Archive for July, 2010|Monthly archive page
I am planning to stream my thoughts on the economy and economics, beginning with some of my basic ideas, which do not neatly fit within any formal school of thought. I am thinking of 7:00 pm Pacific time, but I first need to master the software.
Notre Dame exiled its heterodox economists to a separate department. Now it is about to execute a death sentence for the department. Apparently, mainstream economists have offered such excellent guidance that questions about their dogma no longer serve any purpose.
On my mailing list, we have had a debate about whether the current crisis is good for the left or the right. I am only now jumping in.
The Chinese character for crisis supposedly combines danger and opportunity, although I’ve been told that it is not true. Even so, it should be true. Uprisings occur during good times, such as the 60s, when people expected better. I’m not sure whether any such uprising ever created lasting changes.
Bad times make people desperate. Desperation makes people vulnerable to demagogy, but it can also create opportunity for long-term organizing. Here, the Great Depression offers the most obvious example.
Opportunity is no guarantee of success. Sometimes demagogy wins out. Sometimes organizing can, but I suspect that generalizations are impossible without looking at context. How would the New Deal have turned out without the prior existence of the Communist Party in the United States? As an undergraduate, I had the opportunity to drive Norman Thomas around Ann Arbor. He thought that Roosevelt had appropriated the Socialist party platform.
Here in the US, the corporate-oriented Democratic Leadership Council might be the strongest operative “left” organization. We have bloggers and e-mail lists on the left, unfortunately only a few of us have any record of organizational successes.
In any case, I suspect that we have little grounds for optimism within the context of the current crisis in the US economy.
Politico reports that the Obama folk blame the Greens for the failure of its energy bill because it was THEIR responsibility to lobby the Republicans. So, here is the story: misinformed Greens voted for Obama for change, but the change was that it was the responsibility of the Greens to create the change.
Of course, the White House needs a strong grassroots movement to fight powerful interests, but it also has the responsibility to lead that movement rather than make deals with those whom the grass roots people oppose.
Remember Obama bragging that he took on the left in his fight for health reform? Anyone taking bets about Elizabeth Warren?
My second cousin, Michael Perelman, whom I have never met, but who sounds like a nice person over the phone, has an antiterrorism business. I checked today’s Washington Post site to see if there was a record of his work.
However, today’s Philadelphia Inquirer does describe the other Michael Perelman’s work without taking it seriously.
I am posing a quick first draft of the introduction to a short chapter on Charles Davenant, hoping that some of you might know more than me about the subject or at least show me how to make it sharper.
Shifting from great economists, such as Petty, Law, and Cantillon to Charles Davenant, the same person who worked with Cantillon is a war profiteer, might seem a bit jarring. Although some of Davenant’s insights anticipated later economic thinking, few economists gave much thought to Davenant. Cantillon did lump Davenant put together with Petty, but he did so to diminish Petty rather than to praise Davenant.
Davenant was a good writer, so much so that the Dutch ambassador refused to have lunch with Jonathan Swift, suspecting that Swift had been the author of one of Davenant’s pamphlet. The art of writing may have been embedded in Davenant’s genes. His father William D’Avenant was a popular playwright and poet laureate of England.
His father was also the godson of William Shakespeare and widely accepted at the time as the illegitimate son of the Bard. D’Avenant’s mother was married to a wine merchant and innkeeper with whom she had no children for many years. Shakespeare often stayed the inn when traveling between London and Stratford. She was rumored to have been Shakespeare’s mistress. Davenant’s uncle, a clergyman, used to tell how Shakespeare would shower him with kisses. The main source for Shakespeare’s paternity was Davenant’s father. One Shakespeare biographer finds numerous hints of the relationship between D’Avenant and Shakespeare in his plot lines (Weis 2007).
Today the Wall Street Journal has a very good article analyzing the Goldman victory over the SEC. The article is not yet gated, so I put the reference first.
Scannell, Kara and Susanne Craig. 2010. “SEC Split Over Goldman Deal.” Wall Street Journal (17 July): p. A 1.
Question 1: Is Ms. Casey really asking if the agency caved? Probably not, but if so, that is interesting.
“Republican Commissioner Kathleen Casey questioned the SEC staff Thursday on their decision to abandon the strongest fraud charge and strike a settlement involving a lesser allegation, and given that, how the SEC could justify such a large penalty on a lesser charge.”
Question 2: Is Russell Ryan saying that the SEC did not have enough proof to charge Goldman with intentional fraud rather than giving incomplete information? After all, the fraud has been public knowledge for some time. Why did the SEC cave? Continue reading
Even in my youth, I was not particularly interested in comic strips. It is not surprising that I usually don’t find humor on the editorial page of the Wall Street Journal. Today is an exception. Karl Rove has a column saying that his visit biggest mistake in Washington was not refusing the nefarious claims that George Bush was lying to get the country involved in a war.
After listening a number of libelous claims by various unpatriotic Democrats, he concludes with an irrefutable proof of the correctness of the administration’s position:
“We know President Bush did not intentionally mislead the nation. Saddam Hussein was deposed and eventually hanged for his crimes. Iraq is a democracy and an ally instead of an enemy of America. Al Qaeda suffered tremendous blows in the “land between the two rivers”.”
In other words, Bush could not possibly have lied because the US won an unwinnable war. If only I could teach my students such logical clarity.
I see that PBS is going to broadcast a review of the world of George Shultz. I fear that they will leave out the time that Schulz was interested in promoting my career. While Secretary of State under Ronald Reagan, Schultz’s son, Alex, took a class from me. At first I knew him only as a very good and personable student. Later, I discovered his family ties.
Knowing that the sins of the father should not fall on the son, I always had fun feelings for Alex. One day after returning from vacation, Alex told me that he had a number of arguments with his father based on ideas he picked up in my class. He told me that at one point his father responded, “that man should not be teaching in this country.” Knowing Shultz’s position as Secretary of State, I awaited a call. Was I going to be made ambassador to France? Or perhaps advising the world a rational method of organizing society.
After a few seconds, I began to realize that no such offer was on the horizon. I would more good remaining in Chico with the opportunity to other enlighten children of the power elite.
I never heard from Alex after he left Chico. I wish them the best and hope that did not get entangled in the dark networks of Hoover, Bechtel, or the other nefarious organizations with which his father associated.
In 1983, Ben Bernanke published an interesting article in which he proposed that the real service that banks perform is the development of long-term working relationships, which give them the informational wherewithal to allocate capital efficiently.
Bernanke, Ben S. 1983. “Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression” American Economic Review, 73: 3 (June): pp. 257-76.
He elaborated on this idea in: Continue reading