New frontiers in Transparency

Originally posted on unsettling economics:

http://online.wsj.com/articles/buyout-firms-push-pension-funds-to-keep-information-under-wraps-1415142588

We know we live in the world of perverse transparency: governments,
which are effectively shielded from having to provide information have
the right to get intimate information about our lives.  I think this
is supposed to be called transparency.

In the case of pensions, they are woefully underfunded. The only hope
they have of staying afloat while meeting their obligations is to
treat their finance as a form of what is known in the football world
as a series of hail Mary passes in order to gamble on getting
extraordinarily high returns.

The largest pension fund is California’s Public Employees Retirement
System, which recently announced that it would be withdrawing its
investments from hedge funds, but left unsaid that it would continue
investing with private equity operations.

Here we encounter a sad irony. The Mitt Romney campaign increase
public awareness of the damage that private equity does to workers.

View original 98 more words

New frontiers in Transparency

http://online.wsj.com/articles/buyout-firms-push-pension-funds-to-keep-information-under-wraps-1415142588

We know we live in the world of perverse transparency: governments,
which are effectively shielded from having to provide information have
the right to get intimate information about our lives.  I think this
is supposed to be called transparency.

In the case of pensions, they are woefully underfunded. The only hope
they have of staying afloat while meeting their obligations is to
treat their finance as a form of what is known in the football world
as a series of hail Mary passes in order to gamble on getting
extraordinarily high returns.

The largest pension fund is California’s Public Employees Retirement
System, which recently announced that it would be withdrawing its
investments from hedge funds, but left unsaid that it would continue
investing with private equity operations.

Here we encounter a sad irony. The Mitt Romney campaign increase
public awareness of the damage that private equity does to workers.
Workers have good reason to want to know about the fees that their
pensions pay to the private equity operations.  The high fees are a
matter of concern. In addition, recent revelations show that private
equity operations sometimes continue to charge fees from companies
after they have severed their official connections with the company.

People, presumably covered by their pension plan, petitioned the state
of Iowa to learn about the fees private equity charges. Private equity
companies pressure the pension plans not to reveal this information
unless they are willing to be blackballed from investing in private
equity.

The Anarchy of Globalization: Local and Global, Intended and Unintended Consequences

Originally posted on unsettling economics:

I am going to give a keynote lecture for a conference on the local effects of globalization in Turkey

Here are a few early sentences to give a sense of my talk.

GLOBAL

View original

The Anarchy of Globalization: Local and Global, Intended and Unintended Consequences

I am going to give a keynote lecture for a conference on the local effects of globalization in Turkey

Here are a few early sentences to give a sense of my talk.

GLOBAL

Extended Interview Regarding my New Book

Tom O’Brien is a very knowledgeable and insightful interviewer.  The URL for earlier interviews on his program is

http://fromalpha2omega.podomatic.com/entry/2014-06-27T15_00_18-07_00

The URL for the interview is

http://fromalpha2omega.podomatic.com/enclosure/2014-06-27T15_00_18-07_00.mp3

By the way, the latest title of the book is Work, the Economy, and Economic Ideology: And Exploratory Political Economy of the Dangerous and Paradoxical Interactions of these Three Faulty Pillars of Society.  I would very much appreciate any criticism and suggestions about the material discussed in this interview. Thank you very much.

 

The Ideological Fraud of Adam Smith, Beginning with the Pin Factory

Originally posted on unsettling economics:

The first sign of Smith’s pin factory appeared in a course of lectures to his students in Glasgow in 1762 and 1763, more than a decade before the publication of his great book. The discussion of the pin factory began on March 28, 1763, while he was explaining to his Glasgow students the importance of the law and government:

They maintain the rich in the possession of their wealth against the violence and rapacity of the poor, and by that means preserve that useful inequality in the fortunes of mankind which naturally and necessarily arises from the various degrees of capacity, industry, and diligence in the different individuals. [Smith 1762 1766, p. 338]

In order to justify this inequality, Smith told his students that “an ordinary day labourer … has more of the conveniences and luxuries than an Indian [presumably Native American] prince at the head of 1,000 naked savages”…

View original 445 more words

The Ideological Fraud of Adam Smith, Beginning with the Pin Factory

SMITHThe first sign of Smith’s pin factory appeared in a course of lectures to his students in Glasgow in 1762 and 1763, more than a decade before the publication of his great book. The discussion of the pin factory began on March 28, 1763, while he was explaining to his Glasgow students the importance of the law and government:

They maintain the rich in the possession of their wealth against the violence and rapacity of the poor, and by that means preserve that useful inequality in the fortunes of mankind which naturally and necessarily arises from the various degrees of capacity, industry, and diligence in the different individuals. [Smith 1762 1766, p. 338]

In order to justify this inequality, Smith told his students that “an ordinary day labourer … has more of the conveniences and luxuries than an Indian [presumably Native American] prince at the head of 1,000 naked savages” (Smith 1762 1766, p. 339). But then the next day, Smith suddenly shifted gears, almost seeming to side with the violent and rapacious poor:

The labour and time of the poor is in civilized countries sacrificed to the maintaining of the rich in ease and luxury. The landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his exactions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full enjoyment of the fruits of his own labours; there are no landlords, no usurers, no tax gatherers …. [T]he poor labourer … has all the inconveniences of the soil and season to struggle with, is continually exposed to the inclemency of the weather and the most severe labour at the same time. Thus he who as it were supports the whole frame of society and furnishes the means of the convenience and ease of all the rest is himself possessed of a very small share and is buried in obscurity. He bears on his shoulders the whole of mankind, and unable to sustain the weight of it is thrust down into the lowest parts of the earth from whence he supports the rest. In what manner then shall we account for the great share he and the lowest persons have of the conveniences of life? [Smith 1762 1766, pp. 340 41]

Smith’s train of thought is confusing. First, the law is needed to constrain the fury of the poor; then the market provides for the poor very well; followed by the wretched state of the people who worked on the land the least fortunate of the workers. For his grand finale, after decrying the “small share” of the poor, Smith curiously veers off to ask what accounts for “the great share” that these same people have. His answer should come as no surprise to a modern reader of Adam Smith “The division of labour amongst different hands can alone account for this” (Smith 1762 1766, p. 341).

By March 30, Smith was confident enough about his success in finessing the challenge of class conflict that he became uncharacteristically unguarded in openly taking notice of the importance of workers’ knowledge:

But if we go into the work house of any manufacturer in the new works at Sheffield, Manchester, or Birmingham, or even some towns in Scotland, and enquire concerning the machines, they will tell you that such or such an one was invented by some common workman. [Smith 1762 1766, p. 351]

Read the entire article here

 

SMITH

Vietnam: Invitation to a Morass: Chapter 5 of the Matrix

The Matrix: An Exploration of the Dangerous Paradoxical Interactions

Between War, the Economy, and Economic Theory

Brief Introduction to the Introduction: The Paradox of the Matrix

What follows the introductory material is a chapter entitled:

Chapter 5: Vietnam: Invitation to a Morass.

The Matrix is an exploration of the intricate relationships between war, the economy, and economic thinking. Because of the complexity of our subject, we have tried to make our exploration more manageable by organizing our analysis around a simplified matrix, consisting of the natural world upon which life depends, together with the and three man-made subjects mentioned in the title, treated as separate pillars. Throughout history, the interrelations between these relationships have proved to be extremely dangerous, largely because of their paradoxical nature in which seemingly people in power confidently take actions that set off unexpected chain reactions with tragic consequences. The Matrix will explore that history in order to throw light upon the present.

Although people had already thought about economic matters in ancient times, the idea of an economy as a separate sphere of society had not yet developed. Instead, economic thinking was largely the domain of philosophers, such as Adam Smith, who was a professor of moral philosophy. Only later did economics become a separate subject of study. By the late 19th century, a few economists were beginning to frame their work as the science of economics ‑‑ a name intended to indicate an affinity with physics. Soon thereafter, supposedly scientific economic thinking acquired increasing authority, so much so that people often became convinced that they could disregard economic analysis at their own peril. Their fear may not have been well‑placed considering how often well‑regarded economic theories helped to create disasters.

The three pillars are intimately connected with one another. While the connections between war and the economy are more or less obvious, economists serve a peculiar role in linking the pillars of war and the economy by influencing the conduct of both war and management of the economy. At the same time, war, as well as economic activity, has influenced economic thinking. Read more »

introduction to the introduction of my new book

I would appreciate any feedback.

 

The Matrix

 

The Matrix: An Exploration of the Dangers of the Paradoxical Interactions between War, the Economy, and Economic Theory

 

Brief Introduction to the Introduction: The Paradox of the Matrix

 

Throughout modern history, the relationships between war, the economy, and economic thinking have been both paradoxical and dangerous.  Because of the wide-ranging nature of this exploration, we have organized our analysis of these relationships around a simplified matrix, consisting of the natural world upon which life depends and three man-made pillars: War, the Economy, and Economic Thinking.

            Although people had already thought about economic matters in ancient times, the idea of an economy as a separate sphere of society had not yet developed.  Instead, economic thinking was largely the domain of philosophers, such as Adam Smith, who was a professor of moral philosophy.  Only later did the economics become a separate subject of study.  By the late 19th century, a few economists were beginning to frame their work as the science of economics — a name intended to indicate an affinity with physics.  Soon thereafter, supposedly scientific economic thinking acquired increasing authority, so much so that people often became convinced that they could disregard economic analysis at their own peril.  That fear may not have been well-placed considering how often well-regarded economic theories helped to create disasters.

            For a long time, war, the economy, and economic thinking have deeply affected each other.  While the connections between war and the economy are more or less obvious, economists serve a peculiar role in linking the pillars of war and the economy by influencing the conduct of both war and management of the economy.  At the same time, war, as well as economic activity, has influenced economic thinking.

            In their effort to masquerade their ideas as a science, economists often label their theories as laws to implicitly identify their theories with sciences, such as physics.  Of all the so-called laws of economics, the law of unintended consequences, which originates in philosophy rather than economics, might be the most consequential.  For good reason, economists do not treat the law of unintended consequences as one of their technical laws, such as the law of supply and demand.  After all, the law itself is an admission of ignorance, which conflicts with the certainty of economic propositions.

            Instead, the law of unintended consequences is generally selectively invoked as a warning to those who might be tempted by policies that might interfere with the rational workings of markets that conventional economics presumes to be natural.  In contrast, the law of unintended consequences is rarely, if ever, invoked regarding the free play of unchecked markets.  Nonetheless, the combined effects of war, the economy, and economic thinking have had unintended consequences of catastrophic proportions.

            The law of unintended consequences becomes more important because of the paradoxical nature of the Matrix, which reflects the ancient concept of the unity of opposites, often associated with the ancient Greek philosopher, Heraclitus, who hinted at such unity, writing about bows: “Thy name is life, thy work is death.” (In Greek, both the bow, an important weapon at the time, and life were synonymously called bios.).  Two millennia later, the technology for casting church bells found a new use for what had been known as the “bell metal” in the production of cannons. The historian, John U. Nef, beautifully recaptured this new instance of Heraclitus’ irony: “The early founders, whose task had been to fashion bells that tolled the message of eternal peace contributed unintentionally to the discovery of one of man’s most terrible weapons” (Nef 1963, pp. 28). A similar unity of opposites concerns the mayhem of the battlefield, when lessons from battlefield medicine get taken up in general medical practice.

United Airlines’ bad behavior (revised)

 

Two employees from United Airlines recently arrested for stealing baggage from planes that were diverted from the San Francisco airport when the plane crashed there.  It reminded me of the awful experience that I had with United Airlines. A few years ago, I had about $500 worth of electronics stolen from my luggage.  I spent many hours trying to contact the appropriate parties at United,  Leading me through an interminable series of dead ends. I would call one party, stay on hold for quite a bit of time, finally gets through to somebody, who would tell me that I needed to call somebody else with authority, who would then tell me that I needed to call somebody else. Nor could I find a name and an address to which I could  have papers served.

Finally, somebody in authority contacted me to inform me that United was not responsible for the theft. I am attaching the letter that the company sent me.

 

united airlines kiss off

 

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