Citation!!!!!
This is, as far as I'm aware, the second time in twelve years that my article "Remuneration and Risk" has been cited. I wasn't actually a "senior economist" in 1997 - I was a Trainee Bank Officer (Graduate), which was at the time the second lowest grade in the Bank's pay structure. (The following year they changed the grades and put the graduates on the bottom rung of the Bank Official grade, which means that the record I set for paid overtime will never be broken). Also, the BoE did not typically consider you to be an "economist" if you had a PPE degree from Oxford, basically due to bigotry on the part of the Warwick clique in the Monetary Analysis division (well come on guys, you know it's true) and I hadn't done my Masters by then.
But otherwise the FT piece is spot on; we published this article post-Barings as a shot across the bows of the industry, and everyone ignored it. The financial correspondent of the Telegraph referred to it as "hitting the market with all the impact of a feather coming to rest on a blancmange", an insult which has rankled ever since.
Cool! A bit annoying that the Bank of England gets the credit for your prescient doom-saying though? It'd be a bit like, "Capitalism Produces its own Gravedigger, says British Library'.
ReplyDeleteMaybe a bit, but on the other hand it's presumably even more annoying for Margaret Bray, who didn't even get credit from me in this blog post!
ReplyDelete(also note from the final page, that stock photos of traders with their hands on their faces were a bit of a cliche even then).
I really am nostalgic over this one because it shows how the debate has not moved on a single inch since 1997 - and this article was hardly original even then.
That reminds me, something that's been bugging me for a long time.
ReplyDeleteThe caption "why are these men smiling" - does anybody know exactly where it was first used?
You should forward it onto said Telegraph correspondent and ask for comment. Would be amusing to get his response.
ReplyDeleteOn the other hand, it did get about as much media attention at the time as everything subsequently published in the FSR put together. The Telegraph corr's response is (typically) florid yet metaphorically meaningless, as it implies that the market was fundamentally soft and impressionable rather than boneheadedly impervious. Too right on the Warwick clique btw: they tried to blackball me too, and I had a Cambridge MPhil.
ReplyDeleteOn a similar note I extend this:
ReplyDeletehttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=364220
Is there much work on the agency problem?
At least you eventually got in! I was shunted into Business Finance Division (motto "A little bit of the DTI, in the Bank of England"), going round listening to small businesses whine about the sterling exchange rate.
ReplyDeletei can certainly remember "why are these men smiling?" as an occasional gag caption in the nme in the late 70s -- i find i specifically associate it with charles shaar murray -- which suggests three potential sources: a 60s or early 70s private eye cover; or the kind of half-scornful half-paranoid joking that creem magazine developed in the us in the early 70s; or something to do with frank zappa (or the firesign theatre, that kind of thing anyway, same era)
ReplyDeleteradical hippyfolker mike heron had a 1971 lp called "smiling men with bad reputations", which sounds like an formant or distorted version of the same gag -- which definitely feels late 60s counter-cultury to me
men smiling? let's ask google books:
ReplyDeletehttp://books.google.com/books?client=safari&oe=UTF-8&um=1&q=%2B%22these+men+smiling%22+%2B%22created+for+today%27s+swinging+stud%22&btnG=Search+Books
Ignorant question from me: doesn't the whole idea of limited liability companies build in the very same asymmetry wrt to risk and reward, and isn't that a good thing?
ReplyDeleteno it's not an ignorant question - it's the main point of the parable below.
ReplyDeletewell googlebooks finds a 1973 version in a feminist pamphlet in the form of a fake ad
ReplyDeletehere's the page that dates it
ReplyDeletefake ad of course suggests it might be based on a real ad that used that phrase
(thanks chris i wouldn't have thought of that)
How curious. I'd always associated it with financial journalism.
ReplyDeleteHello Daniel,
ReplyDeleteI'm a journalist a would really like to talk to you.
If you have a spare moment, would you mind dropping me an email on pauliemack1983@googlemail.com
Thanks for your time, and look forward to hearing from you,
Paul
Not to worry, Matt Yglesias has noticed you, so you've hit the big time!
ReplyDeleteI would bet the 'smiling' thing goes back to the ancient Esquire magazine, which once ran a picture of Nixon with the caption, "Why is this man smiling?"
ReplyDelete-- Miracle Max