Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Report from Eastern Econ. Assoc. MeetingsI (D&S co-editor Chris Sturr) am in New York City for the annual meetings of the Eastern Economics Association, the sweet kid sister to the Allied Social Sciences Association (which would make the latter the bullying older brother, if we're going to go with the metaphor), from which I blogged a couple of times back in early January (here and here, and here's D&S collective member Arpita Banerjee's ASSA report).It's hard to say what makes the EEA meetings so much nicer than the ASSA. Part of it is that they are much smaller (I don't have the numbers, but the program is much thinner, as are the crowds, and the book exhibit, where we spend most of our time, is about 1/10th the size), and maybe there is a critical mass of left or left-ish or at least not left-averse economists on the east coast. All in all, there is a more relaxed and less corporate feel to the EEA. Our comrades at the Union for Radical Political Economics (with whom we share an exhibit table) are sponsoring seven panels this year, which is a pretty high number for a relatively small conference. Back at the ASSA, one of the plenary sessions that drew big crowds was (as I reported in my earlier post) the spectacle of Marty Feldstein rediscovering fiscal policy after years (a career?) of denying that it was necessary. Meanwhile, at the EEA this year, this year's Nobel Prize winner, Paul Krugman was a big draw, as was another leftish Nobel Prize winner, Joseph Stiglitz, who gave the presidential address (since he's the current president of the EEA). I missed Krugman's talk, but I made it to see Stiglitz, and I'm really glad I did. (Stiglitz was introduced, by the way, by Steve Pressman, secretary of the EEA, who co-authored an article in our July/August 2007 issue on debt poverty in the United States--more evidence of the EEA's left-friendliness.) Stigliz's topic was the current economic crisis ("What else is there to talk about?" he asked), and he set himself two questions: (1) "What shall we do about our failed banks?" and (2) "What role did the economics profession--or rather *some* members of the profession--play in the crisis?" His assessment of the inadequacies of the responses to the crisis so far (including the stimulus, efforts to address the foreclosure crisis, and the bank bailout) was great, though his "Plan B" was a bit rushed and hard to follow. His critique of the mainstream economic views that contributed to the crisis was also a bit rushed, but gratifyingly scathing. One big reservation I had about the talk was that he was nearly as timid on the issue of bank nationalization as he was in the interview he did with Amy Goodman (which we blogged about a couple of days ago). I have pretty extensive notes from the talk, and there were some great bits (e.g., he quipped, a propos of the way the "experts" denied the crisis for so long, seeing recovery around the corner, until we had turned corner after corner: "The light that was at the end of the tunnel turned out to be a train coming right at us."). I would like to write up more on his talk, but in my hotel room on a Friday night in NYC with the nightlife beckoning, this post is starting to feel like a grotesque combination of a diary entry and a term paper, so I will aim to say more tomorrow with more EEA updates. Labels: ASSA, bailout, EEA, financial crisis, Joseph Stiglitz, Martin Feldstein Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). A Delayed Report on ASSA (Arpita Banerjee)Here is another report on the Allied Social Sciences Association meetings, this one from D&S collective member and University of New Hampshire economist Arpita Banerjee.Another social science festival is over now. For four days, San Francisco downtown had been infested by Economists. It surely has given good businesses to the hotels, restaurants, and gift shops. The grandeur and the turnover were, as every year, unmatchable by any other economics conference. Did I say Economics? Well, it surely was the annual conference of the Allied Social Science Association, but other social science disciplines were easily overpowered by Economics. And I guess that too is an annual phenomenon. Apart from seminar sessions, the ASSA meet was, like all other years, the host of job interviews. Every now and then you would come across tense faces of interviewees which would light up in the sights of Maurice Obstfeld, Kenneth Rogoff, Jagdish Bhagwati or Joseph Stiglitz. It isn't often that someone would look at your face as (s)he is too busy reading the name-tag hanging from your neck. On the first day, on January 2nd, I attended the plenary session organized by Association for Social Economics (ASE) and ICAPE. Dierdre McCloskey talked about Ethics and Capitalism and Adam Smith's position on Ethics. Nancy Folbre and Herbert Gintis were the two discussants. It was very exciting to see such a great turnout at the session. Union for Radical Political Economics (URPE) and International Association For Feminist Economics (IAFFE) had organized various sessions, among which I attended the sessions "The Global Financial Crisis: Heterodox Perspectives", "Gender and Migration", "Women's Work at the ASSA Meetings" and "What Difference Does Gender Make for Economic Theory". All these sessions had a full room. Particularly, the first one on financial crisis had an overcrowded audience. I heard that other sessions on the financial crisis were similar full house. No surprise here, right? Frequent D&S contributor and collective member Ramaa Vasudevan was one of the presenters in the session on The Global Financial Crisis. She talked about the dollar, financialization and subprime market crisis, similar to her recent Monthly Review paper. [See also Ramaa's recent primer on financialization in D&S. —CS] I had to skip the discussion in the end to attend the session on "Microfinance, Poverty and Women's Empowerment" organized by the Association for Economic and Development Studies on Bangladesh (AEDSB). Anyone listening to the papers presented at this session would have to agree that earning money is the key to women's empowerment! So, does a woman working as an informal worker at a construction site and earning some bucks get to choose how many children she would bear? I don't think so. I was a discussant at the IAFFE organized session on "Gender and Migration". All the papers were dealing with migrant women workers, but I particularly liked the one by Alex Julca. He was asking a very broad question, does increasing remittance due to global migration of workers make any difference in income inequality? Perhaps it creates a new kind of inequality in the native places of the migrated workers. This session was quite well attended too. The ASSA people came to count heads twice during the session. Julie Nelson at the "Women's Work at the ASSA Meetings" talked about how cognitive gender plays a crucial role in determining women's participation in different social sciences. She showed two very interesting quotes from the back cover of Econometrica and a sociology journal. The descriptions of the "motto" of the two journals can quite easily be deconstructed using the modernist binary division between constructed genders. While Econometrica talks about rigorous, 'scientific' rational thinking, the Sociology journal seems to talk about a much more subjective approach. Robin Bartlett from Denison University, in her presentation, showed that ASSA meetings had a stark difference between male and female participation and between top and low ranked (or as Robin calls it, "unranked") places except for a brief period when Amartya Sen was president. Martha Starr from American University concentrated on women's work in the AER Papers and Proceedings and she too, showed the wide gender gap in the list of published papers. Another great session was "What Difference does Gender Make for Economic Theory", presided by Nancy Folbre. Dierdre McCloskey put a very interesting and arguable concept; that for men, conversation is often a competitive game, while it is a cooperative game for women. She also emphasized that we should not use the term "mainstream" for mainstream economics as that makes a lot of people who do not agree with the tenets, outside-mainstream. I do not see any disgrace in roaming around the periphery though! She says that we should use the term "Samuelsonian" instead of "mainstream". Well, not a big deal I guess. Ann Mari May from University of Nebraska-Lincoln showed the results of the survey she had conducted on how male and female economists think about methodology used in Economics, Several economic issues of recent times as well as issues about workplace. Surprisingly, though women economists seem to be pro-regulation and seem to agree upon gender differences in the workplace, they seem to not see any problem with the Economic methodology! It was puzzling to see that women seem to contribute to a consensus about "mainstream" (or Samuelsonian!) economics as science with a big S and its methodology, even after identifying the reasons behind current economic problems. The URPE reception room was jam-packed, much to the excitement of all the members present. The economics department of the University of Utah received special recognition for its contribution towards the aim of URPE and Minqui Li from Utah received the commemorative plaque. It was great to see so many URPE members together. The IAFFE member luncheon was similarly inspiring for a new member like me. Everybody got to know about everybody else during the 'introduce yourself' session. Susan Himmelweit of the Open University became the new president. Everyone is looking forward to the IAFFE annual meeting in Boston from June 26 to 28. On last note, it was quite an interesting four-day carnival in a great city. San Francisco is a nice city, not very organic though. Its Anarchist bookstores in the Mission area, easy reach to Berkeley area and diverse population makes it quite colorful. But, like a lot of other US cities, it takes only about a mile's walk to discover the dying economy of the neighborhoods. Labels: Arpita Banerjee, ASSA, Dierdre McClosky, gender, IAFFE, Ramaa Vasudevan, URPE Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Why So Little Self-Recrimination? (Yves Smith)This is from Yves Smith at Naked Capitalism. It's a long post, worth quoting in full. She quotes from a post by Jeff Madrick (editor of Challenge) at The Daily Beast. I was asking myself the same question at the ASSA. Hat-tip to D&S collective member Ben Collins. —CSWhy So Little Self-Recrimination Among Economists? Why is it that economics is a Teflon discipline, seemingly unable to admit or recognize its errors? Economic policies in the US and most advanced economies are to a significant degree devised by economists. They also serve as policy advocates, and are regularly quoted in the business and political media and contribute regularly to op-ed pages. We have just witnessed them make a massive failure in diagnosis. Despite the fact that there was rampant evidence of trouble on various fronts—a housing bubble in many countries (the Economist had a major story on it in June 2005 and as readers well know, prices rose at an accelerating pace), rising levels of consumer debt, stagnant average worker wages, lack of corporate investment, a gaping US trade deficit, insanely low spreads for risky credits – the authorities took the "everything is for the best in this best of all possible worlds" posture until the wheels started coming off. And even when they did, the vast majority were constitutionally unable to call its trajectory. Now of course, a lonely few did sound alarms. Nouriel Roubini and Robert Shiller both saw the danger of the housing/asset bubble; Jim Hamilton at the 2007 Jackson Hole conference said that the markets would test the implicit government guarantee of Fannie and Freddie; Henry Kaufman warned how consumer and companies were confusing access to credit (which could be cut off) with liquidity, and about how technology would amplify a financial crisis. Other names no doubt belong on this list, but the bigger point is that these warnings were often ignored. Shiller has offered a not-very-convincing defense, claiming that economists were subject to "groupthink" and no one wanted to stick his neck out. That seems peculiar given that many prominent policy influencers are tenured. They would seem to have greater freedom than people in any other field to speak their mind. And one would imagine that being early to identify new developments or structural shifts would enhance one's professional standing. But if a doctor repeatedly deemed patients to be healthy that were soon found to have Stage Four cancer that was at least six years in the making, the doctor would be a likely candidate for a malpractice suit. Yet we have heard nary a peep about the almost willful blindiness of economists to the crisis-in-its-making, with the result that their central role in policy development remains beyond question. Perhaps the conundrum results from the very fact that they are too close to the seat of power. Messengers that bear unpleasant news are generally not well received. And a government that wanted to engage in wishful, risky policies would want a document trail that said these moves were reasonable. "Whocouldanode" becomes a defense. But how economists may be compromised by their policy role is way beyond the scope of a post. To return to the matter at hand: there appears to be an extraordinary lack of introspection within the discipline despite having presided over a Katrina-like failure. Jeff Madrik tells us: At the annual meeting of American Economists, most everyone refused to admit their failures to prepare or warn about the second worst crisis of the century. Madrik goes on in the balance of his piece to offer a list of things economists got wrong. Unfortunately, it's off the mark in that he contends that economists (in effect) had unified beliefs on a lot of fronts. It's a bit more accurate to say that there was a policy consensus, and anyone who deviated from the major elements had a bloody hard time getting a hearing (Dean Baker regularly points out that the New York Times and Washington Post still keep quoting economists who got the crisis wrong). The particulars on his list need some work too, but at least it's a start (reader comments and improvements on it would be very much appreciated). But Madrik does seem spot on about the lack of needed navel-gazing. I looked at the AEA schedule and did not see anything that questioned existing paradigms. And one paper that did was released recently, "The Crisis of 2008: Structural Lessons for and from Economics," fell so far short of asking tough questions that it proves Madrik's point. The analysis is shallow and profession serving. And that is not to say the author, Daron Acemoglu, is writing in bad faith, but to indicate how deeply inculcated economists are. For instance, one of the three (only three?) ways in which he says economists took too much comfort in the Great Moderation; The seeds of the crisis were sown in the Great Moderation... Everyone who patted themselves or others on the back during that time was really missing the point... The same interconnections that reduced the effects of small shocks created vulnerability to massive system-wide domino effects. No one saw this clearly. Huh? The problems with the Great Moderation were far more deeply rooted than this depiction suggests. Acemoglu's take is that the economy became more susceptible to shocks (that is, absent the bad luck of a shock, things could have continued merrily along). Thomas Palley argues, persuasively, that it was destined to come a cropper: The raised standing of central bankers rests on a phenomenon that economists have termed the “Great Moderation.” This phenomenon refers to the smoothing of the business cycle over the last two decades, during which expansions have become longer, recessions shorter, and inflation has fallen. Palley wrote this in April 2008, although he had touched on some of these issues earlier. Did this view reach a wide audience? No. Understanding why might help us understand better why the economics profession went astray. Acemoglu's paper had a couple of other eye-popping items: Even though he gives lip service to the idea that the economics was unduly infused with ideas from Ayn Rand, he then backtracks: On the contrary, the recognition that markets live on foundations laid by institutions— that free markets are not the same as unregulated markets— enriches both theory and its practice. "Free markets" is Newspeak, and the sooner we collectively start to object to the use of that phrase, the better. Because it is imprecise and undefined, advocates can use it to mean different things in different contexts. I cannot take any economist seriously who uses "free markets" in anything more rigorous than a newspaper column (and even there it would annoy me). It has NO place in an academic paper (save perhaps on the evolution of the concept). We also have this:
This reveals that Acemoglu has been corrupted by Rand more than he seems willing to recognize. No one would have dared write anything like that even as recently as ten years ago. Let us consider the definition of greed, from Merriam Webster: a selfish and excessive desire for more of something (as money) than is needed Greed is different than, say, ambition. "Greed is good" was famously attributed to criminal Ivan Boesky, and later film felon Gordon Gekko. Put more bluntly, greed is the id without restraint. Psychiatrists, social workers, policemen, and parents all know that unchecked, conscienceless desire is not a good thing. Acemoglu calls for external checks ("the right incentive and reward structures"), when the record of the last 20 years is that a neutral to positive view of greed allows for ambitious actors to increasingly bend the rules and amass power. The benefits are concentrated, and the costs often sufficiently diffuse as to provide for insufficient incentives (or even means) for checking such behavior. Like it or not, there is a role for social values, as nineteenth century that may sound. The costs of providing a sufficiently elaborate superstructure of rules and restrictions is far more costly than having a solid baseline of social norms. But our collective standards have fallen so far I am not sure we can reach a better equilibrium there. Labels: ASSA, economics, financial crisis, Naked Capitalism, Yves Smith Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). What Should Be Done (James K. Galbraith)James K. Galbraith, who teaches economics at the UT-Austin, stopped by the Dollars & Sense booth at the ASSA (see recent posts). He also sent along a link to an audio recording of his panel discussion with former labor secretary Robert Reich and New York Times economics reporter David Cay Johnston. I was sorry to have missed the panel—there was a bit of a buzz about it at the conference (at least among the sorts of people who visited the D&S booth).Here is what he said about it: This link will take you to an audio file of my remarks to a panel on what should be done in the crisis, delivered on Saturday to a packed room at the Allied Social Science Association meetings in San Francisco. The session was sponsored by the Association for Evolutionary Economics and chaired by Mat Forstater of UMKC. Bob Reich and David Cay Johnston were among the other participants. Labels: ASSA, David Cay Johnston, James K. Galbraith, Robert Reich Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). NYT on ASSAFrom the business section of today's New York Times. Louis Uchitelle drew about the same conclusion I did in my post a couple of days ago, on the basis of that panel with Marty Feldstein and the SF Fed head. Click here for the full article —CJSEconomists Warm to Government Spending but Debate Its Form Labels: ASSA, economic stimulus, fiscal policy, Martin Feldstein, recession Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Report from the ASSAA quick report from the 2009 meetings of the Allied Social Sciences Association (as the economists grandiosely call their meetings) in San Francisco. This will have to be short, since I am on the clock at an Internet café one block from the San Francisco Hilton at Union Square, not having brought my laptop with me on the trip. Plus I have to get back to our booth at the book exhibit to haggle with someone from the company that runs the book exhibit about the fact that two of our boxes never arrived at the booth, even though we shipped them at great expense via UPS. Ah, professional meetings!My panel went well on Saturday. It was sponsored by the Union for Radical Political Economics (URPE), and the title of the panel was Using Economics for Social Change: Five Organizations Report. The other panelists were Heidi Hartmann of the Institute for Women's Policy Research, Larry Mishel of the Economic Policy Institute, Kevin Danaher of Global Exchange, and David Barkin of Universidad Autonoma Metropolitana-Xochimilco in Mexico. The panel was officiated and organized by Lane Vanderslice of World Hunger Education Service. It was quite well attended--I'd say around 50 people were there, including several familiar faces, including Randy Albelda of UMass-Boston (and a D&S associate) and Pat Duffy, URPE staffperson. A short but lively discussion period followed. I enjoyed all the talks, but I was particularly excited about David Barkin's reports about solidarity economics activity among indigenous people in rural areas of Mexico. The only other panel I've had time to visit was another URPE-sponsored panel, on minimum wages. I had hoped to catch the talk by Jeannette Wicks-Lim of the Political Economics Research Institute (she's working on an article for D&S on a related topic) comparing Earned Income Tax Credits vs. minimum wage increases as ways of improving poor people's living standards. I got there too late, but caught an interesting paper by Manuel Pastor of USC profiling immigrant communities in LA. Our friend Arlene Geiger, econ prof at John Jay College, stopped by the book exhibit booth and reported that she'd gone to some mainstream panels to see what the mood of the profession is about the recession and financial crisis. She reported that one extremely well-attended panel on the financial crisis seemed to indicate that no one in the room thought that the recession would be anything but long and deep. Another packed panel entitled "The Revival of Fiscal Policy" revealed disagreements between Marty Feldstein of Harvard and John Taylor of Stanford about the value of fiscal policy. Janet Yellin of the SF Fed was a discussant (I'm missing a panel on the subprime crisis that she's presiding over right now). I will press Arlene for a fuller report, but the impression she seemed to get was that mainstream economists still have their heads in the sand on the issue of whether government has a role in guiding the economy (even if they can't help but recognize the need for government action in the current crisis). Frequent D&S blogger Polly Cleveland, of Columbia U., also stopped by the booth. She'd been focusing on sessions on the history of economics, including one on the history of the Chicago School. She promised a full report for the blog. I'm almost out of time, so I will wrap this up; I promise more coverage soon. --Chris Sturr, D&S co-editor Labels: ASSA, fiscal policy, John Taylor, Marty Feldstein, solidarity economics Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). ASSA and Jet BlueThings may be relatively quiet on the D&S blog for the first week of 2009, as our busiest blogger (yours truly, D&S co-editor Chris Sturr) will be at the annual economics meetings, grandiosely named the Allied Social Sciences Association meetings (as if economists were the only social scientists!) in San Francisco.I am excited to be flying via JetBlue; since they are in the midst of a union drive, with an election coming up soon, maybe I can give the workers some moral support. If you are going to the ASSA meetings, stop by the ICAPE exhibit table (602(B), I think) to say hello--I will be there hawking D&S books. And stop by the panel I'll be speaking on, sponsored by the Union for Radical Political Economics. Info on the panel (note the august company I'll be in): Jan. 3, 12:30 pm Happy New Year! Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
