Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

LQD: Stiglitz at Hyman Minsky Conference in April

by NBBooks Tue Aug 4th, 2009 at 07:25:46 AM EST

I have been on the road for much of the past month or two, but I have a week at home, and want to post some of American economist Joseph Stiglitz's April presentation to the Hyman Minsky conference of the The Levy Economics Institute of Bard College. I did a cursory search, and it appears no one had diaried it yet here on EuroTrib.

But first, I want to point to an important piece Simon Johnson wrote on Thursday on his Baseline Scenario blog, The Case for Capital Controls, Again, in which Johnson writes:


. . . what is now being whispered about in the corridors of financial power - begin to consider ways to tighten capital controls, i.e., limit the amount of capital that can come into a country, or force investors to commit to stay in the country for longer periods of time.

OK, back to Stiglitz. YEEOOW ! he really gives it to 'em! Here's the audio file  (well worth listening to as an antidote to the "green shoots, we're at the bottom" bullshit that so many people, especially in the United States, want to cling to) And here's some of what he said, lifted from the transcripts (Stiglitz begins on page 71 of this HUGE pdf file).

More below...

promoted by whataboutbob


. . . that’s probably what the Geithner plan was intended to do—to transfer money to the banking sector in ways that no one would know, because it was "Oh, we sold it at fair market value"—no, at the fair market value of the option, and without getting control. Because one of the constraints they’ve imposed on themselves is, they want to give money to the banks but don’t want us to have control over what the money does. That’s a recipe for disaster. . . . That is likely to solicit very peculiar behaviors, which we’ve already seen, where the government has provided these firms money to recapitalize and what do they do? They decapitalize by paying out dividends and bonuses.

Now, the funds were transferred in a very clever way; that is, the government provided guarantees through the FDIC. The FDIC was supposed to be insuring deposits, not this kind of activity, but if it makes a loss, who pays for it? There are two options. It’s supposed to be self-financed, but either we, the taxpayers, bail it out or it raises the deposit insurance. What it should do is honor what I call the "polluter pays" principle. The big banks have polluted our global economy with these toxic assets, and they ought to pay for the cleanup. That would mean the banks that are a source of the problem pay the higher deposit rates. But a more likely outcome is that all deposit rates will be increased; and that mean, rather than helping the small- and medium-size banks, the real sources of dynamism in our economy, we’re going to be taxing them in effect, and all for the benefit of these banks that are "too big to fail." . . .



Stiglitz then explains how the Paulson / Geithner "rescue" of the financial system has created incentives that are so perverse, that what was a zero-sum game (somebody has to bear the losses, but who gets stuck with them?), has been converted into a negative sum game, with enormous economic damage blighting entire communities, and the destruction of future economic potential.

He provides a quick summary of his evaluation of the situation. Reading it is one thing, but to get the full impact, you should listen to the audio. You can somehow hear the discomfort in the room.


There are four criteria: rekindle lending—hasn’t happened; keep the cost low—not likely; address the long-run problems—we’re not doing anything about that (in fact, the most benefit goes to the banks that did the worst); and, finally, adhere to standards of good governance and transparency—what’s actually happened in this area is really a model of what should not be done. If I were chief economist of the World Bank and a developing country had done this, I would have recommended cutting off all lending to that country. "This is a banana republic" is what we would have said in private.



Stiglitz ends with a criticism of the economics profession that is almost vicious in its directness, lucidity and intensity.

I'll lift this one little quote out of place to end with. Remember, this was back in April.



There is a continuing fiction put forward by some people that this is just a matter of expectations: if we just let the green sprouts grow and everybody feels good in the spring, house prices are going to return to where they were. If you believe that, you’re in fantasyland. The rate of decline may slow, that’s true, and that would mean we were no longer in free fall. But the fact of the matter is, we had a housing bubble, and almost surely, prices aren’t going to bounce back to where they were.



Display:
[Lazy Quote Comment]

Here is the "Lessons for Economics" portion of the talk.  NBBook's analysis, "Stiglitz ends with a criticism of the economics profession that is almost vicious in its directness, lucidity and intensity" is spot on.  The only adjective to add is "devastating."  While, to a reader of ET, its nothing we haven't seen before Stiglitz does provide a (relatively) short, easily grasped, precis of our discussions over the last three years.

It's a Public Service, one supposes.

Let me spend just a few minutes talking about the lessons for economics. The Great Depression
transformed the economics profession. Even as the economy sunk into depression, mainstream economists argued that nothing should be done, as government intervention would only make things worse.  As the Depression faded into distant memory, the economics profession lost sight of these lessons.  Dogmas and doctrines holding that markets worked well and that they were self-correcting once again came to predominate. This time, the theories were more sophisticated, but the underlying assumptions were equally irrelevant. These ideas helped shape the intellectual milieu that gave rise to the flawed policies that in turn gave rise to the current crisis.  To some extent, they are shaping policies today as we attempt to respond to the crisis.

The advocates of free markets in all their versions say that crises are rare events, though they have been happening with increasing frequency as we change the rules to reflect beliefs in perfect markets. I would argue that economists, like doctors, have much to learn from pathology. We see more clearly in these unusual events how the economy really functions. In the aftermath of the Great Depression, a peculiar doctrine came to be accepted, the so-called "neoclassical synthesis." It argued that once markets were restored to full employment, neoclassical principles would apply. The economy would be efficient. We should be clear: this was not a theorem but a religious belief. The idea was always suspect.

Why should market failures only occur in big doses? Rather, recessions can be seen as the tip of the iceberg.  Underneath, there are many smaller market failures giving rise in aggregate to huge inefficiencies -- illustrated, for instance, by the myriad of tax paradoxes. We should remember, too, that while megafailures have been rare in the United States, on a global scale such failures have in fact been frequent. This is just the largest, most recent of the financial crises that have occurred since America's savings-and-loan debacle or the bailouts with country names--Mexico, Brazil, Korea, Indonesia, Argentina, Thailand, Russia--which were really bailouts of Western lenders as a result of the inadequate assessment of creditworthiness.

The main difference between these crises and the current one is, the consequences were felt in the periphery, and the cost of bailouts was largely borne in the periphery. The irony, of course, was that other strands of modern economic theory, including the theory of imperfect information, were simultaneously explaining why markets often do not work so well.  Bruce Greenwald and I, in Towards a New Paradigm in Monetary Economics (2003), showed that the reason Adam Smith's invisible hand often appeared invisible was that it wasn't there. Market equilibria were not Pareto-optimal whenever there were information imperfections, and asymmetries, and imperfect risk markets. That is always. At the same time, the most successful countries ever in terms of growth and poverty reduction, the countries of East Asia, follow policies with active government involvement.

One would have thought that this powerful combination of theory and evidence might have dampened the enthusiasm for unfettered and under-regulated markets, but evidently it did not. I understand the unbridled enthusiasm of special interests that found the arguments for deregulation profit enhancing.  I'm not so clear on what motivated so many economists.  

Some have argued that risk is the price we have to pay for innovation, and America's financial markets have been extraordinarily innovative. However, financial markets did not create risk products that would have enabled individuals to manage the risk they faced: the simple risk of homeownership. Rather, the innovations consisted mostly of tax, regulatory, and accounting arbitrage. Their financial alchemy--converting F-rated toxic mortgages and financial products that could be held by fiduciaries--had a private, but not necessarily social, payoff.  

Such repackaging, we know from the Modigliani-Miller theorem, should have a limited value.  Meanwhile, many in the financial sector actually resisted innovations that would have made markets work better--innovations like GDP, inflation index bonds, Danish mortgage bonds, and better auctions of Treasury bills. The models that are predominating within macroeconomics, which assume representations with rational expectations, are particularly disturbing. These models have particular influence among central bankers. If I were giving my litany of criticisms of the central bankers, I would say they should have begun inflation targeting and with the models that they have, which are actually badly flawed.

What I find even more striking is that some economists still argue that this crisis has not shaken their belief in rational expectations. To me, the evidence of irrationality and intellectually inconsistency abounds--I can give dozens of examples. It's just astounding.

Even today, flawed thinking continues. We are encouraging mergers among the big banks that cause them to be even bigger. We talk about tight regulation of systemically significant institutions, failing to note that there can be systemic effects of correlated behavior on the part of institutions, even if each is not systemically significant.

Representative Asian models that have dominated the economics professions ignore the rich diversity of our economy, a diversity that is at the heart of some of the problems it faces. An economy with a single individual has no lenders and no borrowers, no problems of asymmetric information (unless individuals are subject to schizophrenia), no need for banks, no need to ascertain creditworthiness--in short, it is missing everything that is important. Remarkably, much of the economics profession focused on models that have almost nothing to say about the crisis we are facing. And there were those who were pursuing alternative strands of thought. Among these was Hyman P. Minsky, who this conference is honoring.  I had the good fortune of knowing him quite well, and he pushed using macroeconomic models.  So there were alternative models out there, but they were systematically ignored by much of the economics profession.

Hopefully, we will learn, at least for a while, some important lessons from this crisis. Unfettered financial markets do not work, and the current regulation and regulatory institutions failed, partly because one is not likely to get effective regulation when there are regulators who do not believe in regulation.  Markets are not self-adjusting, at least within a relevant time frame.

More broadly, Darwinian natural selection may not work either. Rather, like Gresham's law, which holds that bad money drives out good, reckless firms forced more conservative firms to follow similarly reckless investment strategies. More prudent firms might have done better in the long run, but they could not survive to take advantage of that long run.

Our financial system failed in its core mission, allocating capital and managing risk, with disastrous economic and social consequences--not just in misallocated capital in the past but also in the huge disparity between potential and actual GDP in the coming years, sums that almost surely will be in the trillions of dollars. Regrettably, flawed economic theories aided and abetted both those in the public sector and those in the private sector in pursuing policies that almost inevitably led to the current calamity.

We need to do a better job of managing our economy, but this will require better research that is less framed by the flawed models of the past, less driven by certain simplistic ideas, and more attuned to the realities of today. There is a rich research agenda ahead.




She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Sun Aug 2nd, 2009 at 11:13:37 AM EST
More broadly, Darwinian natural selection may not work either. Rather, like Gresham's law, which holds that bad money drives out good, reckless firms forced more conservative firms to follow similarly reckless investment strategies. More prudent firms might have done better in the long run, but they could not survive to take advantage of that long run. (My bold)

Since Stiglitz levies frontal attacks on the foundations of Mainstream Economics/Neo-Classical Economics/"neo-classical synthesis" approaches, he, despite his being the recepeint of a "Nobel" in economics, cannot be a true Serious PersonTM.  It still is gratifying to find him using Gresham's Law to describe the effects on the integrity of financial firms of the (still) prevailing "see no evil" regulatory approach in the USA.  It has long been one of my own favorite hobby horses.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Aug 3rd, 2009 at 12:10:15 AM EST
[ Parent ]
How does standard monetarist economics deal with the original Gresham's law in the first place?

The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.
by Migeru (migeru at eurotrib dot com) on Mon Aug 3rd, 2009 at 02:18:53 AM EST
[ Parent ]
How does standard monetarist economics deal with the original Gresham's law in the first place?

By ignoring it, as they usually do with inconvenient facts or theories?  If you are asking me, we obviously need someone much better read in the literature of economics.  Bruce?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Aug 3rd, 2009 at 09:43:26 AM EST
[ Parent ]
... instruments that function as money. In the conventional monetarism, Gresham's Law is a cautionary tale instructing us to avoid allowing the creation of "bad money".

A bit like using the the rate of acceleration in free fall to generate the advice not to fall off of high places on planets with so much gravity that its dangerous.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Aug 3rd, 2009 at 11:59:35 AM EST
[ Parent ]
In other words:
By ignoring it, as they usually do with inconvenient facts or theories.

If repeatedly pressed in a public forum of his peers on this subject what would Milton Friedman have done?  My guess is that, prior to the Giant Financial Crisis he would have strenuously argued that such a thing could not happen or was very unlikely to happen.  Afterwards?  Pull a Greenspan? I have no idea.  But Gresham's Law is the most concise explanation of the events leading up to the GFC that we have.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Aug 3rd, 2009 at 05:03:55 PM EST
[ Parent ]
... based on actual monetary institutions. However, actual money is not needed at all in the purest of the mainstream models, and even where its useful, its a minor technical benefit, and money itself is "neutral" in the long term.

The mainstream model is a model of allocation, not a model of mobilization of resources, and the model of human behavior used in the model of allocation is incompatible with the way real people actually mobilize resources in the real world ... hence the breakdown of the "neoclassical-Keynesian synthesis" model of the 50's and 60's.

Its just that the breakdown was in reality an indictment of the effort to combine Keynes valid model with an invalid micro model, and it was taken as an indictment of Keynes model for being incompatible with the (invalid, but ignore that minor point) micro model.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Aug 3rd, 2009 at 06:14:25 PM EST
[ Parent ]
Its just that the breakdown was in reality an indictment of the effort to combine Keynes valid model with an invalid micro model, and it was taken as an indictment of Keynes model for being incompatible with the (invalid, but ignore that minor point) micro model.

Figures.  Do I recall correctly that the remaining part of the "failure" of Keynsian Economics had to do with the development of trans-national corporations which, coupled with the failure to develop international regulations and accounting standards, facilitated the escape of corporations from effective oversight, with the push to remove restrictions on trans-national capital flows and with the resulting increase of complexity of economic analysis and and opacity of economic data left attempts to perform Keynsian macro analysis with indeterminate results?

This whole process smacks of the successful resistance of the capital elites to submit to any meaningful oversight or restraint, which remains the problem and which is a large part of what led to the current GFC.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Aug 3rd, 2009 at 07:28:10 PM EST
[ Parent ]
A somewhat different failure may have been the problems of proscribing effective measures during the stagflations in the 70ies - or at least that is something I vaguely recall reading somewhere. That would be a failure in the sense that political economics is an education for becoming an advisor to the court, and if the advices are no good, the advisors may loose their positions (in due time).

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Tue Aug 4th, 2009 at 06:19:06 AM EST
[ Parent ]
And Economists are about as effective as Court Astrologers were when it comes to advising policy?

The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.
by Migeru (migeru at eurotrib dot com) on Tue Aug 4th, 2009 at 06:22:33 AM EST
[ Parent ]
Both can hang around as long as they convince the rulers that their advice is fundamentally sound, and the rulers would be even worse of without their advice.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Tue Aug 4th, 2009 at 06:35:28 AM EST
[ Parent ]
and if the advices are no good, the advisors may loose their positions (in due time).

For this to happen the bad advice has to be seen as bad advice.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Aug 4th, 2009 at 08:32:53 AM EST
[ Parent ]
"Nobody could have foreseen..." seems to work for Economists like it didn't for Astrologers.

The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.
by Migeru (migeru at eurotrib dot com) on Tue Aug 4th, 2009 at 08:35:21 AM EST
[ Parent ]
Since they don't really want to know, Mainstream Economists have wisely avoided, indeed, denied the possibility of predicting GFCs.  Time will tell if this was a good long term strategy.  At least it avoided the unpleasant task of telling their masters things their masters did not want to hear.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Aug 4th, 2009 at 08:43:26 AM EST
[ Parent ]
... models did not have the same strong bias in favor of unfettered transnational corporate power as models with a neoclassical heritage without the partial Keynesian model bolted onto the side.

Of course, the "purer" models normally work by assuming that all exchange is hands-off market exchange and assuming that all "capital flows" are hands off capital market transactions, and are then deployed to argue in favor of foreign direct investment in integrated production activities ... because, after all, the pure model has to treat the production activities of a going concern as a black box, so when the formal "going concern" consists of hundreds of going concerns operating on the basis of managerial transactions under private corporate governance ...

... its necessary to pretend otherwise. Otherwise, of course, the model does not fit.

Its a strategy of telling all the news that fits the print.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Aug 4th, 2009 at 10:44:05 AM EST
[ Parent ]
The cumulative price to the average citizen of the USA of financial bailouts since the Savings and Loan Fiasco of the '80s and through the current catastrophe may not yet exceed the cumulative cost of US military spending, but if it does not yet it soon will.  The Financial Disservice Industry first takes a healthy bite out of this money to cover bonuses and then uses the rest as required to paper over the immediate consequences of bad investments.  Were they to actually resolve the problems they would be killing the goose that is laying the golden eggs.

Clinging to a failed economic paradigm whose chief value is the rhetorical cover it provides for their rapacious behavior serves to de-legitimate analysis that might ward off some of these repeated failures.   It might be thought that this is a major deficit of that system, but, increasingly, it seems that that is the very point of Mainstream Economics as practiced in the USA.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 2nd, 2009 at 12:16:08 PM EST
Oft and idly conjectured the entire Right Wing are Marxists with the minor exception they consider the Exploitation of the Working Class is a good thing.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Sun Aug 2nd, 2009 at 12:31:17 PM EST
[ Parent ]
But they are not good Leninists.  They want to substitute a Pirate's Cabal for The Dictatorship of the Proletariat.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 2nd, 2009 at 12:39:13 PM EST
[ Parent ]
I suggest the phrase Stirling Newberry used in a blog of his a month or two ago: The Dictatorship of the Propertariat.
by NBBooks on Sun Aug 2nd, 2009 at 12:42:31 PM EST
[ Parent ]
The pwn3rship society.

The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.
by Migeru (migeru at eurotrib dot com) on Sun Aug 2nd, 2009 at 04:27:25 PM EST
[ Parent ]
Brilliant.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Aug 2nd, 2009 at 04:43:11 PM EST
[ Parent ]
Long John Silver

sez ...

Ar, matey.  Unless the Too Big to Fail banks be subsided the economy be never reach full employment and the markets be never reach equilibrium.  Ar (bite the parrot) AR!

So hand over the doubloons or prepare to be boarded ye scurvy slobs!

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Aug 2nd, 2009 at 12:48:26 PM EST
[ Parent ]
That's one of the reasons I claim America has reverted to feudalism...

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Aug 2nd, 2009 at 04:14:55 PM EST
[ Parent ]
Glad you posted this here. I saw your link at dKos, but there's such an overwhelm of stuff sometimes that it's hard to focus in on individual long posts.

And besides, I find I prefer to read in-depth items here, anyway. :-)

by Mnemosyne on Sun Aug 2nd, 2009 at 11:41:35 PM EST
Reading through the PDF makes me angry.  Stiglitz is clearly stating things that have been clearly stated on ET for the last year.  Yet these fundamental criticisms have not made it into the public sphere.  Why not?

The simplest explanation that accounts for the observed phenomena is the best.  For this I nominate Upton Sinclair:

It is difficult to get a man to understand something when his job depends on not understanding it.

Almost all economists who work in government or for economic organizations representing the interests of the majority of the holders of wealth are incapable of "understanding" the true nature of the current system as their jobs depend on not understanding it.  The purpose of Mainstream Economics is to provide a "cover story" that is useful for disguising what, if understood properly, clearly should be illegal.

NBBooks was right a year ago: Wall Street must be euthanized!  

This is necessary but is not sufficient to a proper solution to this crisis.  The "rent" that is being extracted from the economy by the financial sector is a millstone around the neck of the economy.  Trying to make good the losses of Wall Street on their counterfeit wealth will preclude any real recovery.  So long as Wall Street and, especially, Goldman Sachs, retain the stranglehold over US economic policy which their ill gotten gains have given them, no one who can "understand" the true nature of the problem will be allowed any place in the public discussion.  Goldman and others on Wall Street must die so that the economy may live!  

There is no alternative. While they remain, they will prevent even the consideration of any meaningful change. The chief beneficiaries of a fatally flawed system are always the last to recognize those flaws and do so only when the system has publicly and undeniably failed.

The unenviable and daunting task of making this known to the wider public falls to us and others who are like-minded.  Else we face a very dark future.        

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Aug 3rd, 2009 at 01:06:51 AM EST
See Krugman's Unpersons (July 8, 2009)
One of the mysteries of the way issues are covered in much of the news media is how certain views get ruled "out of the mainstream" and just don't get covered -- even when many well-informed people hold those views.

...

And here's the thing: in this case [unlike the run-up to the Iraq war], there isn't any hidden evidence -- you can't argue that the CIA knows something the rest of us don't. And the voices calling for stronger stimulus are, may I say, sorta kinda respectable -- several Nobelists in the bunch, plus a large fraction of the prominent economists who predicted the housing crash before it happened.

But somehow, the pro-stimulus people are unpersons. Who makes these decisions?



The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.
by Migeru (migeru at eurotrib dot com) on Mon Aug 3rd, 2009 at 02:10:54 AM EST
[ Parent ]
ARGeezer:
Reading through the PDF makes me angry.  Stiglitz is clearly stating things that have been clearly stated on ET for the last year.  Yet these fundamental criticisms have not made it into the public sphere.  Why not?

Because we've been sitting around twiddling our keyboards when we could have been running a media campaign to get these points of view into the mainstream.

Currently most of what's written on blogs doesn't exist. Aside from a small coterie of devotees, no one sees it.

This won't change until it changes.

And the solution for Wall St is story telling - literally changing the story that Wall St tells America, and replacing it with a more honest story that America can tell Wall St.

Even now after all the theft and pillage, there are still far too many people on dKos who think that Wall St is on the same side as they are, and who are only very slowly starting to realise that perhaps it isn't.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Aug 3rd, 2009 at 06:40:06 AM EST
[ Parent ]
ThatBritGuy:
Because we've been sitting around twiddling our keyboards when we could have been running a media campaign to get these points of view into the mainstream.
With whose bankrolling?

Or do you mean a broader "we" than we here ETers?

The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.

by Migeru (migeru at eurotrib dot com) on Mon Aug 3rd, 2009 at 10:19:58 AM EST
[ Parent ]
Our own of course.

But we've been talking about this for years now and nothing has happened, or is any closer to happening than it was originally.

So I've pretty much lost interest in pushing it here.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Aug 3rd, 2009 at 11:17:58 AM EST
[ Parent ]
If not ET as an organization, then perhaps a sub-set of the participants could push an agenda.  I would personally appreciate a  diary or any suggestions in this regard that could make my own pathetic efforts more effective.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Aug 3rd, 2009 at 05:11:15 PM EST
[ Parent ]
... that is also a successful political action committee ... there is goal conflict between the two, in that what is rewarding to the magazine will not always be rewarding to the political action committee, and visa versa.

At its heart, ET is a magazine where writers are paid in comments and the ephemeral status of recs and tips. And that is not a stable reward structure for even a all-volunteer political action committee.

Of course, a political action committee could rely on new media technology and organize itself in a new media way around a website that features the updated-on-an-ongoing-basis content that we recently learned is important even for spam-blogging ... using writing at ET to publicize the organization and using writing from ET to generate part of the content for the website.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Aug 3rd, 2009 at 06:21:04 PM EST
[ Parent ]
I've made it clear that I could seed-fund the early months of such an effort (but no more) - if people came up with a plan and the willingness to implement it. There are some efforts under way - contact me if you want to join in.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Aug 4th, 2009 at 07:39:11 AM EST
[ Parent ]
That's half of the money problem. Given a workable business plan, the start-up funding would allow that business plan to get up and running.

Is the business plan to operate on grants and funded projects, or is there a social networking twist in there?


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Aug 4th, 2009 at 10:46:11 AM EST
[ Parent ]
I think we could do well in seperate focused campaigns were we:

  1. Put up campaign page with some kind of counter.
  2. Generate buzz online. Get that counter high.
  3. Take it to the MSM with the counter number and an easy conflict as the news.

"10 000 sign petition aganist Blair as president!"
"20 000!"
"30 000!"

Yes, it would be simplistic and have to focus on easily identifible conflicts. That is how the media works.

So should we get a petition rolling on bailouts?

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue Aug 4th, 2009 at 05:00:57 AM EST
[ Parent ]
Krugman Complains
A lot of people think economics is completely summed up by "Yay free markets! Greed is good!"

But there's a lot more to it -- and once you get past the simplest stories, far more nuance.

To which I replied
Well, the economics you see in the media and in the discourse of politicians, in policy papers, or coming from organizations such as the OECD does seem to reduce to "Yay markets!"

If there is more to it, it is not visible outside the halls of academia.

You yourself have complained that the public discourse on economics is strangely homogeneous and lacks discordant voices. (See Unpersons on July 8)

So, if the public debate on economic policy is dominated by simple stories devoid of nuance which, to top it all, are not even wrong, it behooves the academic economists who supposedly know better to call foul.

After all, biologists react forcefully to creationism and astronomers to confusions of their science with astrology.

It's about time you economists started calling the pseudoscientific claptrap that passes for popular economics for what it is.

Otherwise you'll be guilty by inaction.

(comment awaiting moderation)

The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.
by Migeru (migeru at eurotrib dot com) on Mon Aug 3rd, 2009 at 10:09:37 AM EST
[ Parent ]
And the nuance is almost invariably a twist or a gimmick in the foreground of the modeling, while the background is the same default model which, when you push on it, is indeed biased to saying "yay, market!".

Those "wow, look at how the model when squeezed hard can in fact say what the critics are saying, after gutting the original critique of much of its substance in the process of translating it into a utility maximizing framework" works are, indeed, part of the "defensive belt" of the paradigm, standing as examples that, "why, yes, we take that into account", without fundamentally changing anything.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Aug 3rd, 2009 at 06:24:54 PM EST
[ Parent ]
... often do not find their job directly depending on toeing the corporate party line, it definitely does provide the easiest route to gaining grant funding, which leads to the publications that can gain an economist tenure, and promotion after that which gains economists status.

Academics are like cats ... the easiest way to herd a group of cats is to hold up a nice smelly slice of bologna. The corporate sector realized this long ago, and the process of the economic profession "forgetting" inconvenient truths involved lots of relatively cheap grants to fund research into more convenient lines of economic research.

If a progressive coalition wanted to change the terms of debate inside the economic profession, substantial grant funding of research with low on-costs would do it ... the graduate students and new PhD's would come flocking with proposals.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Aug 3rd, 2009 at 12:07:17 PM EST
[ Parent ]
and the fact that one side has more of it - or has it available in a more concentrated form. And thus the only way to fight back is by harnessing many small forces into a large one, which requires discipline and order, something that the current left seems profoundly hostile to.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Aug 4th, 2009 at 07:37:32 AM EST
[ Parent ]
which requires discipline and order, something that the current left seems profoundly hostile to.

At the least, broadly indifferent.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Aug 4th, 2009 at 08:47:16 AM EST
[ Parent ]
... the concentration of money allows a Foundation to be established that funds ongoing propaganda out of ongoing wealth income, so that the think tank can expand when more funds become available and contract when new funds are harder to find, but never has to close its doors.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Tue Aug 4th, 2009 at 10:56:50 AM EST
[ Parent ]
The elites can pour some money into economics research in the secure knowledge they will get it all back.  And then some.  For them it's a positive sum game.  When the Left, on the other hand, putting money into economic research is a negative sum game as any return is diffused through society.  

The elites also get a nice, for them, little positive feedback cycle going as one can see from the events of the past 50 years: they fund "research" - of the properly vetted kind, tilting the playing field towards them, making them more money, part of which goes into "research" - of the properly vetted kind, tilting the playing field towards them, making them more money, and so the cycle continues.

A second input into the loop is as the money flows to the elites there is less money flowing for the rest of society, for the Left -- as a sub-group of society.  

A third input is as the money flows into and under control of the elites they are able to purchase the means of mass communication to push their own line while simultaneously ensuring "heterodox" (sic) (Read: unwanted) ideas are not allowed air time.

The above implies, BTW, any group i.e., ET, wishing to push "heterodox" (sic) ideas is underfunded making their efforts ad hoc, intermittent, and semi-private.  Even acknowledged Serious People© such as Stiglitz can be marginalized and thwarted under these conditions.  (It took ET how many months to become aware of his talk?)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Aug 4th, 2009 at 11:29:09 AM EST
[ Parent ]
The elites also get a nice, for them, little positive feedback cycle going as one can see from the events of the past 50 years: they fund "research" - of the properly vetted kind, tilting the playing field towards them, making them more money, part of which goes into "research" - of the properly vetted kind, tilting the playing field towards them, making them more money, and so the cycle continues.

And this works until a tipping point is reached, after which any more tilting will result in the playing field toppling over on them.  I think that is, in fact, what really is happening now.  The financial sector has so successfully "tilted the playing field" that they have become a cancer on the body politic.  

The tipping point may well have been 2000, when the dot.com bubble broke.  At least it involved "investment" in something that actually provided benefit to the society--the internet infrastructure. In order for the financial sector to continue to grow while conducting the >$1 Trillion Iraqi misadventure without raising taxes, we allowed the housing bubble to inflate.  This extracted wealth from all of society and temporarily delivered it to the financial sector.  they pocketed the profits prior to the bubble's collapse.  Then the collapse magically turned assets into liabilities.  Trying to "make good" the losses that the financial sector created and suffered is sucking the life out of the rest of the economy, just as a malignant tumor sucks the life out of the body on which it grows.  

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Aug 7th, 2009 at 09:17:36 AM EST
[ Parent ]
You sound radical but you just make sense. I have long felt that the Islamic code which severely restricts money-lending has that grain of truth common to most evolved social control systems.

Financiers have the most arrogant overestimation of their value to society I know of, worse even than theologians.

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Thu Aug 6th, 2009 at 02:43:24 AM EST
[ Parent ]
Yes because we all know what raging successes mideast economies are... Take away the oil and what do you have left?

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Aug 6th, 2009 at 09:36:49 AM EST
[ Parent ]
You imply that only interest rates are important to economic success?

Next you'll be telling me that Growth is Good.

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Thu Aug 6th, 2009 at 08:07:11 PM EST
[ Parent ]
Certainly not. I imply they ar extremely helpful, that the Arab countries actually use them, and that Sharia banking is as much a scam as American investment banking.

And that without oil Saudi Arabia would be about as developed as Niger.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri Aug 7th, 2009 at 05:01:58 AM EST
[ Parent ]
Well any countries economy would hardly be considered a raging success if you took out its largest, most productive sector.

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Thu Aug 6th, 2009 at 08:29:35 PM EST
[ Parent ]


Display:
Go to: [ European Tribune Homepage : Top of page : Top of comments ]