My _____ Is Better than Yours!

Neil Irwin at The New York Times has a sad little piece on the pissing matches between economics departments.

Why is a newspaper like the Times concerned in the slightest over which economics department is best? What does that mean? It's clear why Stanford or Harvard or MIT would be concerned -- donor dollars. But nobody would suggest that X being best means that every economist at X is better than any economist at Y, or that all the work emerging from X is better than any work from Y.

And why is it the people that make one better? It's the obsession with star names that leads less wealthy schools to spend fortunes building a handful of superstar departments, spending fortunes on a handful of faculty. Do the students benefit? Do junior faculty? Is there better funding for any but the superstars? Harvard, Stanford and a handful of others can buy almost anyone they please. But NYU or Berkeley -- outstanding schools with outstanding economics departments -- can't. Why not create a better overall climate for students and faculty and worry less about the superstars?

Isn't it the quality of work coming out that matters? Certainly, the work is tied to the people, but if research is the real standard, then economists and the reporters who follow them around like little puppies might do well to consider some history. Twenty five or thirty years ago, many would likely have said that Chicago's was the 'best' department. Now, many would say that much of the work done at Chicago was politically driven hokum. (And who would now deny that political ideology drives an enormous part of economics?)

It's telling that in no natural science would this kind of chest beating take place. There are tempests in teapots over the 'best' physics or biology department and there is something sense to saying one is better than they other, but few worry so much about status because the work is the standard. By contrast, economics (and political science) seem to be little more than personality cults.

Property Rights in the New Glorious Not-Quite-Revolution

My guess is that many glitterati economists and political scientists at places like Stanford and Harvard are couching the TPP in terms of "property protections" (among which intellectual property is currently the most popular). By the same token that the "Glorious Revolution" supposedly marked a milestone in protecting property from the interference of a national leviathan (making possible the English revolutions in finance and industry), now restrictions on international leviathans (or national ones with international influence) will -- if you drink Obama's Kool-Aid -- promote revolutions in international commerce. With the TPP, international players will have further incentives to innovate and trade because they will be more confident of retaining the gains from their effort.... Or something like that. 

John Roemer wrote a nice survey essay in 2011: "The Ideological and Political Roots of American Inequality". He suggests that micro-economic theory has turned from focusing on the coordinating functions of markets to focusing on markets as devices for harnessing incentives (modeled in the theoretical tool of this time -- game theory). So politicians and executives who want to further line their own pockets now have a theoretical justification for opposing policies that might be deemed to interfere with the incentives of market rewards (especially any redistributive policy).

This serves a convenient dual purpose. First, since the middle class and poor are "takers, not makers," the effect on incentives for them is irrelevant, neatly excluded from the 'scientific' program. Second, redistribution effected by markets is okay (it's 'natural'), but redistribution effected by the leviathan is distortionary and depresses incentives. Regulations, environmental protections, loosening intellectual property protections, and so on, all involve government action that will weaken owners' property claims and effectively redistribute down the economic ladder. This also explains why we are seeing an explosion in conservatives and corporations appealing to rights.

Main Currents of Political Science and Economics — Over a Cataract

Duke professor Jedediah Purdy highlights a NY Times essay by Molly Worthen, particularly the following passage:

"The left can’t talk openly about ideology, while the right pretends to ignore its own identity politics. The country’s political conversation is boring and unsatisfying precisely because its unspoken rules forbid politicians from acknowledging what is really going on and encourage them to talk past one another. 

"The right has so thoroughly captured the terms of economic debate that American liberals — uniquely in the Western world — champion cultural issues like same-sex marriage equality while avoiding serious confrontation with the structural sources of socio-economic inequality. Their ideological cowardice has left them turning sensible reform proposals like single-payer health insurance into the Frankenstein’s monster of government-subsidized private enterprise that is the Affordable Care Act."

Before the elections, the Times was running a side by side comparison of several models predicting the outcome of the campaigns. I haven't found an account of how those models actually shaped up in the actual outcome.

One way or another, the "conversation is boring and unsatisfying" also captures something about the state of political science exemplified in those models. It's badly missing something. And I don't think it's any accident that it has bought so completely into the methods of the main current of economics that so badly missed critical trends of the past 35 years (not just the past 7 years).

Entropy, the Business Cycle, and the New Mediocre

Vanessa Frieden, New York Times fashion critic, has an essay in the paper drawing on comments by Christine Lagarde, director of the IMF, on what Lagarde calls the "new mediocre." I think Frieden doesn't quite get the point.

Thomas Kuhn, the philosopher of science, coined the term "paradigm shift." Later, after it became a buzzterm with many meanings and little force, he regretted that, critically brilliant though it was. I wonder whether Christine Lagarde might feel something like that with the "new mediocre."

Lagarde means something specifically economic (as Vanessa Frieden acknowledges). Still, Friedman may be onto more than she realizes. The "meritocracy" that the privileged rave about (think executive pay, elite universities, charter schools, privatization of government functions, etc.) is mostly a myth. The great people of merit have proved to be stunningly mediocre (even incompetent, even criminal) — Lloyd Blankfein, Jamie Dimon, about 90% of Congress and the executive, even the Supreme Court. Economic theorizing (including about meritocracy) has failed like very few sciences have ever failed. (A whole science — that's impressive.) Meritocracy was a cover story invented after the fact.

But the irony is in what Frieden and Lagarde still buy into: Growth must go on — the old thinking. "No prosperity without growth." People must buy more. Throw out the old — or even the new, useful or not. Buy newer, needed or not. Get a new cell phone each year. New clothing each season. Frieden's real quibble seems to be with the pace, not the irrational cycle.

Here's another law of physics: Entropy increases. Disorder increases. In time, things fall apart. Irrationality will accelerate that.

Wealth Supremacism: The Real Reason the Harvard Study on Mobility is a 'Landmark' in the Eyes of American Media

The amount of hype the Chetty study has gotten is quite astonishing, but not surprising. First, we have to remember the lengths to which Harvard goes to present anything and everything that happens at Harvard as more earth-shattering than anything and everything that happens anywhere else. It is easy to roll ones eyes at this point of mine, but it is part of the politics and economics of academia. We see much the same in the lobbying of universities for Nobel Prizes — one of the reasons why some, like physicist N. David Mermin, have so strongly criticized prizes generally: "[Mermin] maintains that the prize system has run amok, absorbing far too much of scientists' time and effort." (It is also, in my opinion, a reason for the public ownership of all universities.) Check out the ancillary materials Harvard has released in connection with this study. There has clearly been an effort to market the work for popular consumption.

The more important reason this is a 'landmark' study in the eyes of NPR or New York Times or Post pundits and editors is that it fits very nicely into the outcomes that they find tolerable. It fits into the prevailing attitude of wealth supremacism. The Bill Kellers or Robert Samuelsons or Cokie Robertses embrace inequality. That want more inequality. They firmly believe that the privileged are innately superior. They absolutely will not tolerate scientific findings that clearly support a case for redistribution of wealth. This cannot be overemphasized. How many mainstream observers of President Obama's State of the Union address obsessed over any possible redistributive implications of his statements:

• The Economist; "Obamacare and inequality — A healthy dose of redistribution";
• Conservative, Clinton-style Democrat William Galston at Brookings;
• Britain's Telegraph newspaper: "Barack Obama calls for more redistribution of wealth";

Consider this from an op/ed at Forbes: "[I]ncome inequality is unrelentingly beautiful." This is a common view among Americans, who overwhelmingly share the conviction, take as an article of faith, that they will soon win the lottery, that they are just about to become fabulously wealthy. But, crucially, Americans also overwhelmingly adhere to a conviction that the wealthy deserve to be so.

Here is 'noted' Harvard economist Gregory Mankiw: "Smart parents make more money and pass those good genes on to their offspring."

This is the thinking underlying eugenics, and it is a pervasive and growing conviction among American conservatives, moderates, and no small percentage of progressives. (And not just among Americans.) It is reflected in the cultish adoration of evolutionary psychology and evolutionary economics, and the gross misunderstandings of genetics and biology common among people generally, social scientists, and even many biologists. Stephen Jay Gould was an outstanding thinker on these issues. Richard Lewontin and others still write on these matters.

I highly recommend Dean Baker's writing on the Chetty mobility study:

• Mobility and Inequality: More on the Non-New Findings
• Did We Need a Landmark Study to Tell Us Mobility Didn't Decrease...

This Republican (and Democratic) Economy

Paul Krugman writes this Monday of "This Republican Economy" and Barack Obama's and the media's unwillingness or inability to state the obvious regarding GOP obstructionism. I think Paul Krugman fails to grasp the nettle (to paraphrase the great left political philosopher G. A. Cohen speaking on John Rawls).

The most obvious liberal-progressive response to Mr. Krugman is that Obama and the media have failed to highlight know-nothing Republican obstructionism because they largely agree with it. On healthcare, foreign policy, education, Social Security, domestic security and a raft of other issues, Obama is conservative. The media in the US is likewise conservative. News organizations like the Times have supported war almost without qualification. They have raised only the most tepid challenges to Obama attacks on American civil liberties. They have largely supported talk of privatizing Social Security, even after the crimes of Wall Street. The list goes on.

If Paul Krugman's question for Obama is "Why the weak response," a question for Mr. Krugman is, "Why not take your own reasoning to the conclusion evidence supports?" This country, not just GOP fanatics, is largely conservative and anti-Keynesian. Obama is anti-Keynesian, just not as extreme as the GOP (on economics; he's more extreme on foreign policy and domestic security). When he had the choice, the opportunity, and the swell of opinion with him, Obama nevertheless surrounded himself with substantially anti-Keynesian economic thinkers (the exception being Christina Romer, who was soon forced out). Keynesians like Paul Krugman or Joseph Stiglitz were pointedly excluded.

Media elites (with some like Bill Keller related to industry executives, some like Cokie Roberts related to government elites, or some like Thomas Friedman being actual economic elites) identify with wealth, not with common Americans. Many academic elites do also.

As John Kenneth Galbraith noted decades ago, these people's interests align with wealth. Moreover, the perceptions of self among media and government elite align with wealth. Elite interests and ideas — to borrow a phrase economist Dani Rodrik has recently used — are highly homogeneous. The contempt Mike Bloomberg shows average Americans is widely shared among Democrats, not just Republicans.

As With Bailout, So With Social Security

Recall that the first attempt to bailout banks in September 2008 failed in Congress after a deluge of calls from voters in opposition. Then Congress rallied. After all, if 95% of members support policy X, how can you play one off against another?

The same is happening now. The oligarchs have ruled against Social Security. They know they will never need it, but in time there will be no one left to raise taxes on but the rich, so in time, if social programs are to be preserved, the rich will have to pay a share more closely representing the degree to which they disproportionately benefit in out society.

The solution is to kill social programs in their entirety, let the poor and middle classes suffer. Why? Congress and every president since Reagan have demonstrated repeatedly that they place a near-exclusive priority on the interests of the wealthiest (not just to the exclusion of others, but at the expense of others).

The political economist Carles Boix has argued that democracy thrives when the privileged perceive that the masses cannot vote away the wealth of those privileged. So countries with diverse and liquid assets like the U.S. can tolerate democracy. I suggest that the United States is proving Boix's argument incomplete. The rich are saying, again and again, "No!" to democracy.

It may be no more complicated than this: In a society where a huge majority show no interest in current events, politics, economics, justice, truth, government, why should power-brokers deal with democracy when they can just as easily — or more easily, given the population's passivity — deal without?

A Brave New America {in progress}

Paul Krugman pulls his punches. He writes in two Times pieces today, one on the op-ed page and the other on his Times blog, of the issues of unemployment, the Obama administration's failure to act and the elite's indifference to the suffering of many now that the Great Recession has officially been declared over.

Looking a year or two forward in his blog, Krugman writes,

[There] will be high unemployment leading into the 2010 elections, and corresponding Democratic losses. These losses will be worse because Obama, by pursuing a uniformly pro-banker policy without even a gesture to popular anger over the bailouts, has ceded populist energy to the right and demoralized the movement that brought him to power.

And from his Times op-ed essay,

You might think, then, that doing something about the employment situation would be a top policy priority. But now that total financial collapse has been averted, all the urgency seems to have vanished from policy discussion, replaced by a strange passivity. There’s a pervasive sense in Washington that nothing more can or should be done, that we should just wait for the economic recovery to trickle down to workers.

Not long ago, in an interview with Eliot Spitzer on Bill Maher's show, Krugman sounded far more pessimistic. "Sometimes I wake up and think I'm in a third world country." And "The American dream isn't dead, but it's dying pretty fast." And still more: "If the US was a third world country, the IMF and others would be saying, 'You have to get rid of your oligarchs.'"

Paul Krugman and Bob Herbert are the most critical — and incisive — voices on the Times op-ed page, but the Times still tones them down, I suspect.

Nouriel Roubini Pessimistic About Recovery

Some Economists Are Funny; Others Are Stupid

A funny economist rags on one of Harvard's many stupid economists, N. Gregory Mankiw.

598,000 Jobs Lost; Stock Market Soars

Real Unemployment Is Up To 14%

Once again, the stock markets have greeted bad employment news with sheer joy. As I write this, the news is that nearly 600,000 jobs were lost in January -- the largest monthly loss since 1974. (New Yorkers: remember how the city was looking in the mid-70s?) Numbers for earlier months have been revised up. And the Dow Jones, at 10:37am, is up 140 points. At 1:40pm, 225 points. The ostensible reason? Even if workers and taxpayers -- We the People footing the bailout -- are getting shafted, financial institutions are looking good. Why? Because we have Summers, Geithner & Co. on the job, guaranteeing unlimited billions for Bank of America, Wells Fargo, Citigroup, while requiring nothing by way of a binding commitment from the companies, especially not anything that might look like a commitment to an owner.

The Financial Times reported, "The non-farm payroll losses in January were higher than the upwardly revised 577,000 positions shed in the previous month and were substantially greater than the 525,000 that economists had forecast in a Reuters poll." Economists were 52,000 shy -- 10% shy of the mark.

Each month since December 2007 has seen job losses -- 3.6 million in all.

Harvard Teaches By Example

Or "Harvard Blows Its Wad"
Caroline Kennedy takes her cue as author from Alan Dershowitz, "borrowing" other people's work and calling it original. (You have to be a student at Harvard to be punished for plagiarism, as Kaavya Viswanathan learned the hard way.) Kennedy, it must be admitted, is smarter than Dershowitz: She called her grade-school caliber work an "anthology". Fair enough. And she also had the example of daddy's Profiles in Courage for the 'right' way to pass off another's work as one's own.

Similarly, Wall Street execs, no small number of whom 'studied' at the Harvard Business School, follow the example of their alma mater when taking massive bonuses even though they suck as businessmen.

Thus The Financial Times reports the newest development in the continuing saga of well-rewarded failure among America's elite:

Harvard’s top money managers paid $26.9m
By Rebecca Knight in Boston
Published: December 19 2008 23:34 | Last updated: December 19 2008 23:34

Harvard, the world’s wealthiest university, said on Friday it paid six senior investment officers a combined $26.9m (£17.5m) this year to manage its endowment.

The fund has lost $8.1bn since the summer [four months].

US college heads accept voluntary thrift - Dec-10

The Harvard endowment earned 8.6 per cent during the last fiscal year but has since taken a big hit.

Drew Gilpin Faust, Harvard’s president, said in a letter to university deans this month that the endowment lost about 22 per cent of its value between June 30 and the end of October, bringing it from $36.8bn to roughly $28.7bn. . . .

The endowment funds about 35 per cent of Harvard’s annual operating budget. The university is preparing for a 30 per cent reduction in its endowment by the end of the year.

Yale's endowment, second largest in the world, has lost 25% of its value. So much for the nation's 'best and brightest'.

Look for some special earmarks — a privileged bailout — directed Harvard's way by Sen. Chuck Schumer (darling of Wall Street, Bernie Madoff, and other money-grubbing, cretinous vermin).

Likewise, look for revelations about Harvard, Yale, and other universities' ties to everybody's favorite whipping-boy conman — Bernie Madoff, who like Gov. Blagojevich, only made the mistake of being excessively brazen in the practice all the nation's money-grubbers were indulging in.

The Cult of Money

The rich have conned themselves. Decades of the pseudo-science, the dismal delusion — economics — had the Milton Friedmans, Alan Greenspans, Robert Rubins believing their own lies and the money-grubbing toads of Wall Street likewise believing while inventing further cons to deceive us out of our savings. Billions were made, now billions are lost. Sadly, the principle losers will not be the architects of the con but us. The bailout is just the beginning.

The newest development in Wall Street's Comedy of Errors — Bernard Madoff's ponzi scheme conning people out of some $50 billion. According to the BBC and other news organizations,

Some of the world's wealthiest private and corporate investors are reported to be victims of an alleged $50bn fraud by Wall Street broker Bernard Madoff.

Mr Madoff is alleged to have confessed to a huge Ponzi scheme (pyramid fraud).

Reports say the main owner of the New York Mets baseball team, Fred Wilpon, and former American football team owner Norman Braman are among the victims.

Others facing losses reportedly include French bank BNP Paribas, Japan's Nomura Holdings and Zurich's Neue Privat Bank.

The rich fall prey to their own con.

Again according to the BBC, Madoff has also said, "that he planned to surrender to the authorities but not before he used his last $200m-$300m to pay 'selected employees, family and friends'."

But here is the best part. Madoff ran a pyramid scheme that burned $50 billion. But, "If found guilty, US prosecutors say he could face up to 20 years in prison and a fine of up to $5 [million]."

So, if were not for the fact that he is now 70 years old, he might very well conclude that robbing $50 billion is cost effective. This pales when compared to the Wall Street conmen who, like John Thane of Merrill Lynch, are still seeking bonuses in the millions.

This is the nature of American justice. Steal a car, serve 5 years. Steal tens of billions, as Wall Street has done, get a bonus.

533,000 Jobs Gone in One Month

Two million jobs lost so far in 2008.

Biggest job losses in over 30 years.

Some will say that 10% unemployment is the "defining point" of depression.

"Today's employment report begs the question of whether the meltdown we're experiencing should be called a Depression."

— Robert Reich, former secretary of labor, professor at Berkeley

"The threat of a widespread depression is now real and present."

— Peter Morici, professor, University of Maryland

The real unemployment rate is certainly over 10% now. (The real unemployment rate is significantly higher than the official rate, now at 6.7%, because the government cooks the numbers.)

Finally, it begins to sink into the glitterati of Wall Street. The masters of Congress. The pundits, the academics. It's bad. We the People, who have to live with Their Decisions — the decisions of The Immune, The Exempt — already knew this.

We must ask what kind of "science" economics is if so many "economists" predicted the opposite of what we are now seeing, or at least got it drastically wrong. Is economics a science in the way Physics was in, say, 1700? Or is economics just no science at all?

If We the People are ill-equipped to do economics ourselves (though we can now reasonably ask whether we are just as well equipped as the so-called economists), we are perfectly equipped to judge the public assertions of economists. They have, with the exception of a small, progressive or liberal minority, been dead wrong.

So is economics just so poisoned by the self-serving interests of economists that it cannot realize its scientific potential? Or is it simply not a science? (And that raises the question of what makes Physics or Biology a science but not economics.)

Leathery Toad Channels Bart Simpson Before Congress

The economic war criminal Alan Greenspan was uncharacteristically intelligible in what will likely be the closest he offers by way of an apology. Greenspan joins Robert Rubin, William Donaldson, Henry Paulson and the cast of thousands in substantially avoiding any admission of his own role in an economic disaster for which WE THE PEOPLE will be held to account.

Greenspan effectively said, "I can't help feeling partly responsible." This is one of the leading advocates of deregulation in the history of modern economics.

Still the media faun all over him, just as they do with all of these arrogant shits. Charlie Rose had "Ace" Greenberg on last night (October 22nd). Now, Rose's specialty is grovelling before those whom he admires or with whom he agrees and being obnoxious to any others. But Rose outdid himself, even compared to recent interviews with Warren Buffett and Maurice R. "Hank" Greenberg (no relation to "Ace").

The New York Times, meanwhile, invited Myron Scholes (vide Wikipedia) of Long Term Capital Management notoriety to suggest questions for Obama and McCain — no mention of Scholes's vested interest in covering up the roots of this absurd, obscene bailout.

And NPR interviewed William Donaldson, former head of the SEC and also a major advocate of deregulation. NPR accepted at face value Donaldson's claim that he voted for more regulation while at the SEC. Presumably that translates as "There was this one time I voted for spending less on coffee at our daily briefings". Donaldson was at the helm when the SEC released Goldman Sachs (then headed by Henry Paulson) and other investment firms from the "net capital rule" in April, 2004, effectively allowing the firms to go into unlimited debt.

Likewise, Robert Rubin (also from Goldman Sachs), now advising the Obama campaign, advocated for deregulation while Secretary of the Treasury in the Clinton years.

See the connections?

It's as if the captain of the Titanic had survived and instantly been offered the command of another great passenger liner by his buddies formerly in the navy with him.

In truth, this should come as no surprise. Ours is an authority-driven society. Thus, a degree from Harvard Business School can mask a multitude of sins.

We have a hybridized Buddy-Authority System (BAS). The figures in positions of authority are all buddies. They cover for one another. And they make damn sure that major media figures are also buddies, thus ensuring friendly media coverage — as if the air of authority were not already sufficient to intimidate weak-minded, not particularly well-educated journalists. Not that these journalists don't have excellent credentials — they have their equivalents of the Harvard MBA — but the notion of actually digging for truth is utterly alien to them, particularly when doing so threatens access, buddy status, or professional acceptance.

Again, no surprise. It was ever thus. The Brits couldn't conceive that Kim Philby was a spy. "He's an old Etonian! We were at Oxford together! Pish posh." And Caesar: "Et tu, Brute?"

At the head of this was the God Greenspan. We have to wonder, "Is there any depth to which conditions could descend which would prompt genuine doubt about Greenspan and his ilk?"

Fortunately, in the midst of these yea-sayers, there are the intellectuals, in the sense that Edward Said meant — the real questioners, the Mark Twains or Chomskys or Galbraiths. (See Representations of the Intellectual, 1996)

Would that Galbraith were still alive. In his last years, he wrote on precisely the phenomenon we are now witnessing (A Short History of Financial Euphoria, 1990 and 1993):

In any great organization it is far, far safer to be wrong with the majority than to be right alone. . . . In all life one should comfort the afflicted, but verily, also, one should afflict the comfortable, and especially when they are comfortably, contentedly, even happily wrong. . . . There is something wonderful in seeing a wrong-headed majority assailed by truth.

BBC: Monkey-Prez "vows to stabilise US economy"

Feel better? Irritated that your not-particularly-honorable ranter should denigrate monkeys? I agree. I irritate myself. An itch I can't scratch.

But the buffoon Bush remains. What are we to do? Here's a passage from the BBC:

President George W Bush has promised the American people the US government is working "aggressively" to restore stability to the economy.

Speaking from the White House, Mr Bush said recent market turmoil was being driven by "uncertainty and fear".

He spoke as world markets tumbled amid rising fears of a global recession, despite interest rate cuts and huge cash injections by central banks.

He also defended the recent $700bn (£410bn) rescue plan for Wall Street.

Mr Bush said the bail-out package he signed into law a week ago was big enough but added "it will take time to have its full impact".

Others have noted that the Bush blather closely resembles in style his lies following 9/11 and leading to war.

As for taking "time to have its full impact": Yes it will take time for the Republicans to totally annhilate the United States.

Sadly, I see little evidence that the Democrats will do much better. Check out Obama's economics team — almost entirely out of the Clinton deregulation/Greenspan cult.

The AudASSity of Hope — a word in progress, brought to you by The Last Leftist

Stay tuned. Today, my little droogies, we shall examine Barack Obama's promise to America. War, Environment, Health Care, and THE ECONOMY. Has Obama changed his tune to win votes, planning to be the politician he promised, or is he showing his true colors?

O, my fellow proles, I despair. Obama's proto-cabinet is thick with Clintonistas, the very people who gave us a substantial portion of this current collapse. Deregulators, privatizers all.

PART 1
OBAMA'S PRIVATEERS
THE ECONOMY and THE ADVISORS

Austan Goolsbee — prof at U. of Chicago, the most rightwing economics department in the world, doesn't mean that he's a rightwinger, but he stridently opposes any single-payer solution to the health care crisis. After Obama made noises about the US opting out of NAFTA, it was Goolsbee who purportedly told Canadian officials that Obama was just waffling to please voters.

Robert Rubin — Clintonian, Goldman Sachs Co-Chair, Citigroup, Harvard economics BA. Was one of the leading deregulation advocates under Clinton. To more populist members of Clinton's economic team, Rubin said that the rich "are running the economy and make the decisions about the economy." Citigroup has been one of the hardest hit banks in the subprime mortgage crisis.

Jeffrey Liebman, Clintonian, prof. at Harvard (which university's business school can claim more of the idiots behind this the economic crash than any other). In the past has advocated privatizing social security.

David Cutler, another Harvard clone with an interest in health care. Very much in the muddle middle. E.g., “The rising cost … of health care has been the source of a lot of saber rattling in the media and the public square, without anyone seriously analyzing the benefits gained.” Or "Take a typical person aged 45. . . . They will spend $30,000 more over their lifetime caring for cardiovascular disease than they would have spent in 1950. And they will live maybe three more years because of it.”

Daniel Tarullo

Michael Froman

Karen Kornbluh — former Clintonian


MORE SOON.

Questions for McCain & Obama from Three Economists

An op-ed piece in October 7's New York Times, worth reproducing entirely. Three economists raise questions for the candidates:

JOSEPH E. STIGLITZ, professor of economics at Columbia, shared the Nobel prize in economics in 2001 and has advised the Obama campaign:

1. When the current bailout of Wall Street fails to turn around the economy and reinvigorate credit markets, will you propose another one? How large should it be? Henry Paulson and Ben Bernanke have said what is needed is a restoration of confidence in the economy. But won’t the failure of this bailout destroy confidence, with disastrous consequences — as happened in Indonesia and other East Asian countries when similar bailouts failed 10 years ago?
2. More than a million people have lost their homes in the past two years. A million more are expected to lose their homes in the next 12 months or so. Do you support a more direct program of relief for homeowners? The government pays more of the mortgage costs of rich homeowners, through larger tax deductions, than of poorer homeowners. What would you do to correct this injustice?
3. President Bush pushed tougher bankruptcy laws that were supposed to reduce bankruptcy and lower lending costs. But the new laws made it more difficult for ordinary Americans to discharge their debts, and encouraged reckless lending on the part of lenders, who thought they could more easily force poor borrowers to repay. Would you make any changes in the bankruptcy laws? Currently, it is more difficult to restructure a mortgage on a primary residence than other debts. Do you support bankruptcy reforms that would make it easier for people to stay in their homes?

R. GLENN HUBBARD, the dean of Columbia Business School and the chairman of the Council of Economic Advisers from 2001 to 2003:

1. Does the financial crisis indicate that we need more regulation? Or is the problem less one of too little regulation than of poorly focused regulation? The crisis had its origins in part in international capital flows that led to extraordinarily low interest rates. But high-risk mortgage lending drew some of its breath from regulatory interventions. Some heavily regulated financial institutions managed to get themselves in trouble. And it was government-sponsored enterprises, no strangers to regulation, that stimulated the demand for questionable mortgage products. Shouldn’t the next president be standing up to protect markets instead of sowing doubts about them?
2. The Federal Reserve has had to step into the political fray to an uncomfortable degree. Are we asking too much of the Fed? Should we create a strong financial regulator that would stand shoulder to shoulder with the Fed?
3. The existing capital standards for financial companies helped create the illusion that risky assets were “safe.” A reformed system could mandate more capital, to support incremental risk-taking, during a boom and lower such capital requirements in a bust. By changing capital cushions over credit cycles, banks would be less likely to be forced into asset fire sales. Would you support such a change?
4. Do you support the appointment of a presidential commission to report quickly on the causes of the current crisis and present options for regulatory reform?

MYRON S. SCHOLES shared the Nobel prize in economics in 1997. [The Times neglects to mention that Scholes was one of the founders of the notorious Long-Term Capital Management — the hedge fund bailed out by Greenspan's fed. But for that endorsement of Wall Street criminality 10 years ago, we might not be seeing the disaster we are now. Scholes was also implicated in illegality in 2005 in the case of Long-Term Capital Holdings v. United States. It should could come as no surprise that Scholes oozed out of the deeply right-wing University of Chicago Department of Economics.)

1. Discuss the tradeoffs for our economy, if any, between growth (so-called trickle down) and redistribution (so-called sprinkle around) policies.
2. At this moment, there seems to be an overwhelming cry for retribution, in the form of new regulations aimed at our financial services industry (so-called Wall Street). To what extent do you believe that these measures are necessary? How will you judge the benefits and costs of the choices to be made? How will the new regulations take into account the evolution of the financial services sector in trading securities or goods and services, financing businesses and homes, saving for college or retirement, and reducing and transferring risk?
3. Individual innovation and creativity in our society are the cornerstones of our economy. They create wealth and improve the nation’s welfare. Through innovations, the 20th century became the American Century. Will the 21st century be so as well or will it become the Global Century? How, if at all, would your administration foster innovation in the following areas: the provision of health care for our citizens; an immigration policy that attracts and retains the best; educational policies that increase the value of our human capital, our most important resource; helping people accumulate enough retirement savings; international trade and manufacturing; the evolution of information technology, biotechnology, nanotechnology and neuroscience; the allocation of water, food and energy and the development of alternative energy sources; and, to some, the most important, the environment?

The Idiots Lose Their Fudge

There is a great deal more here than meets the eye. But for the moment let us savor the shock of an elite in business and government who cannot fathom that we the people are not quite the sheep they take us to be.

But the Titanic is Unsinkable!

What analogy best fits the current economic disaster and boondoggle?

Rome is good. The Visigoths sacked Rome almost 1600 years ago — AD 410. What did the Romans think as they witnessed the conquering hoards approaching? I imagine sheer disbelief. Incredulity. "But this is Rome. Rome! The greatest city of the greatest empire in the world!" And Rome fell.

Better, I think, is the Titanic, particularly for how the least fortunate were treated. In the middle of frigid, iceberg-thick waters, the Titanic steamed ahead full-speed. Even as the ship began to sink, people insisted, "But the Titanic is unsinkable!" Then, as the first class and some second class passengers boarded lifeboats, the poor — the steerage passengers — were physically barred from the boats.

We the People are the steerage. Ignored. Even disdained by the likes of Alan Greenspan, George W. Bush, John McCain.