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How the Roberts Supreme Court is using the First Amendment to craft a radical, free-market jurisprudence.
"In addition to ambiguity, Age of Fracture exudes ambivalence, a moral position neither for nor against our age. Like the modernists, Rodgers sees no point pretending we can go back to the way it was. But like the antimodernists, Rodgers is unsettled by the present condition."
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Coase’s Noble-prize winning argument went as follows: since social efficiency is best achieved when two parties are left alone to bargain their way out of their conflicting positions, civil litigation need not be weighed down by such quaint considerations as justice. Rodgers’s concise critique then follows as such: “The social good was a maximization problem in aggregate market value: crops and cattle, property values and pollution-abatement costs, not, he had been candid enough to say, any close assessment of who stood best to bear the pain of the compromise or how unequally matched their resources might have been at the outset.” The precision with which Rodgers implicitly unmasks the most significant problem with Coase’s crude brand of utilitarianism, that in failing to account for historically-rooted power imbalances it empowers those best positioned to benefit from the “free market,” works in microcosm as an argument against the microeconomic impulses that define the age of fracture: the seemingly neutral application of microeconomics, the prototypical weak reading of society, to theretofore macro-problems, is anything but neutral.
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In making his devastating critique of conservative anti-structuralist thought, Rodgers shows that structural notions of power mattered where weak readings of society led to conservative conclusions. Coarse could only make the case that aggregate social efficiency should be the judicial system’s core objective by deflecting structural inequality, the consideration of which required giving thought to concepts infused with history, such as justice. Murray could only argue that welfare destroyed incentives for poor people to find jobs by ignoring the structural causes of unemployment, such as the trade policies that decimated the urban-industrial job sector, thus impoverishing large pockets of inhabitants in cities across the nation. Hand could only contend that the Constitution did not stipulate for incorporation by thinking of the document as devoid of history, by erasing two centuries of American jurisprudence that had ineluctably given constitutional law new meaning.
"Free-market enthusiasts’ place in the history of economic thought will remain secure. But thinkers like Friedman leave an ambiguous and puzzling legacy, because it is the interventionists who have succeeded in economic history, where it really matters."
1957 classic review of Atlas Shrugged.
Zombie Economics
How Dead Ideas Still Walk Among Us.
By John Quiggin.
The Crisis of Neoliberalism
By Gérard Duménil and Dominique Lévy.
in list: Economic Crisis
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Something rankles about Quiggin’s plainspoken conclusion, despite the able history of ideas and the enjoyable skewering of some disingenuous beliefs. His book doesn’t seem to take its lovely, lurid starting point as anything more than a hook. There is a rich tradition of zombies as figures of capitalism, perhaps most gloriously in George Romero’s film Dawn of the Dead. Lumbering automatons stripped down to the most ingrained habits, his living dead recall nothing but ceaseless consumption. They can only return to the mall’s torpid palace of commodities: they are blank, mindless, their arms outstretched for sustenance. The disease that has captured them is not a local phenomenon; as with countless other versions of the allegory, it is everywhere. Dawn of the Dead was made in 1978 and cannot be adduced either to the Keynesian or neoliberal era; it is not a withering critique of one importunate variant of modern economics but a total allegory.
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The book’s other seductively lucid schema concerns the history of structural crises, which follow an alternating pattern. The authors count four in the “long twentieth century”: the first “great depression” in the 1890s, the Great Depression, the 1970s collapse and the current morass. The first and third they identify as crises of profitability; the second and fourth, crises of “financial hegemony.” In these periods the profit rate is relatively stable, but the unchecked power of the upper echelons allows for unsustainable demands. They are gilded ages, perhaps; yet every such age gilds not the lily but the tulip: they are built out of bubbles. With the wealthy unwilling and the poor unable to support the mountain of social debt, the bubble eventually pops. This is, for our authors, the nature of the present crisis, and it is from here we must seek a way forward.
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"But what if all the dilemmas above are really different faces of the same beast? It's a deeper dilemma that I call, in my book, the Capitalists' Dilemma. We've reached a place where generating more of the same old "prosperity" requires more and more economic harm — real and relentless damage to people, communities, society, nature, and the future, whether in the form of McJobs, rising inequality, chronic mass unemployment, declining trust, or a missing sense of personal meaning."
"The *normal operation* of economic markets makes some people poor. Not because they are lazy, or fail to take initiative, or lack foresight, or have insufficient gumption and moxie. Just because."
"When Americans begin routinely complaining about how they hate their government and don't trust their leaders, it may be time to look warily at the homicide rate."
"Dr Steve Hall and Dr Craig McLean, claim in the latest international journal Theoretical Criminology that homicide rates are significantly higher in nations in neo-liberal politics where free market forces are allowed free rein, such as the USA, but are significantly lower in nations governed by social-democratic policies which still characterise most Western European nations."
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It's not. It's a product not of nature but of engineering. And to treat the market as nature, as some product of purely evolutionary forces, is to deny ourselves access to its ongoing redesign. It's as if we woke up in a world where just one operating system was running on all our computers and, worse, we didn't realize that any other operating system ever did or could ever exist. We would simply accept Windows as a given circumstance, and look for ways to adjust our society to its needs rather than the other way around.
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In short, these economic theories are selecting examples from nature to confirm the properties of a wholly designed marketplace: self-interested actors, inevitable equilibrium, a scarcity of resources, competition for survival. In doing so, they confirm — or at the very least, reinforce — the false idea that the laws of an artificially scarce fiscal scheme are a species' inheritance rather than a social construction enforced with gunpowder. At the very least, the language of science confers undeserved authority on these blindly accepted economic assumptions.
THE MYTH OF THE RATIONAL MARKET A History of Risk, Reward, and Delusion on Wall Street.By Justin Fox
THE SAGES Warren Buffett, George Soros, Paul Volcker, and the Maelstrom of Markets By Charles R. Morris
in list: Economic Crisis
Will Wilkinson has gotten a lot of Internet love for his article “Thinking Clearly About Economic Inequality”, which argues that increasing inequality is not as bad as people like Paul Krugman make it out to be. I thought it was a rhetorically clever but deeply misleading attempt to blur the obvious issue – economic inequality is increasing – by looking at it through a dizzying array of qualifying lenses.
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Wilkinson then tries to explain why increased income inequality does not translate into increased happiness inequality (although Steven and Wolfers actually say that it has translated into increased happiness inequality since the 1990s). There are two parts to this argument, but basically they collapse down to one. First, he says that the quality of budget-level products has increased faster than the quality of luxury-level products (like refrigerators), so that the differential in material comfort is decreasing for a given differential in monetary consumption. Second, he says that rich people are actually taxing themselves by spending huge amounts of money on “real estate with ocean views, or Ivy League diplomas, or goods like yachts” that do not provide value commensurate to their cost.
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And here Wilkinson undercuts his own argument. He points to the relatively small practical difference between a $300 refrigerator and a $10,000 refrigerator, which is far bigger than the difference between no refrigerator and a refrigerator – which was the relevant difference maybe fifty years ago. Good point. But he also talks about how vanilla and pepper suffered the same fate – only much longer before. The lesson is that different products and services that people want change over time, and at different times, from being rare luxuries to being relative commodities. Just because one former luxury good is now a commodity good doesn’t mean there aren’t other valuable goods that many people cannot afford.
But suppose you are buying meat that won't be supplied for 20 years? Still want to rely on the greed of the butcher? Thought not. By the time you have found out if he is cheating you, it will be too late to switch supplier. When there is a substantial time lag between purchase and consumption, as there is for pensions, savings schemes and sub-prime debt, the market loses its magic and the purchaser is vulnerable.
in list: Economic Crisis
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But it has become increasingly clear over the past few days that top officials in the Obama administration are still in the grip of the market mystique. They still believe in the magic of the financial marketplace and in the prowess of the wizards who perform that magic.
The market mystique didn’t always rule financial policy. America emerged from the Great Depression with a tightly regulated banking system, which made finance a staid, even boring business. Banks attracted depositors by providing convenient branch locations and maybe a free toaster or two; they used the money thus attracted to make loans, and that was that.
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Much discussion of the toxic-asset plan has focused on the details and the arithmetic, and rightly so. Beyond that, however, what’s striking is the vision expressed both in the content of the financial plan and in statements by administration officials. In essence, the administration seems to believe that once investors calm down, securitization — and the business of finance — can resume where it left off a year or two ago.
To be fair, officials are calling for more regulation. Indeed, on Thursday Tim Geithner, the Treasury secretary, laid out plans for enhanced regulation that would have been considered radical not long ago.
But the underlying vision remains that of a financial system more or less the same as it was two years ago, albeit somewhat tamed by new rules.
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