Economics as she ought to be done
I am filled with a certain degree of probably unjustified optimism by this from Claudio Borio at the BIS. I don't agree with the central argument, I think (in particular, I really don't like the way that Borio dismisses the accounting identities and insists that the gross financing flows are what matter - surely if what you're interested in is the effect on securities and real estate prices, the net demand is exactly what you want to know, not the gross). But he is totally, totally addressing the right questions, and as a statement of the opposite case to my argument on the "global bezzle" below, it's basically the only one I've seen that I really think I need to take seriously. It bears slow, careful, repeated reading I think - if you can't be arsed with that, Borio ends up concluding that the problem wasn't the flows themselves, it was an excessively accomodative policy stance toward the flows, with an excess of what he calls "elasticity" in the system.
So basically his view is that between the bankers and the central bankers, they created too much credit; my view is that they created a lot of credit because they had a big imbalance to intermediate. Both of us agree that the key decision made was the decision to accomodate the monetary consequences of international savings flows, and we disagree about the importance of internal feedback effects within the system.
In unrelated news, I think I am going to call up everyone I know who is involved in political activism and blame them for the Iraq War. I am not proposing to ask whether they were actually responsible for it, or indeed to cut them any slack for having opposed it. I'm just going to declare that they are all part of the same system, and that they haven't suffered enough compared to the Iraqi people. The bloody arrogance of those Greens and Trotskyists, trying to pretend that it was nothing to do with them! They're all just politicsters and their claims that their kind of "politics" aren't the same kind of "politics" that gave us Guantanamo Bay are just more evidence that the whole system needs to be torn apart and reformed, in some way which I don't propose to specify or indeed learn the first thing about. I don't want to hear about any historical or systematic explanations; the Iraq War happened because some politicians ordered it, and this proves that all politicians of any type are corrupt and awful people. Yes I am still bitter.
It would improve the analogy (if not the rant) if you focused specifically on political activists who earn their living from their role in the system, from Ms Lucas to Cde Zizek.
ReplyDeleteThere are people who hate and distrust all professional politicians on principle, but I don't think that would be a problem, as they're generally stupid people. IOW, instead of saying "you're ignorant and crazy" you'd be saying "you're no better than Kilroy".
While arguing on twitter last night, I realised why it is that I *don't* want to stop whinging about this, and why I'm not going to grow a pair any time soon.
ReplyDeleteWhich is basically - think of the other really unpopular trades. Tobacco, the defence industry, oil & gas. Was it a good day for economic democracy when those guys gave up on ever being listened to and decided to own their role as villains? Did it make them more or less amenable to informed and sensible criticism of their activities to have a load of people who don't understand thing one about their industry and the environment in which it operates basically deciding they were all just devils?
There certainly are people in the industry who are in the equivalent of climate change denial. But they're not the majority, yet.
Good luck. I think part of what's going on is unfinished business from the election (here and in the US, mutatis mutandis). We know that capitalism's cyclical, we know housing was and is overvalued, we know the cuts are down to a Tory deficit reduction strategy, we know that people are getting laid off in financial services as well... but there's still that vague feeling that if things are going to hell for us, somebody else must have done something bad and got away with it. It's not as if we're getting a Tory government because we wanted one - hardly anyone voted Tory, or if they did it was because they didn't like Gordon Brown, and who knew the Lib Dems were going to be so useless? Bankers, you say? Bankers' bonuses? The bastards!
ReplyDeleteMy wife's office had a meal out the other week to celebrate completion of an integration project; they made the booking under somebody's name rather than the name of the company, because they didn't want people taking pictures of those greedy bankers having a good time at the taxpayer's expense.
See also: Gordon Brown, general hatred for. Utterly bizarre - the worst you could say for his premiership was that he didn't do very much, and the best you could say is that he made the 2008 crash a lot less serious. I suspect what's going on, again, is that he was in charge when things fell apart, so begone with him and bring us someone new who won't break everything.
The Gordon Brown h8 is interesting because the transition was so swift and total. I can remember when the newspapers didn't just think he was a great statesman, a man of genius, but would also regularly assert that he was handsome. It was surprisingly soon after that when they suddenly decided he was sweaty and ugly and weird as well as being a national disaster.
ReplyDeleteIt really was like Orwell's good party man who changes all his thoughts on hearing the 6 o'clock news on the 22nd June 1940. The party line had changed and Oceania had always been at war with Eastasia.
No, I think the sudden hatred for Gordon Brown in the media and Parliament is a lot simpler and more rational than that: just think what would happen to the hardest bully in your year at school if he'd publicly lost a fight with a smaller boy. The other pupils would be queuing up to pay him back for how he'd treated them.
ReplyDeleteWhy was Brown so feted in his early months as PM? Partly the change from Blair, mainly because it looked like he would call and win an early election (he probably could have won it, too). Everyone in the media was nice to him because they expected him to be the boss for the next five years at least, and because they knew precisely how easy it was to make an enemy of Brown, who took his enmities very seriously indeed.
All that about Gordon Brown being particularly nasty to people who had disagreed with him, even by Westminster standards: time and again I've heard things that indicate that was entirely true and not a myth. The first instance I ever heard of that concerned one of my economics tutors, a man famed for equally for his honest and polite behaviour and for his devotion to the Labour party. He had disagreed- privately, politely, rationally- with Gordon Brown over a detail of policy when Labour were in opposition. Brown gave instructions that he was never again to do any work for the Labour party. Mad behaviour.
I lost count of the number of people I'd heard Brown had a feud with, to the extent that he wouldn't speak to them in the same room. It's true that some were famously difficult individuals, like Ken Livingstone and Robin Cook, but there were others like George Robertson and Donald Dewar who most Labour people found perfectly easy to get on with.
The minute he ran away from calling an election, the bully lost his power and the other kids moved in on him. I agree, by the way, that he did a much better job of palliating our economic troubles than the fools we've currently got in Government. I always said Osborne would be a disaster, and he is. But Brown's unpopularity with his own party and the media is no mystery at all.
Phil talks about Brown's unpopularity with the general public. I suspect this stems simply from the fact that very few people follow the political and economic news as obsessively as the average reader of this blog. A great many voters just know Brown as the slightly odd bloke who seemed all right when the economy was doing well, who promised everyone that he had abolished boom and bust, and who then was the guy in charge for a bloody great bust.
I don't think, contra Phil, that the obsessive hatred of Brown actually reached the general public: if it had, the Conservatives would have done rather better in the 2010 election than the somewhat pathetic vote that they managed.