He always had a talent for the bottom line. On the mortgage agencies he writes:
What went wrong? The illusion that the companies were doing virtuous
work made it impossible to build a political case for serious
regulation. When there were social failures the companies always blamed
their need to perform for the shareholders. When there were business
failures it was always the result of their social obligations.
Government budget discipline was not appropriate because it was always
emphasized that they were "private companies.” But market discipline
was nearly nonexistent given the general perception — now validated –
that their debt was government backed. Little wonder with gains
privatized and losses socialized that the enterprises have gambled
their way into financial catastrophe.I wonder how general the lesson here might be. My fear is fairly
general. Inherent in the multiple objectives urged for creative
capitalists is a loss of accountability with respect to performance.
The sense that the mission is virtuous is always a great club for
beating down skeptics. When institutions have special responsibilities
it is necessary that they be supported in competition to the detriment
of market efficiency.It is hard in this world to do well. It is hard to do good. When I
hear a claim that an institution is going to do both, I reach for my
wallet. You should too.
Here is more. Larry Summers was my professor for Macro II and every lecture was a joy. "Lecture" isn’t even the right word, it was more like turning on a faucet.
Two sides to the coin, market profits with government impunity. The answer is obvious of course, fully nationalize!
If, on the flip side, full privatization does not even merit conversation by economists in a time of obvious failure, it seems it never will.
Tyler Cowen was my professor for Macro I and every lecture was a joy. “Lecture” isn’t even the right word, it was more like turning on a faucet.
I wonder if you would feel the same way about him if you were a woman.
HC
“Larry Summers was my professor for Macro II and every lecture was a joy.”
Most of Summers post was delightful but it’s my belief that the subprime mess wouldn’t have happened if there wasnt such a pervasive attitude that everyone must own a house.
oh yeah, happy camper myself and probably a lot of other females wouldkill to have a lecture with Larry Summers. It’s silly to dismiss a brilliant economist because he made one stupid statement.
Neither fish nor fowl ==> not edible long term
Thank you for such a thoughtful response, buggy professor. I can appreciate the argument that there are biological differences even if i don’t really buy it. And I’m sure there’s a lot of people that support it, even if they don’t always come out and say it. By “stupid statement” I meant it was probably something Summers should have kept to himself and should have been able to anticipate the media jumping all over it. Generally, college presidents have a job similar to that of a CEO–half of it is putting on a good face and not causing controversy.
Then again I wouldn’t have expected him to lose his job over it. You’d think that of all places a university–and one of the very best in the country–would be able to tolerate free speech.
I would posit that it is far more acceptable to propose sociocultural differences as a factor in success/wealth/development (as Clark did) than to propose genetic or biological differences (as Summers/Jensen did).
You will find that the more cheap eve isk here is very good for you.
it is a good time in four seasons
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