at one to one conversions with another currency.

However, relatively little of Argentina's growth over the last five years is a result of exports or of the favorable prices of Argentina's exports on world markets. This must be emphasized because the contrary is widely believed, and this mistaken assumption has often been used to dismiss the success or importance of the recovery, or to cast it as an unsustainable "commodity export boom." Table 1 shows the relative contributions of the various components of GDP to economic growth, for three phases of the recovery.5 It can be seen that exports played a major role only for the first six months of the recovery (the first phase), when the economy grew at just a 1.3 percent annual rate.

Yes as the paper tries to point out that growth was actually more in other segments over the 5 years, but I would say the most important aspect is what sector of the economy is going to lead. Without this massive and substantial increase in Net Exports as percentage change in contributions to the GDP of 239% for the first time period used then the recovery would not have gotten off the ground. Simple as that.

I would doubt that people would dismiss the recovery because of exports and I think export booms can be sustainable even if a lot of it is in commodities.

During this period exports grew at a 6.6 percent annual rate and accounted for 71.3 percent of GDP growth. Imports dropped by more than 30 percent and therefore accounted for 167.8 percent of GDP growth during this period. Thus net exports (exports minus imports) accounted for 239.1 percent of GDP growth during the first six months of the recovery. This was countered mainly by declining consumption, with private consumption falling at a 5.1 percent annual rate.

Much of what I already mentioned but notice the significant drop in consumption. In most Structural Adjustment Programs (SAP) this is one of the key policies the IMF is trying to incorporate, i.e. reducing the Absorption of the economy and thus reduce inflationary pressures. And of course these policies get the most controversy.

However, in this phase exports did contribute more than in the previous period, accounting for about 16.2 percent of growth; although imports grew faster, resulting in a negative contribution for net exports. Over the entire recovery through the first half of this year, exports accounted for about 13.6 percent of economic growth, and net exports (exports minus imports) contributed a negative 10.9 percent.

Still a respectable and important part of the overall growth of the economy and allowed needed inputs for capital accumulation also. Nothing here voids the idea that the engine starter for the recovery was export growth. Without at least one sector being the first, I can not imagine that any recovery would have been possible.

The economy reached its pre-recession level of real GDP in the first quarter of 2005. As of the second quarter this year, GDP was 20.8 percent higher than this previous peak. Since the beginning of the recovery, real (inflation-adjusted) GDP has grown by 50.9 percent, averaging 9.7 percent annually. All this is worth noting partly because Argentina’s rapid expansion is still sometimes dismissed as little more than a rebound from a deep recession.

Again I would never dismiss a recovery just because of countervailing factors, just that after a severe depression, you would expect that at least some strong rebound effect would kick in eventually. Since the factors of production have not gone to rot in the short term, we would expect some recovery in industrial capacity at least.

A number of government policies seem to have contributed to Argentina's rapid and robust recovery. This is often overlooked, possibly because some of these policy choices are considered controversial. Perhaps the most important of these policies was the government's exchange rate policy. This was important from the second quarter of 2002, when the government strengthened
foreign exchange controls and intervened in the foreign exchange market in order to stabilize the currency. At first, the problem was that the peso was too low, as a result of significant exchange rate "overshooting" (see Figure 2) that brought the nominal rate to 3.6 pesos/US dollar in May of 2002. The devaluation had caused a sharp spike in inflation, which was then running at a more than 28 percent annual rate. It was important for the government to stabilize the nominal exchange rate –
not only to help stabilize inflation but also the financial system. This was done primarily through interventions in the foreign exchange markets (selling dollars), and also by restricting the outflow of pesos from the banking system. The government also required that dollars from export revenues exceeding $1 million had to be turned over to the central bank, thus increasing the supply of dollars that the central bank could use at this time to stabilize the peso.8 These exchange controls were therefore also an important part of the process of stabilizing the exchange rate, and therefore of the economic recovery.

Sorry for so much text here, but wanted to give the context for the ideas. I think it is funny to say there is controversy and then go into exchange rate regimes that I see very little controversy in what was done. Argentina went off the pegged exchange rates and went to a managed float or a managed band, which most economists consider a good policy overall-including IMF staff. The foreign exchange controls that were strengthened is controversial but so is no restrictions. So this is an issue that is mostly empirical than strictly theoretical, that is the degree of freedoms of capital is more of a numerical consideration.

The Argentine government's policy of pursuing a stable and competitive exchange rate was and remains unorthodox and controversial. The conventional wisdom among central bankers today is that the central bank should not target the exchange rate, and most central banks would not do it. Most Central banks may target inflation itself, or intermediate variables such as short-term interest rates and monetary aggregates, but not the exchange rate. It is generally believed to be incompatible
with controlling interest rates in the domestic economy, in an economy with open capital markets. However, this is not true if there is an excess supply of foreign exchange at the central bank's target exchange rate. The Argentine government has also been able to sterilize its interventions in the foreign exchange market by issuing bonds in the domestic market, and it turns out that this policy is also sustainable.10 Also, the prevailing orthodoxy is that central banks should be independent of the government.

I have seen some support such monetary targets, but I fear if the world economy becomes in a crisis or even regionally to its partners it could have spill-over effects. But everything I have read seems to not correspond that sterilization will work over the long term. Either the central bank will run out of reserves or reserves will explode and then cause inflation. Again with a managed float then maybe such concerns can be negated. Lastly, yes independence for the central bank is of the utmost importance I see. Politicians like Hugo will see the central bank as a source of free funds to promote socialism and ultimately hyper-inflation is the result.
Did you also note from the graph above that the currency was actually more unstable after the stabilization as before the default period. And this does draw into question the hard pegging that was before the crisis.

Another important policy concerns the default and renegotiation of the government's external debt.
As noted above, the expectation that Argentina would pay a large and continuing cost for its default did not materialize. On the contrary, the default appears to have been necessary for the country to change its macroeconomic policies so as to restore economic growth. Before the default, the government was focused on tightening its fiscal and monetary policies in a futile – and, probably impossible – attempt to restore credibility among its creditors, an effort that included maintaining the convertibility system. The default enabled the government to pursue a new set of ultimately successful macroeconomic policies.

Good that they suffered no cost for the defaults and this subsidized time did allow them to get their house in order. So being the pragmatist, I will applaud any effort to get back on track, but to imply that the IMF and others did not help out is false even if the actions were beyond their control. By Argentina not paying its debts it was allowed to transfer monies to productive uses in the economy. This is one reason that the IMF has implemented HIPC funding, with realization that overburdening debt for developing countries can prevent growth and development.

The Argentine government was subject to considerable pressure from the IMF in the years following the debt default to offer better terms to the defaulted foreign creditors (see below). But in
the end, a debt swap in 2005 was arranged that took 67.3 billion of foreign external debt off the books. This was a record 65.6 percent "haircut" and was very important to Argentina's recovery. This can be seen by the reduction of the overall public debt, which the swap combined with the rapid economic growth reduced the public debt from 127.3 percent of GDP in 2004 to 62 percent today (see Table 2).

So this haircut was not considered a subsidy? Sounds like the international community including the IMF did a lot to help Argentina to recover.

Two unorthodox taxes levied by the government were also important to the recovery. One was an new export tax which allowed the government to get some of the windfall profits that exporters received as a result of the devaluation. The other tax was already in existence: a tax on financial transactions. As Frenkel and Rapetti (2007) have noted,12 the two taxes together pulled in about 2.7 percent of GDP, and were responsible for almost the whole national primary budget surplus in 2004. It is also worth noting, as can be seen in Table 2, that real short-term interest rates have been negative throughout most of the recovery (since 2003).

Well golly gee wiz! Maybe exports would have done a better job without a drag on that sector. And this opens the possibility that they actually were driving the economy since they had nice growth with a disincentive tacked on. I prefer no export taxes but it is something that should be looked at more closely especially when concerning commodity exports. Thus most of the fiscal balancing of the budget was accomplished on the backs of the export sector. And we do remember that balancing the Fiscal Budget is important in SAPs and considered an important aspect of all those economic theories like Neoliberalism.

As far as the financial tax scheme the writer does not give us any indication of how it is implemented. But as far as negative real interest rates we have covered that quite extensively here with regard to 'financial repression' and Ronald McKinnon. But the actual numbers as I read them are 2003:5.1%, 2004:2.3%, 2005:-3.2, 2006:-2%, and 200:-0.2|

Another policy that contributed to the recovery was a program that provided a monthly stipend (150 pesos) to heads of households who were unemployed with children of up to 18 years-old (or disabled of any age), and to those where the head of the household was ill. At its height (2003), the program reached 20 percent of all households, with 97.6 percent of beneficiaries under the poverty line. 13

The writer here goes to great length to explain how well the social safety net worked, and I applaud that. But how does this program help the recovery? Now it may have made structural adjustments more feasible for the general public but increasing consumption at a time when absorption needs to be reduced does not seem to help the economy out of the depression.

While recognizing that steps must
be taken to bring inflationary expectations under control, and avoid a wage-price spiral, the government is willing to live with double-digit inflation for some time as a tradeoff for the rapid real growth of the economy and its enormous positive impact on poverty, employment, and income distribution.

Yes some cultures/economies live more freely with higher levels of inflation without causing much problems. India is an exception to this from much of South America, where nearly segment of the economy wants a low and stable inflation rate. So I am not as hard on Hugo Chavez on his inflation rates as others are but since he has destroyed the independence of the central bank, this is a portent for hyperinflation.

As more countries become more independent of the IMF and allied IFI's and governments, the "policy space" for different and potentially more successful macroeconomic and other economic policies will expand. In Argentina's case, as we have seen, the IMF was opposed to most of the major economic policies that contributed to the country's rapid economic recovery. Argentina's break with the Fund was therefore one of its most important decisions, and one that may prove to have lessons for other developing countries as well.

The last portions of the paper talk about the IMF mostly. And yes some of the criticisms are legitimate, but I see them not so much as problems but just signs that maybe the IMF has lost it meaning in the present international economic environment. But I still see that many of the tools the IMF have developed over the years should be of use to the general welfare of the world economy. Such as the monitoring and technical assistance they provide to member countries. How the IMF finances such ventures is anyones guess.

Markets W/O States|Stateless Markets

I have been engrossed in a discussion about Zero-Sum Games and then the question came up that 'can markets be formed without the control of the Government'? I do make a distinct and important difference between the formation of a Government that creates rules and laws that enables and facilitates the peaceful trade between peoples and that what it is called as the State or as I like to call it "Police State". I use that phrase since it gives the importance that this State not only manages the functioning of government but also has a force beyond what people voluntarily provide in government functions-like volunteer firefighters. The inspiration for the above distinctions comes from a book by Albert J. Nock called Our Enemy, The State. From the link: His Classic Critique Distinguishing 'Government' from the 'STATE'.

So I got to thinking of times that neither Governments or States are there to administer rules for trade, and this is what this post tries to do. One of the most ubiquitous trade that happens without intervention is the actions of young people that look for odd jobs and such. Obviously it takes a certain person to willingly rip off a young person. Social norms are the binding force that prevents most contracts from being broken. Word of mouth and community discussions usual ferret out the people that are likely to take advantage of even the simplest contracts. Our conversations got a little interesting around here.

...It is the police state that perverts markets. You are right that drug dealers do not have property rights that the courts will support. But if there was no penalties for individuals to trade then adults would behave like adults and trade. Many trades in our society are below the level that Police want to get involved in. Just get the wrong change at a store and see if you get your money back. The local person that mows lawns for a few dollars, does he need the state to protect his rights?

Before passing prohibition, many people made moonshine and traded but only with passing of the constitution did it make it profitable for criminals to get involved. I would suggest you read the book "Free Market Environmentalism". RR

This self quote brings us to another way of looking at this as the issue of what happens when Police States try to prevent trade between consenting adults. The following is from Arnold Kling, an economist that I truly look up to.

Drug Prohibition
What difference does it make whether you address substance abuse with taxes, as we do with alcohol and tobacco, or with prohibition, as we do with cocaine and heroin? There is a sense in which the two approaches lead to similar results--an increase in price and a reduction in available supply. However, the tax maintains order while prohibition produces disorder.

As Richard E. Wagner points out in the essay quoted at the beginning of this article, the spontaneous order of the market can adapt to a tax relatively easily. However, when government tries to control supply, disorder emerges. Profit opportunities are created in crime and corruption. Compare the crime and mayhem in the market for drugs with that in the market for cigarettes. Or compare the disorder that resulted from alcohol Prohibition with the order that prevails today.

So governments can enhance a market but it takes a lot for a State to prevent such trade actions. A phenomenon that even Communist Countries have problems controlling. Which ironically shows that even Libertarian Economists (actually a Masonomist) believe in libertarian paternalism. Of course this assumes that the social good of minor manipulation of the market is better than just letting the markets solve the problems.

Before the US States were even established, settlers, farmers, ranchers and others had to resolve property rights issues. This was especially true with regard to water rights. The following link entitled Montana Water Rights has a good history of what techniques were used in Montana (Pages 1-10) and more broadly across the Western States. I remembered this from the book Free Market Environmentalism by Anderson and Leal. They also write for PERC.

Another area that is getting more attention lately is ungoverned areas of Africa with the rise in discussions of Africom. One market that is doing well is Telecommunications as the article Telecoms thriving in lawless Somalia shows. Even in lawless areas telecommunication is important. As I see it the capital that is used in building up networks has very low value for most to try and steal, but provides an important service that nearly everyone needs including the ones with more power. Incentives are low to steal but the benefits are high. The structure is almost like roads, how many people try to steal a road?

The Development of the U.S. Currency System has a short excerpt on Barter and commodity money:

The best known form of commodity money among the Native Americans is the wampum: beads of polished shells strung in strands, belts or sashes. The use of wampum was widespread in North America and it became one of the major forms of commodity money used extensively by the American colonies (established by the French, English and Spaniard).

The reason that wampum and other forms of commodity were used as a medium of exchange is because the colonial governments in Europe fear that the colonies will become financially independent if they have the power to coin money. As a result, wampum became a money substitute (in the colonies) together with beaver skins, tobacco, corn, rice, and other commodities.

Without getting into a specific tribe and type of trade, I would conclude that forms of government were non-existent or failed to be formalized for most issues like trade.

And lastly humans are basically cooperative beings and thus cooperation results better returns than competition or in other words playing the Scorpion in trade will not likely result in very high returns. I found the following paper (PDF) really interesting: Cooperation versus Competition.

Among cooperative populations, Generous TFT is sometimes the dominant strategy, but much more frequently, an altogether different strategy, the Pavlov strategy, dominates.8 A Pavlov player cooperates after experiencing a reward or a punishment and never otherwise. After experiencing a reward for mutual cooperation (3 points each), the two players repeat the former cooperative move; after being punished for mutual defection (1 point each), they both switch to cooperation; after getting away with a unilateral defection (5 points), a player repeats the defecting move; and after being subject to the sucker’s payoff for unilaterally cooperating (0 points), a player reacts by defecting. At first, this rule may seem odd: It tells you to defect if your coplayer’s move was different from your move in the previous round. A second glance reveals that the rule makes sense: The Pavlov rule tells you to stick to your former move if it earned you a high payoff but change your behavior if it brought you a low return.

Basically then society needs governments only for occasional protections from The Scorpions as in the parable of the Scorpion and the Frog. And even the approach by Gandhi may not be enough to prevent the Scorpions from getting the upper hand...

P2: Dean Baker is a Dweeb!

Trade and Social Security: Why Are Fox and the Post Surprised?

Actually, it is very reasonable to cite trade in reference to these shortfalls. The growth in wage inequality over the last quarter century is responsible for more than half the 75-year shortfall projected by the Congressional Budget Office for Social Security. Increasing wage inequality has caused the share of wage income falling over the taxable cap for Social Security to increase from 10 percent in 1983 to almost 17 percent at present.

I know that Dean has some analysis that he is looking at for these conclusions but I have to question whenever someone states that if more money was collected by SSA then there would not be a shortfall. But payments in equal future entitlements. So even if more water goes into the tub the outflow in future years is greater. As far as more wage income being earned over the taxable cap could also indicate that adjustments for inflation has not kept up. Just because the total percentage of taxable amounts goes down does not even indicate that the SSA could be collecting more money.

Trade policy has been an important factor in the rise in inequality. Trade can also be an important factor in reducing inequality. If policy is focused on increasing competition in highly paid professions then a larger share of wage income will again fall underneath the taxable cap. Perhaps more importantly, if trade policy is oriented toward improving the living standards of ordinary workers they will be far less concerned about the possibility that in thirty or forty years they will see the same sort of tax increases they experienced in the decades of the 50s, 60s, 70s, and 80s.

But labor markets can often not 'behave' like general economists may think of supply and demand. How does he think inequality can be reduced through trade? Here Dean thinks that higher competition will lower pay to the high paid. But this by itself will not improve the money collected in the taxable cap. That is if the average pay of job x,y or z is $150k and it is reduced to $125k then this has no effect on the taxes collected. Larger share has nothing to do with actual dollars collected. The aspect that could change collected Payroll Taxes is if more people are hired. But again I go back to the more money into the system the more drainages from the system. We hire more H1 Visas and more people are on the payrolls and thus more Payroll Taxes collected.

Lastly, I see "highly paid professions" may have other factors that influence rates than just simplistic supply and demand factors. For one aspect is synergy. Since these paid professionals are paid on their marginal productivity then conceivably as more gather together then wages are actually driven up. Just think of Silicon Valley and the wage rates effects then. I read recently that the highly trained professionals have unemployment rates of less than 2%. Thus any increase in supply could have the effect of not lowering rates but just provide a larger pool of transitional unemployment. Technically we could see a labor market that is highly elastic for demand of labor and supply is constrained so as supply increases prices do not change for the short term.

I wonder what Dean is thinking of with regard to "trade policy is oriented toward improving the living standards of ordinary workers". How would you devise such a plan? And what do you define as "ordinary workers"? I mean how many businesses ask for ordinary workers?

Trade can also go far toward alleviating the projected shortfalls in Medicare. If Congress proves incapable of repairing the U.S. health care system, Medicare can reap enormous savings by allowing beneficiaries to buy into the health care systems of the countries with longer life expectancies than the United States.

First I agree with the idea that consumers in the USA being able to have a chance to get medical services overseas. Thus it could break the monopolistic powers in the USA health industry-not the least starting with the AMA. But then the hand wringing will begin when shabby work is shown and the Liberal establishment wanting regulations.

BUT Dean so completely misses the mark on the "buy into the health care systems of the countries with longer life expectancies". It is not the health system that drives life expectancy is lifestyle choices. So unless he figures out how to import different lifestyles to US citizens then no matter what country you get health services from the life expectancy will not change. Our lifestyle is dictating our life expectancy. Eliminate smoking, excessive drinking and obesity (diabetes) and our life expectancy would rise meteorically. But as libertarian I can not support even such thoughts but maybe some more application of libertarian paternalism...

For the record, the upward redistribution that results from placing less educated workers in competition with low-paid workers in the developing world IS the orthodoxy of free trade. That is what mainstream economists should expect to happen from the current pattern of trade. Unfortunately, many of them are not honest enough to adhere to their own theory.

This was in the comments section. Of course again Dean's simplistic views are laughable. As Ben would say returns to education are quite high now and there is plenty of opportunity here in the USA to improve job skills. We could also look at the other side of the coin that people living in poverty are more willing to do jobs that we would prefer not to do. And this is through regulations or laws or just the going wage rate is lower than other alternatives.

Dean Baker is a Dweeb!

Dean Baker has again shown his lack of understanding inTell McCain: Cap and Trade Is a Carbon Tax.

The NYT had an article today on the Republican candidates positions on global warming. At one point it reports that Senator McCain has supported a cap and trade system, but opposes a carbon tax. According to the article, Mr. McCain said that he opposed a carbon tax because he "opposed new taxes but that he also believed that poor workers who tended to commute to work longer distances would be disproportionately affected."

OK, seems reasonable to me.

A cap and trade system would create a certain number of tradable carbon emission permits which can be auctioned off or distributed through some other mechanism. This would lead a price to associated with carbon emissions just as a tax would. A poor person commuting to work would pay more for their gas because the oil carbon had to buy carbon permits just the same as if they had to pay a carbon tax. From the standpoint of commuters and the economy there is no obvious difference between the impact of a cap and trade system and carbon taxes, if they are set at a level where they bring the same reduction in emissions.

So, one key here is that the method of distribution. Many C&T schemes give away the credits as the grandfathered polluters get the credits since that is the status quo and not distorting the market on the first round. But as he defines the "tax" it is simply a transfer from least efficient to most efficient polluters which by McCains standard is revenue neutral with regard to Federal Taxes. The poor person commuting to work even if the cap and trade filtered down to his level on commuting allows him to choose more efficient suppliers than less. Any way you slice it the more efficient polluters would be favored over the less. Most carbon taxes translate to gas prices and as such his commute would be taxed directly unless he could find alternatives.

I often wonder why people devise plans to tax the wrong actions. It is not the gas producers that are emitting the carbon but it is the consumer in this case. Now for electricity generation then yes the power companies are the emitters. The question is to who is burning the hydrocarbons?

The article should have noted this point and informed readers that Mr. McCain either does not understand his own proposal or is not being honest with voters.

Seems McCain was honest with voters. Of course does Baker expect politicians to be as versed in all aspects of every policy? I mean it seems that Baker has taken some short cuts here also. In the comments section he did state:

You charge the cap and trade the oil companies that sell the gas.
...
Barkley,
i don't have any objection to cap and trade, as long as most of the permits are auctioned off. I just think it's ridiculous for anyone to say that they would oppose a carbon tax, but they support cap and trade. I understand that McCain is doing this to please his anti-tax base, but the media are not obligated to help him in this effort at deception.

So now he tells us that cap and trade is to sell/auction off the permits which he did not start with. And do you think the reporters would have gotten the difference if McCain had talked about these points? I mean Dean Baker should know that the Press is not very savvy with respect to economic issues.

The only distortion I see here is from Baker. McCain is correct that the Cap and Trade could be revenue neutral and that and "tax" that Baker has imagined is just a transfer from less efficient to more polluters.

Let me end with one comment on Dean's Blog that explains the issues pretty well:

Dean - you misunderstand the carbon debate.

Carbon will be regulated. The cost of regulation (incl. diminished emissions) will be carried by consumers. The flavor of regulation - straight tax or cap & trade - doesn't matter from the consumer's perspective.

However, the flavor of regulation (tax v. cap™) will have a tremendous impact on business and industry. Long story short: a straight carbon tax will handicap many business and industrial activities to the point of failure, but a cap & trade framework is far more flexible (allowing business and industry to plan, adjust and eventually comply with lower emissions and higher costs).

Dean B. is correct that carbon regulation has an absolute and invariable cost to consumers. The debate/question is whether the type of regulation imposed will allow business/industry some control/flexibility on the road to compliance. Many (like McCain) believe a straight tax is far too rigid and will kill many businesses.

Update (3-31-08)Well my famous or infamous "Anonymous" has struck again.

"Economics" "from a conservative perspective"? That's like saying "math" "from a conservative perspective".

Funny but not quite right.

Political economy originally was the term for studying production, buying and selling, and their relations with law, custom, and government.
...
In late nineteenth century, the term "political economy" was generally replaced by the term economics, used by those seeking to place the study of economy upon mathematical and axiomatic bases, rather than the structural relationships of production and consumption (cf. marginalism, Alfred Marshall).

So just like Dean Baker, he is just as partisan as I am. The only difference seems is that I am honest and up front about it so that readers can understand a little about my general position. Of course I have always had difficulty in expressing my own self awareness, and would love to spell out a manifesto about my philosophies.

And the beat goes on...