Walt Whitman, First Artist of Finance (Part 1): Robert Shiller. One of the myths surrounding economic inequality in our society is that high incomes are often the result of selfishness and narrow-mindedness, rather than idealism and humanity. We tend to think that those in careers other than our own are fundamentally different kinds of people. Personality and character differences are, indeed, somewhat associated with occupation. But we tend to attribute the behavior of others to personality differences far more often than is warranted. We tend to think of philosophers, artists or poets as the polar opposite of chief executive officers, bankers or businesspeople. Walt Whitman is one of our most revered poets, and his poetry is among the most transcendent. Poets Need Money The book was an embarrassment to him, but it made money, though apparently not enough to finance his future, more serious work.
Although “Leaves of Grass” gradually gained acceptance, the publication of each subsequent edition was accompanied by further struggles. Managing Finances. Logic of Finance Can Banish Corruption (Part 4): Robert Shiller. The economic power that some in the financial community attain bothers many people deeply. It offends our ideal of a society that aspires to respect, appreciate and support everyone. The pursuit of power that often drives financial capitalism seems contrary to the concept that finance should be about the stewardship of society’s assets. Yet successful societies develop elites partly because they need leaders with the power to get things done. We have to make it possible for a relatively small number of people to use their personal judgment to direct our major activities. A system of financial capitalism will eventually imbue those in possession of such faculties with wealth and power. Still, there is a reason that the level of resentment of the wealthy and powerful is so high: A free capitalist system can support an equilibrium in which some kinds of social conspiracy pay off.
Castes in Finance Financial capitalism is a work in progress, not yet perfected but gradually improving. Don’t Resent the Rich; Fix the Tax Code (Part 3): Robert Shiller. We have ample reason to believe that financial markets are quite useful. And yet our wonderful financial infrastructure has not yet brought us the harmonious society we might consider ideal. There remains the ugliness of extreme economic inequality, of some who endure hardship while others are pampered.
While some inequality is actually in many ways a good thing, for the motivation and stimulation it provides, arbitrary and extreme inequality poses problems. It is an imperative that people feel society is basically fair to them. We see this aversion most clearly today in the worldwide protests associated with Occupy Wall Street and its variants.
Rising inequality is certainly a valid concern, and one that must be addressed. But financial capitalism does not necessarily produce unjust wealth distribution. World’s Richest People If we define the field of finance broadly, then most of the world’s richest people may be classified as connected to it. Progressive Consumption Tax. The Case for Raising Top Tax Rates. Finance Isn’t as Amoral as It Seems (Part 2): Robert Shiller. Many people assume there is something sleazy about the business of finance, or the people who practice it. This impression is probably behind the commonly voiced opinion that it is a shame so many young people today are going into finance-related occupations, when they could be doing something more high- minded in other fields.
It’s true that many people in business do seem to feel rewarded, for the short run at least, in putting salesmanship ahead of purpose and in cutting legal corners. They seem too focused on money to have moral purpose in their business affairs. Yet if one lives in the real world, one has to work with, or even for, such people. They are a reality, and it makes sense to try to understand them -- to see if they are as simply sleazy as people think. Positions in certain finance-related fields often offer more than the usual temptation to be less than honest -- because finance is a profession that offers, at least to the lucky few, astronomically high incomes.
John D. The New Priesthood: An Interview with Yanis Varoufakis Part I. Yanis Varoufakis is a Greek economist who currently heads the Department of Economic Policy at the University of Athens. From 2004 to 2007 he served as an economic advisor to former Greek Prime Minister George Papandreou. Yanis writes a popular blog which can be found here.
His treatise on economic theory ‘Modern Political Economics: Making Sense of the Post-2008 World’, co written with Nicholas Theocrakis and Joseph Haveli is available from Amazon. Interview conducted by Philip Pilkington. Philip Pilkington: Without getting into too much technical detail what is it that you refer to in your book Modern Political Economics: Making Sense of the Post-2008 World the ‘inherent error’ in all economic theories and models? Yanis Varoufakis: The essence of the economists’ inherent error is that they erred into thinking it is possible to tell a credible story about how values and prices are formed in complex (multi-sector) economies that grow through time. PP: That’s really twisted.
YV: Quite so. Is money a liability? I waved a $20 note in front of my macro class this morning. I said: "Is this a liability of the Bank of Canada? ". They all answered "Yes". That's what we teach them. We draw a balance sheet for the Bank of Canada. We put the government bonds it owns on the asset side, and the currency it has issued on the liability side. I think it's wrong. Because it's made out of paper, and is more valuable than the paper it's written on, it certainly looks like debt. Let me tell you a counterfactual alternate history of money. Once upon a time, in the olden days, people used gold as money. The government used gold as money too. Then someone invented better things to use for fixing teeth and making airbag switches, so the industrial demand for gold disappeared. Then the government nationalised all the gold mines, so it had a monopoly.
Then the government decided to abandon marginal cost pricing. Then an alchemist discovered how to make gold from paper, very cheaply. What about government bonds? There’s No Stopping the Rise of E-Money. Science-fiction writers once imagined a galactic currency that would grease the wheels of commerce from here to Alpha Centauri.
In fact, however, we are tending in precisely the other direction, toward a burgeoning number of ever more specialized currencies. These will circulate electronically, by means of the mobile phones that are increasingly part of the dress of every person on the planet. Seemingly everywhere you look, you can see the emergence of this pattern in what futurologists call the weak signals [PDF] of change. These are the changes that will be seen, a generation from now, to have foreshadowed a technological revolution. That money is a technology is obvious, once you look at it. What’s more, like all technologies, money exhibits the law of unintended consequences.
Today, the technology of money is racing to catch up to social changes that have radically altered how people interact and therefore how, why, and when they use money. The technology worked well. David G.W. Money and Wealth: How to heal the disconnect. | David Boyle | There is no more conservative nation on earth than the British when it comes to money. Let me correct that. The Scots are great money innovators in history.
They gave us Michael Linton who invented LETS and John Law who ruined the French government in 1716 by monetising their national debt. No, it’s the English who are so financially conservative. When Barings Bank collapsed in 1995 because of the activities of one trader, Nick Leeson — who lost $827 million in Singapore betting on currency futures — it turned out that his London bosses had no idea what he was doing. The truth is that the English still believe that their bank manager is at his desk, drinking sherry, umming and aahing about their overdrafts. Perhaps this isn’t surprising. The party’s tenets were put together in Omaha in 1892 by a man called Ignatius Donnelly.
It’s enough to send a shiver down the spine — European conditions. The message of the Wizard is that it is all fake. And there lies the conundrum. Interview with Tomas Sedlacek: 'Greed is the Beginning of Everything' - SPIEGEL ONLINE - News - International. Finance and the Good Society by Michael Heller. Exit from comment view mode. Click to hide this space Goodness and finance are not words one usually sees sitting alongside each other in the same sentence. There was a sensible idea -- doux commerce -- at the time of the European Enlightenment that a common interest in commerce would tame the barbaric passions and civilize and soften societies.
Alas, that’s not a viewpoint often heard since 2007. Robert J. Shiller’s new book came out last week. In particular I was intrigued by a paragraph in Harding’s review: The review concludes, by way of summary: In this book Shiller *does* appear to rely on morality-cum-ethics as a foundation stone for creating and sustaining a capitalist world in which any poor person could start a business by “getting credit from a bank or capital from wealthy investors”. Moreover: Shiller emphasizes a formal : If there is going to be criticism of this book it may be that it is short on concrete remedies . OK, back to the question of goodness. The Financial Crisis and “Fractal Explanations” Posted by gregfisher on Dec 21st, 2011 in Blog, Networks | 2 comments by Greg Fisher The financial crisis is now over 3 years old and the explanations for the crisis have been well rehearsed.
This blog takes issue with a number of the explanations for the crisis, and develops a new term, fractal explanations. Google indicates that I am not the first to use this term but I think it’s worth developing some more. The Mandelbrot Set zoomed X 2000 In a nutshell, fractal explanations of “whole system phenomena” are those based on micro explanations that can be scaled up and easily mapped on to the whole. Fractals are, according to Mandelbrot “a rough or fragmented geometric shape that can be split into parts, each of which is (at least approximately) a reduced-size copy of the whole”. Put another way, if a person’s actions are represented by x and there are N people in a population, then fractal explanations mean that social phenomena can be thought of as Nx.
What do I mean? Share this Article: School for quants. Inside UCL’s Financial Computing Centre, the planet’s brightest quantitative analysts are now calculating our future On a recent winter’s afternoon, nine computer science students were sitting around a conference table in the engineering faculty at University College London. The room was strip-lit, unadorned, and windowless. On the wall, a formerly white whiteboard was a dirty cloud, tormented by the weight of technical scribblings and rubbings-out upon it. A poster in the corner described the importance of having a heterogenous experimental network, or Hen.
Six of the students were undergraduates. During the meeting, Galas asked each undergraduate about a particular corner of the database. ©Richard Nicholson Philip Treleaven, director of the Financial Computing Centre, believes that the meeting of computing power and fine young brains will transform problem-solving Every now and again, though, the discussion became comprehensible. Of course it all looks rather different now. Brave New Math. Economists find evidence for famous hypothesis of ‘comparative advantage’ David Ricardo’s concept of “comparative advantage” is one of the most famous and venerable ideas in economics. Dating to 1817, Ricardo’s proposal is that countries will specialize in making the goods they can produce most efficiently — their areas of comparative advantage — and trade for goods they make less well, rather than making all kinds of products for themselves.
As a thought example, Ricardo proposed, consider cloth and wine production in England and Portugal. If English manufacturers are relatively better at making cloth than wine, and Portugal can produce wine more cheaply than England can, the two countries will specialize: England will concentrate on making cloth, Portugal will focus on making wine, and they will trade for the products they do not produce domestically. Neat as this explanation may seem, it is by definition hard to prove. If England does not make wine, and Portugal does not make cloth, it is very hard to say how efficiently they could produce those goods. How to Prevent Other Financial Crises. Joseph Stiglitz | Austerity, and a New Recession? - Politics Is at the Root of the Problem. Wendell E. Berry Lecture. “Because a thing is going strong now, it need not go strong for ever,” [Margaret] said.
“This craze for motion has only set in during the last hundred years. It may be followed by a civilization that won’t be a movement, because it will rest upon the earth. E. M. Forster, Howards End (1910)1 One night in the winter of 1907, at what we have always called “the home place” in Henry County, Kentucky, my father, then six years old, sat with his older brother and listened as their parents spoke of the uses they would have for the money from their 1906 tobacco crop. The crop was to be sold at auction in Louisville on the next day. He came home that evening, as my father later would put it, “without a dime.” The economic hardship of my family and of many others, a century ago, was caused by a monopoly, the American Tobacco Company, which had eliminated all competitors and thus was able to reduce as it pleased the prices it paid to farmers.
James B. James B. Taking risks with the economy? It's time to throw caution to the wind. As an instrument for the deterrence and rehabilitation of criminals, the modern prison system is exceptionally bad value for money and woefully ineffective. While invented to ameliorate certain social risks of modern industrial societies, it has become clear that it is generating new risks all of its own, with prisons becoming schools for the teaching of crime.
If policy-makers were to start again in tackling problems of crime and social exclusion, they would not start from where we are today. But such is the nature of national risk management. Governments get locked in to certain dysfunctional paths, which then, it seems, become even riskier to abandon. No government will simply reverse existing incarceration policy without inviting far greater political and social costs. This is all becoming true of government’s involvement in another 19th century risk management system: investment banking. Escaping financial lock-in Experimenting with responsible finance. How to End This Depression by Paul Krugman. The depression we’re in is essentially gratuitous: we don’t need to be suffering so much pain and destroying so many lives. We could end it both more easily and more quickly than anyone imagines—anyone, that is, except those who have actually studied the economics of depressed economies and the historical evidence on how policies work in such economies.
The truth is that recovery would be almost ridiculously easy to achieve: all we need is to reverse the austerity policies of the past couple of years and temporarily boost spending. Never mind all the talk of how we have a long-run problem that can’t have a short-run solution—this may sound sophisticated, but it isn’t. With a boost in spending, we could be back to more or less full employment faster than anyone imagines.
But some readers will wonder, isn’t a recovery program along the lines I’ve described just out of the question as a political matter? Let me start by talking about the possibility of a decisive change in policy direction. "Giving the Well-Performing State Its Due" by Ana Palacio. "A Global New Deal" by Jomo Kwame Sundaram. Paul Krugman: We Could End This Depression Right Now | Economy. "The End of the World as We Know It" by Dani Rodrik. "The Institutions of Capitalism And Their Decay" by Michael Heller. "Austerity and Debt Realism" by Kenneth Rogoff.
Misplaced faith. Sensible Keynesians see no easy way out. Austerity has never worked | Ha-joon Chang. A Manifesto for Economic Sense. "The Good Times Might Never Come" by Michael Heller. "Ideas over Interests" by Dani Rodrik. "Is Global Financial Reform Possible?" by Paul Volcker. Issues 2012 | An Audacious Promise: The Moral Case for Capitalism. Funds - Weekly Market Comment: The Heart of the Matter - June 11, 2012. "The Perils of Prophecy" by J. Bradford DeLong. "Why Do Economies Stop Growing?" by Michael Spence. "My Speech to the Finance Graduates" by Robert J. Shiller. "The Economic Costs of Fear" by J. Bradford DeLong.
The Economy of Gross National Happiness by Sabina Alkire. Big Maconomics: How McDonald's Explains the World - Derek Thompson - Business. "Budgetary Wishful Thinking" by Jeffrey Frankel. "Austerity and Debt Realism" by Kenneth Rogoff. What Money Can't Buy: The Moral Limits of Markets. "A World of Convergence" by Kemal Derviş. "Re-Capturing the Friedmans" by J. Bradford DeLong. Exponential Economist Meets Finite Physicist. Remarks at the Festival of Economics, Trento Italy. Viewpoints - Evolution, Impact and Limitations of Unusual Central Bank Policy Activism.