- Behavioral economics, a hybrid of psychology, is in. The efficient market hypothesis is widely viewed as an embarrassing example of primitive fundamentalism.
- To state the bloomin’ obvious, unless the private sector expands to create jobs and generate tax revenues, we’re going to be considerably poorer for years.
- But how on earth can that happen if the state has to employ a growing army of officials to prevent the private sector ripping us off?
This essay asks a British-bent but critical question: “If markets don’t work, what will?“
UK’s Robert Peston is asking us all if we want to revive an intrusive government we knew years ago as we try to repair the hands-off and weak government that George Bush and Schwarzenegger and Palin, for example, with decades of free-market pundits were proud to starve and destroy.
In an earlier post, toward reasonably optimal behavior, I pointed out that our belief in so-called free markets and embedded game theory is both unfounded and lazy. I’ve resented this jingoism since Reagan and I’m sad for its effects.
The foist of laissez-faire arrived in the stagflating late 1970s and grew through the 80s while we first shrunk under multinational globalism, the still unsolved specter of exponential human demand, and the great challenge of hoping to invigorate both leadership and ourselves.
But as Greenspan apologizes for over reliance on the false magic of self-interest and we see that few if any had tested Milton Friedman’s assertions that trial and error is our best government, we’re proving what we’ve known, that nests of fools and thieves are entrenched in business and politics, too many of whom we’ve elected.
What’s next? We’ve seen tremendous innovation and growth. I believe more the result of the generations than witty policies – increased knowledge and ease of relations, building out finance and services, checking incessant and arrogant pathology, pushing ourselves forward in myriad projects that we encourage each other to fruit, and as well, due to Volker perhaps, firm monetization of economies without a staid oligarchy or cruel presidium.
Giving credit where it’s due, agencies and officials told to back off have been more agreeable over the years than post-war, except the local armies dressed as police or those roping unkempt poverty. Did we know smiles and handshakes were hiding ineffectual oversight and backroom alliances?
We must re-purpose.
We must repair sectors we’ve neglected to oversee. We know for certain we will restrain trickery and massive exploitation. Stop the rude lie that the weak will not hurt us if we ignore them. It’s not only government that can do that. A better tolerance is needed and much better intolerance too.
Robert Peston wants a revivalist turn, I think, criticizing one bench while sitting too close to its sister. I’d want vital change instead, where we realize we can steer government, we own it, to execute important duties without daring in any way to harm its people or waste the nation’s holding.
I think we’ll continue to purge unpublic representatives coddling libertine and vicious contributors, including the tiny fiefdoms nearby. Second we will at least re-set broad rule making and grant civil power to intervene. But this time, with immediate transparency easily obtained by the public. We want to bite fraud and crime but watch our watchdogs.Current media truly failed here.
It’s not just Wall Street on my mind. Food safety is an example of weakened agents overdue for a lift. Favors and habits in our military budget? The list is too long, but there’s our prize.
Another Franklin Roosevelt stuck in this 21st Century crash might hire millions of us to fix our ragged institutions, photographers and artists coming along to offices and halls. We’ll sweep away what’s crooked in our generation as the prairie was planted. No new Hoover Dam, but we’ll vacuum away nonsense. We’ll swat those taking comfort from the weary. We’ll audit the execs at the golf course.
Our trust will return. With or without that, it’s our future and we make it.
The global financial crisis has made it painfully clear that powerful psychological forces are imperiling the wealth of nations today. From blind faith in ever-rising housing prices to plummeting confidence in capital markets, “animal spirits” are driving financial events worldwide. In this book, acclaimed economists George Akerlof and Robert Shiller challenge the economic wisdom that got us into this mess, and put forward a bold new vision that will transform economics and restore prosperity.
Akerlof and Shiller reassert the necessity of an active government role in economic policymaking by recovering the idea of animal spirits, a term John Maynard Keynes used to describe the gloom and despondence that led to the Great Depression and the changing psychology that accompanied recovery.
Like Keynes, Akerlof and Shiller know that managing these animal spirits requires the steady hand of government–simply allowing markets to work won’t do it. In rebuilding the case for a more robust, behaviorally informed Keynesianism, they detail the most pervasive effects of animal spirits in contemporary economic life–such as confidence, fear, bad faith, corruption, a concern for fairness, and the stories we tell ourselves about our economic fortunes–and show how Reaganomics, Thatcherism, and the rational expectations revolution failed to account for them.