Economists Eye Identity

Uma nova/velha fronteira da economia que ainda não recebeu a devida atenção da comunidade de economistas do grande bananão.


In 1995, George A. Akerlof, a professor of economics at the University of California at Berkeley, circulated a working paper on the impact of social class and conformity on decision making. Akerlof argued that people make decisions—demand education, practice discrimination, marry, divorce, have children, and so on—based in large part on external factors, such as the quest for peer status.

A short time later, Akerlof received a letter from Rachel E. Kranton, a former student who was then an assistant professor of economics at the University of Maryland at College Park. The paper, she wrote, was flawed because it overlooked the role of identity in determining economic outcomes.

"I wouldn't call it chutzpah," Kranton says about her letter to Akerlof. Whatever the case, Akerlof was displeased. He also thought Kranton was wrong. "I understood identity as an aspect of people's tastes," he recently recalled, "and economists had already incorporated taste into their theories."

Despite his skepticism, Akerlof, who was awarded the Nobel Memorial Prize in Economic Science in 2001, felt he owed Kranton an opportunity to explain herself. They met at the Brookings Institution, in Washington, where Akerlof was ensconced as a resident fellow while his wife, Janet L. Yellen, served on the Federal Reserve Board. (Yellen, a much-rumored candidate to become the first woman to chair the Federal Reserve Board, is currently president of the Federal Reserve Bank of San Francisco.)

Over lunch, Kranton explained her ideas about identity, which originated in Middle East studies—"a field," she says, "that has grappled with questions about how communities are defined." Her husband, Abdeslam E. Maghraoui, is an associate professor of political science at Duke University and a scholar of political identity in the Muslim world. "Identity looms large in the intellectual discourse of my family," Kranton says over the phone from her office at Duke, where she is a professor of economics.

By the end of the meal, Akerlof was convinced that Kranton was on to something significant. "The important part about an idea," he tells me, "is the intuition that something isn't being done." But several questions remained. What exactly is identity? And how could it be incorporated into economics?

They began to meet frequently and read widely in the humanities and social sciences. The work of the Italian sociologist Vilfredo Pareto, who died in 1923, was particularly influential. Pareto's basic observation, Akerlof explains, was that people "don't just care about economic things, they also care about what they should and should not do, and those beliefs are shaped by who they think they are."

Akerlof points to the persistence of taboos against homosexuality. "These views, which are very arbitrary and cause a great deal of unnecessary pain and suffering, are not well captured in standard economics." People's senses of who they are shape their ideas about how they, and others, should behave. Those beliefs, moreover, change with time. For instance, a young mother in the early 1960s faced a very different choice about whether to pursue a career than do her contemporary counterparts. "Once we saw that"­—Akerlof calls it an "Aha!" moment—"we could see how identity applies to almost all areas of human motivation, from the behavior of children riding on a merry-go-round to how CEO's operate."

In 2000, Akerlof and Kranton formally introduced identity into economics in a paper published in the Quarterly Journal of Economics. "Because identity is fundamental to behavior, choice of identity may be the most important 'economic' decision people make," they wrote. More papers followed. Now Princeton University Press is publishing a book-length treatment of Akerlof and Kranton's ideas, Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being. "Identity economics is at the frontier," they write. "We change economics by closely observing economic and social life and transforming existing theory."

Identity economics, according to Akerlof and Kranton, is both a continuation of and a departure from other developments in the field over the last half-century that have brought economics closer to reality. Game theory allows for a more supple analysis of everything from marriage to monetary policy, and behavioral economics incorporates psychology into the discipline, highlighting the predictable irrationality of human behavior. And since the publication of Gary Becker's groundbreaking book The Economics of Discrimination in 1957, economists have taken up the study of social issues, like fertility, crime, and punishment.

But while Becker and his disciples account for some noneconomic motivations, they generally assume such tastes to be universal and static. Akerlof and Kranton, however, argue that taste is largely dependent on social context. "Taste has been taken as a given, and economists weren't supposed to explore where they come from and how they change. But taste is not a cultural constant," Kranton tells me. "Once you recognize that, you have a different view of how people will act in certain circumstances."

Imagine a new cadet at West Point. On his first day, he is given a haircut, stripped to his underwear, put in a uniform, and forced to endure a number of arduous rituals, like saluting and repeating the same phrase over and over again. Why? The cadet is assuming a new identity as a future officer in the U.S. Army, and he is being indoctrinated with the norms of military life, where incentives—medals, ranks, camaraderie—are not financial-based. Current economics, however, can't explain how a cadet's new identity, and his commitment to ideals like duty and honor, will change his preferences and behavior. Identity economics emphasizes a cadet's identification with the military, and civilian employees' identification with their workplace.

"In each case," Akerlof and Kranton write, "identity would be a component of the workers' utility," and an organization's success depends on employees who share its goals. "Without identity," Kranton says, "you will miss a huge part of what drives economic outcomes and economic behavior." Akerlof adds, "The field is heading in this direction because these ideas answer questions that don't have good answers without them."

Akerlof and Kranton's work has stirred criticism. Some economists question whether identity is an empirically valid concept; others are doubtful that identity can be modeled effectively. But they have prominent supporters, like Amartya Sen, a professor of economics and philosophy at Harvard University and the author of Identity and Violence: The Illusion of Destiny (W.W. Norton, 2006). "Our priorities, obligations, and concerns are strongly influenced by our identities," Sen says. "This fact doesn't come through sufficiently in standard economic reasoning, so George and Rachel's remarkable work supplements standard economics in a very significant way."

Fonte: TCHE

Economia e vida, na perspectiva da encíclica Caritas in veritate

Sou um dos organizadores deste pequeno livro do Núcleo Fé e Cultura da PUC-SP


Na Campanha da Fraternidade de 2009, a economia e a política vistas a partir do pensamento de Bento XVI e da Doutrina Social da Igreja

Este livro nasceu de um conjunto de acontecimentos providencialmente coincidentes. Em 2010, a Campanha da Fraternidade Ecumênica tem por tema “Economia e vida”, convidando-nos a aprofundar as implicações da Doutrina Social da Igreja para a vida econômica e social no Brasil. Em julho de 2009, recebemos a nova encíclica social de Bento XVI, Caritas in veritate, dezoito anos depois da última encíclica dedicada à temática, Centesimus annus, de João Paulo II.
Nesse meio-tempo, após um período de crescimento econômico aparentemente elevado, mas que terminou com uma crise previsível, o mundo do capitalismo globalizado percebe hoje com clareza a necessidade de repensar seus fundamentos e suas práticas econômicas recentes. Paralelamente, os problemas da pobreza, das escandalosas desigualdades sociais e do desenvolvimento continuam presentes, mas a maior parte das velhas fórmulas que procuravam responder a esses problemas encontra-se desacreditada. Neste contexto, o Núcleo Fé e Cultura – órgão da Pontifícia Universidade Católica de São Paulo voltado especificamente ao diálogo entre o Magistério da Igreja e os desafios da pós-modernidade e da globalização – e o Observatório Internacional Cardeal Van Thuân para a Doutrina Social da Igreja – organismo internacional que busca acompanhar e colaborar com as atividades do Pontifício Conselho Justiça e Paz, da Santa Sé – fizeram um convênio de colaboração. Essa é a origem deste livro. [...] Em seu conjunto, Economia e vida, na perspectiva da “Caritas in veritate” traça um amplo painel interdisciplinar sobre a forma como o Magistério da Igreja enfrenta os problemas relacionados à vida econômica e política no Brasil e no mundo, indo desde a antropologia filosófica e a teoria do conhecimento até as questões do desenvolvimento econômico, do meio ambiente, da economia de mercado, da relação entre empresas e bem comum e da defesa da vida. Só posso congratular-me com a iniciativa da publicação desta obra, fazendo votos para que seu estudo seja proveitoso para muitos leitores.

Do Prefácio do Cardeal Odilo P. Scherer, arcebispo de São Paulo.

Sumário

Ia. Parte: Fundamentos

1. Caridade e verdade: fundamentos da dimensão histórica e pública do cristianismo
Cardeal Renato Raffaele Martino

2. A caridade na verdade nas três encíclicas de Bento XVI
Dom Giampaolo Crepaldi

3. A solidariedade como compreensão da Caritas in veritate
Thais Novaes Cavalcanti

4. O diálogo entre a Doutrina Social da Igreja e o mundo na Caritas in veritate
Stefano Fontana

5. A arquitetura mundial de Bento XVI
Thierry Boutet



IIa. Parte: Economia e desenvolvimento

6. O desenvolvimento na Caritas in veritate
Simona Beretta

7. Finanças, racionalidade, bem comum na Caritas in veritate
Stefano Zamagni

8. Empresa, empreendedores e consumidores a serviço do desenvolvimento humano integral segundo a Caritas in veritate
Cristian Loza Adaui & André Habisch

9. Caritas in veritate e Economia de Comunhão
Luigino Bruni


IIIa. Parte: Desenvolvimento e defesa da vida

10. Vida, família e desenvolvimento: a unidade antropológica da Caritas in veritate
David L. Schindler

11. Defesa da vida, meio ambiente e economia na perspectiva do pensamento de Bento XVI
Francisco Borba Ribeiro Neto


IVa. Parte: No contexto latino-americano e brasileiro

12. Caritas in veritate e a América Latina: novos nomes para o desenvolvimento
Juan Esteban Belderrain

13. Os desafios da economia brasileira a partir da Caritas in veritate
Antonio Carlos Alves dos Santos

14. Caritas in veritate e os movimentos populares no Brasil
Vando Valentini & Rafael Marcoccia

15. Refletindo sobre a política e a economia no Brasil a partir de Caritas in veritate
Francisco Borba Ribeiro Neto

Revolutionaries

I was born in England in 1948, late enough to avoid conscription by a few years, but in time for the Beatles: I was fourteen when they came out with "Love Me Do." Three years later the first miniskirts appeared: I was old enough to appreciate their virtues, young enough to take advantage of them. I grew up in an age of prosperity, security, and comfort—and therefore, turning twenty in 1968, I rebelled. Like so many baby boomers, I conformed in my nonconformity.

Without question, the 1960s were a good time to be young. Everything appeared to be changing at unprecedented speed and the world seemed to be dominated by young people (a statistically verifiable observation). On the other hand, at least in England, change could be deceptive. As students we vociferously opposed the Labour government's support for Lyndon Johnson's war in Vietnam. I recall at least one such protest in Cambridge, following a talk there by Denis Healey, the defense minister of the time. We chased his car out of the town—a friend of mine, now married to the EU high commissioner for foreign affairs, leaped onto the hood and hammered furiously at the windows.

It was only as Healey sped away that we realized how late it was—college dinner would start in a few minutes and we did not want to miss it. Heading back into town, I found myself trotting alongside a uniformed policeman assigned to monitor the crowd. We looked at each other. "How do you think the demonstration went?" I asked him. Taking the question in stride—finding in it nothing extraordinary—he replied: "Oh I think it went quite well, Sir."

Cambridge, clearly, was not ripe for revolution. Nor was London: at the notorious Grosvenor Square demonstration outside the American embassy (once again about Vietnam—like so many of my contemporaries I was most readily mobilized against injustice committed many thousands of miles away), squeezed between a bored police horse and some park railings, I felt a warm, wet sensation down my leg. Incontinence? A bloody wound? No such luck. A red paint bomb that I had intended to throw in the direction of the embassy had burst in my pocket.

That same evening I was to dine with my future mother-in-law, a German lady of impeccably conservative instincts. I doubt if it improved her skeptical view of me when I arrived at her door covered from waist to ankle in a sticky red substance—she was already alarmed to discover that her daughter was dating one of those scruffy lefties chanting "Ho, Ho, Ho Chi Minh" whom she had been watching with some distaste on television that afternoon. I, of course, was only sorry that it was paint and not blood. Oh to épater la bourgeoisie.

For real revolution, of course, you went to Paris. Like so many of my friends and contemporaries I traveled there in the spring of 1968 to observe—to inhale—the genuine item. Or, at any rate, a remarkably faithful performance of the genuine item. Or, perhaps, in the skeptical words of Raymond Aron, a psychodrama acted out on the stage where once the genuine item had been performed in repertoire. Because Paris really had been the site of revolution—indeed, much of our visual understanding of the term derives from what we think we know of the events there in the years 1789–1794—it was sometimes difficult to distinguish between politics, parody, pastiche...and performance.

From one perspective everything was as it should be: real paving stones, real issues (or real enough to the participants), real violence, and occasionally real victims. But at another level it all seemed not quite serious: even then I was hard pushed to believe that beneath the paving stones lay the beach (sous les pavés la plage), much less that a community of students shamelessly obsessed with their summer travel plans—in the midst of intense demonstrations and debates, I recall much talk of Cuban vacations—seriously intended to overthrow President Charles de Gaulle and his Fifth Republic. All the same, it was their own children out on the streets, so many French commentators purported to believe this might happen and were duly nervous.

By any serious measure, nothing at all happened and we all went home. At the time, I thought Aron unfairly dismissive—his dyspepsia prompted by the sycophantic enthusiasms of some of his fellow professors, swept off their feet by the vapid utopian clichés of their attractive young charges and desperate to join them. Today I would be disposed to share his contempt, but back then it seemed a bit excessive. The thing that seemed most to annoy Aron was that everyone was having fun —for all his brilliance he could not see that even though having fun is not the same as making a revolution, many revolutions really did begin playfully and with laughter.

A year or two later I visited a friend studying at a German university—Göttingen, I believe. "Revolution" in Germany, it turned out, meant something very different. No one was having fun. To an English eye, everyone appeared unutterably serious—and alarmingly preoccupied with sex. This was something new: English students thought a lot about sex but did surprisingly little; French students were far more sexually active (as it seemed to me) but kept sex and politics quite separate. Except for the occasional exhortation to "make love, not war," their politics were intensely—even absurdly—theoretical and dry. Women participated—if at all—as coffee makers and sleeping partners (and as shoulder-borne visual accessories for the benefit of press photographers). Little wonder that radical feminism followed in short order.

But in Germany, politics was about sex—and sex very largely about politics. I was amazed to discover, while visiting a German student collective (all the German students I knew seemed to live in communes, sharing large old apartments and each other's partners), that my contemporaries in the Bundesrepublik really believed their own rhetoric. A rigorously complex-free approach to casual intercourse was, they explained, the best way to rid oneself of any illusions about American imperialism—and represented a therapeutic purging of their parents' Nazi heritage, characterized as repressed sexuality masquerading as nationalist machismo.

The notion that a twenty-year-old in Western Europe might exorcise his parents' guilt by stripping himself (and his partner) of clothes and inhibitions—metaphorically casting off the symbols of repressive tolerance—struck my empirical English leftism as somewhat suspicious. How fortunate that anti-Nazism required—indeed, was defined by—serial orgasm. But on reflection, who was I to complain? A Cambridge student whose political universe was bounded by deferential policemen and the clean conscience of a victorious, unoccupied country was perhaps ill-placed to assess other peoples' purgative strategies.

I might have felt a little less superior had I known more about what was going on some 250 miles to the east. What does it say of the hermetically sealed world of cold war Western Europe that I—a well-educated student of history, of East European Jewish provenance, at ease in a number of foreign languages, and widely traveled in my half of the continent—was utterly ignorant of the cataclysmic events unraveling in contemporary Poland and Czechoslovakia? Attracted to revolution? Then why not go to Prague, unquestionably the most exciting place in Europe at that time? Or Warsaw, where my youthful contemporaries were risking expulsion, exile, and prison for their ideas and ideals?

What does it tell us of the delusions of May 1968 that I cannot recall a single allusion to the Prague Spring, much less the Polish student uprising, in all of our earnest radical debates? Had we been less parochial (at forty years' distance, the level of intensity with which we could discuss the injustice of college gate hours is a little difficult to convey), we might have left a more enduring mark. As it was, we could expatiate deep into the night on China's Cultural Revolution, the Mexican upheavals, or even the sit-ins at Columbia University. But except for the occasional contemptuous German who was content to see in Czechoslovakia's Dubc ek just another reformist turncoat, no one talked of Eastern Europe.

Looking back, I can't help feeling we missed the boat. Marxists? Then why weren't we in Warsaw debating the last shards of Communist revisionism with the great Leszek Ko akowski and his students? Rebels? In what cause? At what price? Even those few brave souls of my acquaintance who were unfortunate enough to spend a night in jail were usually home in time for lunch. What did we know of the courage it took to withstand weeks of interrogation in Warsaw prisons, followed by jail sentences of one, two, or three years for students who had dared to demand the things we took for granted?

For all our grandstanding theories of history, then, we failed to notice one of its seminal turning points. It was in Prague and Warsaw, in those summer months of 1968, that Marxism ran itself into the ground. It was the student rebels of Central Europe who went on to undermine, discredit, and overthrow not just a couple of dilapidated Communist regimes but the very Communist idea itself. Had we cared a little more about the fate of ideas we tossed around so glibly, we might have paid greater attention to the actions and opinions of those who had been brought up in their shadow.

No one should feel guilty for being born in the right place at the right time. We in the West were a lucky generation. We did not change the world; rather, the world changed obligingly for us. Everything seemed possible: unlike young people today we never doubted that there would be an interesting job for us, and thus felt no need to fritter away our time on anything as degrading as "business school." Most of us went on to useful employment in education or public service. We devoted energy to discussing what was wrong with the world and how to change it. We protested the things we didn't like, and we were right to do so. In our own eyes at least, we were a revolutionary generation. Pity we missed the revolution.

Tony Judt

Fonte: NYBooks

Recordação, Rainer Maria Rilke

E tu esperas, aguardas a única coisa
que aumentaria infinitamente a tua vida;
o poderoso, o extraordinário,
o despertar das pedras,
os abismos com que te deparas.

Nas estantes brilham
os volumes em castanho e ouro;
e tu pensas em países viajados,
em quadros, nas vestes
de mulheres encontradas e já perdidas.

E então de súbito sabes: era isso.
Ergues-te e diante de ti estão
angústia e forma e oração
de certo ano que passou.

Tradução: Maria João Costa Pereira

Truth? There's the rub

Ótimo artigo do Simon Blackburn sobre a virtude . Uma raridade em qualquer ambiente.


New Year, and a general election year to boot. A good time, then, to think about resolutions and virtue, truth, authenticity, principle, sincerity and accuracy. In a democracy, it is said, we get the politicians we deserve, so Peter Mandelson's proudly flaunted £21.5K Patek Philippe wristwatch may be a welcome signal that, as befits a man in charge of universities, he has a passion for this last virtue. But no sooner does this thought flit across one's mind than it is hunted down by the worry that the First Secretary of State's watch may be only a sign that he would like to be thought to have a passion for accuracy. The trouble with semiotics is that signs and symbols can mean so many different things: what we might call their impact is so difficult to control, or even to measure, although perhaps in this case focus groups helped.

But now it must occur to many observers that even the most expensive and exclusive Swiss timepiece hardly delivers more accuracy than comes with an iPhone or a quartz timepiece given away with ten gallons of petrol. So, horribile dictu, perhaps it was not even accuracy that was on Lord Mandelson's mind, but the very human joy of using conspicuous consumption to signal the wealth about which he is so relaxed.

Not that I would deny our leaders the joy of dressing up. Philosopher David Hume said: "It cannot reasonably be doubted, but a little miss, dressed in a new gown for a dancing-school ball, receives as complete enjoyment as the greatest orator, who triumphs in the splendour of his eloquence, while he governs the passions and resolutions of a numerous assembly." The First Secretary and Department for Business, Innovation and Skills supremo does not often rise to the latter enjoyment, so perhaps we should be glad that he has the former. And dressing up may appeal to an electorate whose main pleasure lies in shopping and discarding. Perhaps in that light we should also see Tony Blair's reported million-dollar consultancy (plus perks) with Louis Vuitton as the final consummation, the symbolic apotheosis of the whole new Labour project. Social justice is not forgotten, for at the end of the yellow brick road is a world in which absolutely everyone has a million-dollar fashion consultancy.

Mention of our previous Prime Minister reminds us that accuracy is not a very fashionable virtue. Sincerity is apparently enough. Hand-on-heart, eye-rolling, catch-in-the-voice, hammed-up sincerity - sincerity that attains the perfect pitch of faith - is supposed to be the business all by itself. It does not matter if it lies alongside a very relaxed attitude to evidence, to probabilities carefully weighed, to possibilities explored, or indeed to any of the procedures that need to attend a sifting of truth from falsity. The leap of faith vaults over all that mundane grubbing around in the puzzling world. It transcends, it elevates and, above all, it exonerates. Or so the faithful believe. Of course, to be fair, everyone is more or less selective in attributing to faith a magical cleansing power. It has to be faith in one's own truth. Fairy dust has to be rationed - in the old days by the authorities, but now increasingly by the market. Faith in the tenets that other people sometimes go in for does not have the same cleansing powers. Quite the reverse, in fact.

Sincerity is a virtue, but it can be a very cheap one, given our propensity to self-deception. Some philosophers have found this notion paradoxical: how can I myself be both the confidence trickster practising on my innocence, and the dupe who is taken in? And since it is usually a bad thing to be taken in, what is in it for me qua confidence trickster? If I am, say, an investor, and deceive myself into believing that some strategy is risk free, then I, qua confidence trickster, am impoverished just as much as I, qua victim (unlesss I am a banker, of course). The difficulty arises because we think of deception as an intentional process with an intended outcome, which is that the person deceived believes something false. But in self-deception the process is not intentional in this way. Rather, the agent allows himself to be seduced, not by himself, but by the attractions of a world in which something he would like to be true is in fact true. What fine figures we imagine ourselves to cut, with our Swiss watches, alligator handbags and yellow cross-garters! We can after all see ourselves as others see us, and look! - their faces are aglow with love and admiration, and just a faint, but rather pleasurable, tinge of envy.

The self-deceived but sincere politician is a familiar pest. We may signal what remains wrong with him (or her, of course) by suggesting that they lack authenticity. Blown around on the winds of desire and opportunity, they remain people without qualities, without principles or resolution. We cannot know where they stand because they do not stand anywhere: they swim with the currents and tides of the moment.

Many philosophers have set a lot of store by authenticity. In fact, perhaps the best-ever piece of light verse about a philosopher introduces it, in the exacting double-dactyl form:

Higgledy-piggledy

Herr Rektor Heidegger

Said to his students

"To Being be True!

Lest you should fall into

Inauthenticity

This I believe -

And the Führer does too!"

The verse suggests that there is something fake about Heidegger's injunctions to authenticity, and it is easy to sympathise. Indeed, Theodor Adorno wrote a whole book attacking him on the topic without managing to put it anything like as neatly as the verse does. But authenticity certainly has its jargon: wholeness, integrity, truth, the natural, the self-sufficient, the real, the original, the rooted - all favourably contrasted with what is superficial, artificial, imposed, merely conventional, social, constructed, fragmented, self-estranged, false.

The literary critic Lionel Trilling cited Polonius' otherwise banal advice to his departing son Laertes as the first expression of the ideal: "To thine own self be true, and it must follow as the night the day, thou canst not then to any man be false." Fine words, but why should we believe them? What if Laertes' own self is insincere and insecure, irresolute and unknowing, a politician all the way down? If this is how he is, and Laertes expresses his own self, he may give promises he cannot keep, begin undertakings he cannot follow through, use language that means nothing, fantasise 24/7, and hand-on-heart say whatever he would most like to be true.

Many traditions in philosophy, from before Plato through Christianity to Freud, have insisted that the true self lies only at the end of a long quest, a hard process of analysis, discovery and purification. And only an extreme scepticism could lead us to argue in advance against such processes of self-examination and self-improvement. What we may more reasonably question is whether they result in discovery of some authentic self that was there all along, or only the invention of a new way to act, a new script to follow or a new persona to put on. The metaphor of being born again may be more accurate than it sounds, and there is no guarantee that what is newly born is less self-deceived, less of a bore or an idiot, or in any sense more authentic, than whoever started the process.

If all the world's a stage, you cannot expect sincerity from the world any more than you can expect it from actors in their professional roles. You should not, for instance, expect fidelity or loyalty to a previous part, for the persona who breaks the promise is most likely not the persona who gave it. You should not expect the sentiment sincerely felt and voiced at one time to be an accurate indicator of the sentiment that will be just as sincerely felt and voiced at another. The selves it is appropriate or strategic to present at each moment are not linked by ties of identity. They make up only an agglomeration or a commonwealth, and any loyalties through time are at best the fortunate precipitate from favourable social circumstances. Even when faced with the most blatant chicanery or abject disgrace - well, hey! we just need to draw a line under it and move on. This year we can see how well this lesson has been learnt as all three political parties compete to disavow more previous election pledges than the others.

We can indeed wonder about possibilities of improvement and dwell on ideals of virtue and excellence as aids to it. We can undertake self-examination, although the term is often misplaced. For when we ask ourselves what we really want, or what we really believe about something, and find the question hard, this is not because we cannot find ourselves or cannot interpret what we find. The question is not answered by uncovering an inner, pre-formed self with an unambiguous desire or belief. It is answered by looking one more time at the choice or at the evidence, and deciding what to desire or what to believe. It is not navel-gazing that gives us such solutions, but thinking the thing through one more time, in engagement with the world.

Which brings us back to accuracy. Universities should be about the attempt to see things that matter and see them as they are. They are about getting things right rather than putting them right, although we all suppose that decisions based on truth are apt to be better than decisions that are not. Universities are about habits of truth, and a habit of truth works not because on any, or many, occasions you can measure its impact. It works by setting an example.

So as an aside - a silly little philosophical point of small predictable impact - it is worth remarking that the Higher Education Funding Council for England's choice of "impact" as a paradigm of causation to which we must all aspire was particularly idiotic. If we want to pick a term from physical science, we might better say that in the human world examples and ideas work by osmosis and infusion rather than by mechanical force. A billiard ball has no choice about whether or how to move if it is impacted upon by another. But unlike the physical world, the political and social world is made up by human beings who do have choices, and it is the human environment that will eventually colour the way they choose. The human environment is an unimaginably complex network of values, stories and examples, nuances and implicatures, sometimes cemented in language, sometimes scarcely noticed, to which any particular person may or may not respond. It makes up what we also call a culture. A little word like "truth", "justice" or "integrity" does its quiet work not by impact, but by action stretching over centuries, and in itself no stronger than a flower, as the poet has it.

Unfortunately, one human option is to evade particular truths. A university can speak with the tongue of men and angels, but what it says may fall on deaf ears. Hume's little miss enjoying her new dress is probably not in a mood to hear unpleasant truths about the value of education. And surely not all can be wrong with a world in which there are £21.5K Swiss watches and million-dollar consultancies falling into the right persons' laps? In an ideal society, of course, these attitudes would not belong to those in power, but which politician is going to work for a society that would find it odious to elect a person such as himself?


Simon Blackburn is professor of philosophy, University of Cambridge. His most recent book is The Big Questions: Philosophy (2009).


Fonte: T.H.E

Entrevista com Richard Thaler

Thaler, one of the founders of behavioral economics, was out of town when I visited Chicago. I subsequently caught up with him on the phone, and I began by asking him what remained of the efficient-markets hypothesis, which he has long questioned.



Thaler: Well, I always stress that there are two components to the theory. One, the market price is always right. Two, there is no free lunch: you can’t beat the market without taking on more risk. The no-free-lunch component is still sturdy, and it was in no way shaken by recent events: in fact, it may have been strengthened. Some people thought that they could make a lot of money without taking more risk, and actually they couldn’t. So either you can’t beat the market, or beating the market is very difficult—everybody agrees with that. My own view is that you can [beat the market] but it is difficult.

The question of whether asset prices get things right is where there is a lot of dispute. Gene [Fama] doesn’t like to talk about that much, but it’s crucial from a policy point of view. We had two enormous bubbles in the last decade, with massive consequences for the allocation of resources.

When I spoke to Fama, he said he didn’t know what a bubble is—he doesn’t even like the term.

I think we know what a bubble is. It’s not that we can predict bubbles—if we could we would be rich. But we can certainly have a bubble warning system. You can look at things like price-to-earnings ratios, and price-to-rent ratios. These were telling stories, and the story they seemed to be telling was true.

So what are the policy implications? What should the government do to prevent bubbles from inflating, in the housing market, for example?

Several things. I think Fannie Mae and Freddie Mac should raise lending requirements in certain areas that look frothy. God did not say that you should be able to borrow one hundred percent of the price of a house.

What was the ultimate cause of the financial crisis? Poor regulation? Greed? Bad market signals? Human frailty?

Leverage caused the crisis—and I would say that is a pretty uncontroversial statement. Human frailty comes into play at two levels. One, the people who were taking out the subprime mortgage loans—many of them didn’t understand what they were doing. Two, the C.E.O.s clearly didn’t understand what their traders were doing. I call that the “dumb principal” problem. Go down the list—A.I.G., Citigroup, Bear Stearns, Lehman Brothers. These companies were destroyed or devastated by a small part of the firm that was hurtling forward and was risking the entire firm. The people in charge were either greedy or stupid, or possibly both.

What about the rational-expectations hypothesis, another Chicago theory? What’s left of that one?

(Laughs) Is there anybody who really believes in Ricardian equivalence? That’s a preposterous idea. I wonder if you can find anyone, other than, possibly, [John] Cochrane and [Robert] Barro, who has made the calculation as to what impact government spending will have on their future taxes and bequests. People don’t act “as if” they were doing that either. They are ignoring it.

I spoke to Cochrane. He said the problem with behavioral economics is it is too flexible—you can use it to explain anything. He also pointed out that Robert Shiller has been calling for economics to incorporate psychological insights for thirty years, but little progress has been made.

[In answering this question, Thaler brought up the Internet stock bubble, during which shares in Palm, the handheld computing companies, were worth more than the entire market capitalization of Palm’s parent company, 3Com.]

[Cochrane] has a model explaining why, during the Internet bubble, the prices of Palm and 3Com were rational. Rational models are one hundred per cent flexible. If you allow time-varying discount rates, there is no discipline whatsoever. If you look at what happened to tech stocks and then to real estate, and you say maybe there wasn’t a bubble—where is the discipline in that?

I think it’s fair to say that behavioral economics hasn’t solved everything. That is true. But to say Shiller and I have been doing it for thirty years—there was just me and him. Now we have some young recruits. We are not outmanned a thousand to one. But there is work to do.

Do you think the financial crisis will come to be seen as a watershed for behavioral economics—a moment it became mainstream, or even dominant?

I think it is seen as a watershed, but we have had a lot of watersheds. October 1987 was a watershed. The Internet stock bubble was a watershed. Now we have had another one. What is the old line—that science progresses funeral by funeral? Nobody changes their mind.

What will happen is that the economists [in their thirties and forties] are pretty open to these ideas. They don’t think it is very controversial. That’s where economics will be in ten years. They will be running the subject. People like Posner and Becker and Fama and Lucas and I—we will be history.

But you don’t think the financial crisis and recession will cause an intellectual revolution in economics, as happened in the nineteen-thirties?

No. Nothing will happen fast. But the next generation of economists, it is safe to say, will be more open to alternative models of human behavior and less confident that markets work perfectly.

Do you think that Chicago economics of the old school has lost some of its swagger?

No, I don’t see any measurable loss of swagger. Posner goes against the grain. He’s probably the counterexample to the theory that nobody learns anything. Becker and Lucas and so on—that group probably thinks he has lost his mind.

That brings us to the Keynesian revival, and to the dispute about the Obama Administration’s stimulus package. What are your views on that?

The General Theory—anybody who goes back and reads that book can’t help but be impressed. It contains so many insights, including many that anticipated behavioral finance. As for the stimulus, I don’t know where we would be now if there hadn’t been a stimulus package.

Back to Chicago matters. You say you don’t see much less swagger, but I hear that there has been a lot of internal discussion, and debate, about what happened. Is that not true?

Yes. There has been a ton of discussion in the lunchroom. For six months, it was the only thing anybody could talk about. The thing I will say about my colleagues is that they were very engaged by what was going on. The good thing I will say about the Chicago School is that it was always about the world, not about the abstract. That continues. People like Kevin Murphy just want to understand how the world works.

The tradition of Chicago price theory is a good one, and it is a low-tech methodology that tries to apply simple economic theory to the world. [Steve] Levitt is a perfect illustration of that. In some ways, I, too, can fit into that definition of the Chicago School.

Ainda o déficit externo...

Não é o artigo mais sofisticado do "alexandre eram os deuses astronautas", mas o argumento me parece correto.


Imagine uma empresa que fature R$ 100 milhões/ano. Usa R$ 62 milhões para pagar seus funcionários, R$ 21 milhões para a diretoria e os restantes R$ 17 milhões para investir e aumentar seu faturamento nos próximos anos, configuração que mantém seu fluxo de caixa devidamente equilibrado. No entanto, novas oportunidades de investimento aparecem e não há dúvida de que, no melhor interesse dos seus acionistas, a empresa deve aproveitá-las. O que fazer?
Para financiar o investimento adicional, só existem três alternativas: reduzir o pagamento aos funcionários; baixar a remuneração da diretoria; ou ir a mercado, seja tomando empréstimos, seja emitindo novas ações. Considere, porém, que a empresa decida pela terceira opção. Caso o retorno dos projetos seja maior que o custo do capital, não há maiores problemas: com a maturação dos projetos o fluxo suplementar de caixa será superior à remuneração do capital adicional e a empresa, após certo tempo, terá plenas condições de remunerar credores e acionistas.
É fácil concluir que, sob as condições acima, tomar recursos no mercado, o equivalente a um deficit no seu fluxo de caixa, é uma boa decisão e qualquer analista digno desse título louvará a estratégia empresarial. Caso, porém, a empresa estivesse incorrendo em deficit devido a investimentos ruins, ou gastos maiores com funcionários e diretoria, a reação seria a oposta. Sem o crescimento adicional do seu faturamento ela teria dificuldades para servir seus novos compromissos e, assim, não apenas os preços de suas ações cairiam mas também os custos associados a novas dívidas se tornariam maiores, refletindo riscos mais elevados quanto à sua capacidade de pagamento.
A esta altura os 17 leitores já chegaram a duas conclusões importantes. A primeira é que deficit não são, em si mesmos, bons ou ruins; o que interessa é o que se faz com os recursos tomados ao longo desse período, isto é, se os investimos em bons projetos ou se os consumimos em despesas que não gerarão receita adicional.
A segunda conclusão é que não estou falando de uma empresa, mas sim do Brasil, país em que, nos 12 meses terminados em setembro de 2009, o consumo privado respondeu por 62% do PIB, o consumo público por 21%, e o investimento por modestos 17%.
Esperamos (na verdade ansiamos) que o investimento se eleve como proporção do produto, pois se trata de fator crucial para que o país possa acelerar sua taxa de crescimento de longo prazo, mas, como no caso acima, as alternativas existentes são apenas três: reduzir o consumo privado (aumentar a poupança), reduzir o consumo público (fazer o ajuste fiscal), ou incorrer em deficit externo. Não há dúvida de que optamos pelo terceiro caminho.
Nossos "keyenesianos de quermesse" associam essa escolha ao ressurgimento da chamada "vulnerabilidade externa", mas, pela discussão acima, deve ficar claro que esta vulnerabilidade depende do que for feito com os recursos que forem tomados, seja sob a forma de investimento estrangeiro, seja sob a forma de dívida (há uma diferença importante entre eles que, por falta de espaço, não vou abordar).
Caso esses recursos sejam utilizados para financiar o ritmo crescente dos gastos públicos, provavelmente enfrentaremos problemas à frente, quando a expansão do PIB não se mostrar suficiente para servir ao capital tomado. Usados, porém, para investimentos que acelerem não apenas nosso crescimento mas também as exportações, não há por que temer deficit externos. Deficit não é kriptonita; o que fazemos com ele é.

Fonte: FSP

FHC privatiza, Lula conglomera

Bom artigo do Vinicius Torres Freire, colunista do jornal da ditabranda, sobre a consolidação dos "barons" no grande bananão. Espera-se que a eles não seja necessário adicionar o adjetivo que acompanha seus similares americanos: "robber".

Nem toda fusão & aquisição tem o dedo do governo Lula. Algumas são feitas a braçadas, outras à boca miúda, algumas levam só a benção estatal. Algumas das principais personagens desses grandes negócios são proprietários do que antes eram apenas empreiteiras gigantes, agora conglomerados diversificados (Odebrecht, Camargo Corrêa e Andrade Gutierrez).
Os grandes empreiteiros conversam muito bem com Lula, em pessoa.
Outra parte do jogo é armada por Luciano Coutinho, do BNDES, que anunciou o projeto das "campeãs" e "multinacionais" brasileiras e o implementou com eficácia, em tempo escasso -o economista assumiu o banco faz menos de três anos.
O contexto histórico deu o resto do impulso à criação de "chaebol" coreanos ou "keiretsu" japoneses à moda brasileira (ou se trata de algo como a criação de conglomerados americanos e alemães na virada do século 19 para o 20?). A crise financeira descapitalizou ou quebrou empresas no Brasil e lá fora. O mundo rico (a contragosto) e o Brasil (com gosto) convocaram o Estado para resolver a lambança. O relativo sucesso do Brasil na crise reforçou os vetores ativistas do governo.
O BNDES terá R$ 180 bilhões do Tesouro no biênio 2009-10. Ajudou a concentrar o negócio de carnes na mão do JBS; o de frango, suínos e derivados na mão da Perdigão-Sadia (a Perdigão já era "semiestatal"); a telefonia nacional na mão da Oi; boa parte do negócio de celulose na mão da Votorantim-Aracruz.
O comentário vem a propósito da simpatia do governo pelo desejo da Camargo Corrêa de açambarcar um terço da distribuição de eletricidade no Brasil, embora tal negócio seja ainda incipiente. Além da Camargo, a Odebrecht também gostaria de levar a Brasiliana (Eletropaulo e AES), hoje de BNDES e AES; pode ser que tente levar a Duke no Brasil. E a Cemig sempre sonhou em ser grande consolidadora do setor.
Com a Odebrecht, a Petrobras forma um grande elo da ciranda de fusões & aquisições do período Lula 2. Sócias na Braskem, que engoliu a Quattor, Petrobras e Odebrecht quase monopolizaram e verticalizaram a petroquímica no Brasil. Por falar nisso, a Braskem comprou ontem as petroquímicas muito mal das pernas da Sunoco, nos EUA.
Odebrecht e Petrobras estão preocupadas com o movimento anunciado ontem pela Cosan, que fundiu seus negócios de etanol e postos com a Shell (lembre-se que a Cosan comprara os postos Esso no Brasil).
A Petrobras quer ter pelo menos um quinto do negócio do álcool no Brasil. Está procurando mais usinas para comprar, uma meia dúzia. A Odebrecht tem a ETH Bionergia, que está acabando de comprar a Brenco (também de etanol, com apoio e sociedade do BNDES).
A consolidação não acabou -as alcooleiras estão mal das pernas, endividadas. Os estrangeiros estão chegando, na contramão das "múltis brasileiras". A múlti francesa do agronegócio Louis Dreyfuss levou a Santelisa, a segunda do etanol (a primeira é a Cosan). A múlti americana de commodities Bunge vendeu seu negócio de fertilizantes para a Vale (outra "semiestatal") a fim de se concentrar no etanol.
O que falta? Farmacêuticas, siderurgia? Quem dá mais?

Fonte: FSP

Entrevista com Raghuram Rajan

I met Rajan in his office at the Booth School of Business. I began by asking him about the academic work he and several colleagues at the business school did in the years leading up to 2007 on banking and liquidity. In addition to exploring theoretical issues that turned out to be important, Rajan, in the summer of 2005, issued a prescient warning about the dangers of a financial blowup involving the credit markets. It was striking, I remarked, that despite Chicago’s image as a bastion of market efficiency, it was also home to much more questioning research in the financial system.



Raghuram Rajan: Forget the public utterances: the research done at this place was, essentially, right on the ball—issues of liquidity, the fact that liquidity might dry up, and who’s there to provide liquidity in those situations. One of my colleagues, Doug Diamond, is, in many ways, the father of modern banking theory. He wrote the book on bank runs, literally. When he was traveling around giving his talks, people used to say, “Why are you working on history?” Unfortunately, this stuff is all too real these days.

The point is, research drives thinking, and there are all kinds of research being done here. People at the extremes get a lot of press, people who say: “Let’s not do anything, let’s liquidate”—the Andrew Mellon kind of view. There are people at Chicago who hold that view. There are others who understand that the banking system is a lot more important than, and different from, most corporations. Yes, you can close down some banks without a problem, but there are some banks that are so intertwined you don’t have an option.

There are some people who say, Simon Johnson [an M.I.T. economist who was formerly at the International Monetary Fund] for instance, “Oh, we know how to shut down these banks. We did it at the I.M.F.” The I.M.F. never did anything of this size—not by any stretch of imagination. The U.S. has closed down banks, such as Wachovia or Washington Mutual, or at least dissolved them, which are really big banks. But when you come to Citigroup or Bank of America it is a completely different kettle of fish. We have to figure out how to do it—without any question. And we could have been much tougher on the banks than we have been. Even now, we could be much tougher than we are. But to argue that it’s a very simple thing to do—it’s just a matter of nationalizing them or shutting them down—there are a whole lot of issues that are raised there.

All I am saying is that there are no easy answers in this thing … and one doesn’t have to be corrupt or in the pay of the financial sector to say, hey, wait a minute: it’s not as simple as letting them all go under or taking them all over. That’s my rant about the banking sector. By and large, I think we’ve done all the things that needed to be done. I think the downside of what we haven’t done is that we haven’t made the banks face up to more pain. That would have made it politically easier to do what needed to be done.

When you say, “make the banks face up to more pain,” what do you mean? Tougher regulation? Big equity stakes for the government—along the British lines?

Equity stakes and other things. For example, even now [the government] can require all compensation above a certain amount to be paid in equity, and equity that is real equity. The way banks do it now is they pay people in shares, but they also buy back equal amounts of shares [in the market]. So there is no increase in capital.

What we have right now is a situation where every saver in the country is, essentially, paying a huge tax to bail out the banking system. We are all getting screwed on our money market accounts—getting 0.25 per cent—and the banks are making a huge spread on nearly every asset they hold, because they are financing them at pretty close to zero rates. Another way of doing this—a way that would be nice to try—is to force the banks to load up on capital.

What is the point of all this? The point of all this is to get banks to lend. Well, they have been doing everything else except lending. Now, it may be that there aren’t that many profitable lending opportunities at this point. But if there aren’t, why are all the savers paying for this? Because you are not getting them to lend any more, and you are not getting more investment, which was the whole point of having interest rates so low. In fact, what you are doing is setting up a whole lot of other asset bubbles at this point.

Another way would be to put more direct pain on the banks. For example, if they were flush with capital and found they couldn’t pay bonuses, so all of this [money] went into increasing the capital base, they would have an incentive to make loans to reduce the effective capital that they had. What we have at the moment is that the citizenry is paying for the banks. Get the banks to pay for themselves.

That gets away from the whole Chicago issue. But what I’m arguing is in Chicago you have the extreme, which says, “Let the chips fall they may. What’s the problem with letting a few banks go under?” Whether you hold that view depends on how much you think the banks as an institution matters. Doug Diamond and I think it does matter. There is a lot of organizational and relationship capital embedded in the banks. If you let them go, it is very hard to start them up [again].

What about the causes of the crisis?

Within the big tent of Chicago, again, there are [also] so many different explanations for why this happened. Whether it was an agency problem in the banking system itself. Whether it was markets going haywire—Dick Thaler would be in that camp—irrational exuberance of one kind or another. Or whether it was government intervention—the story about pushing credit to the less well off segments of the population. My sense is, if you think seriously about this, all parts of it are important.

When you have a systemic crisis of this kind in a developed country … the whole point about development is that you deal with some of these problems. You don’t have populist extension of credit. You don’t have banks going haywire. There is reasonable supervision. That is what we have always argued—you get good institutions. And all of it broke down. Which would suggest it is not a small breakdown; it is not a small thing that went wrong. You can’t pin it all on Greenspan. It is a systemic breakdown, and we need to look more broadly at why it happened.

How long have you been in Chicago?

I came here in 1991.

When it was largely associated with the efficient-markets hypothesis?

I would guess…. When I came here, Merton Miller and Gene Fama were the leaders of the finance group. Clearly, both of them were strongly persuaded of the old Chicago viewpoint. Since then, I would say that Dick Thaler and Rob Vishny have been two important figures arguing that there are some serious departures from fundamentals. The whole point about a strong form of efficiency is this: If everybody knows things are going wrong why don’t they correct it? Vishny’s arguments have been about why it doesn’t get corrected—limits to arbitrage and stuff like that. I think that is quite persuasive. Dick Thaler’s [work] has been about how people make mistakes of a certain kind. That by itself is not enough to explain major departures. If somebody makes mistakes, why doesn’t somebody else see those mistakes and try to take advantage of them?

Who brought in Thaler and Vishny? Was a deliberate decision taken to try and broaden out the Chicago approach?

Vishny evolved. He was a dyed-in-the-wool corporate-finance guy when he came in, and then he got interested in market efficiency and things like that. He put his money where his mouth is. He ran a very successful [investment] fund. And now he’s come back. Vishny evolved and therefore wasn’t an import of the virus. Thaler was a direct import. I think Gene, to his credit, and Vishny played a big role in bringing Dick in.

I want to tell you a story that I don’t know if anybody else has told you. Dick Thaler used to teach a course on market inefficiency. For nine weeks, he would pound the notion that markets were inept in this way and that way. The tenth week he would invite Gene Fama in. And Gene would demolish everything that Dick had taught the students over those nine weeks. It was Chicago at its best—where you have a debate but you respect each other’s viewpoint even though it is diametrically opposed to yours…. It’s not about people; it’s about ideas. Unfortunately, in too many departments, disagreements about ideas turns into personal disagreement. That’s an important difference in Chicago—that we criticize the idea, and we criticize it very fiercely internally, but not the person.

Is there a big difference between the business school and the university economics department?

The economics department, as you know, has these giant personalities. I would say the business school has fewer personalities…. Maybe there are fewer giants at the business school, but it may also be that the culture here is one of greater give and take.

As an outside observer, it sometimes seems that the business school is starting to loom over the economics department. Is that fair?

We have a lot more younger people—just because of the size. We have an economics group, a behavioral group, a finance group. I think in the numbers we are bigger. Also, business schools typically have substantial resources, and so on. All those things help. But I would say it is still a formidable economics department.

Have there been a lot of in-house debates about the crisis? Seminars, that sort of thing?

Oh yes, when the crisis started getting worse and worse we had a whole bunch of seminars across the school. And our lunchroom is full of debate about this, all the time—again, because we differ internally about what the causes and remedies may be. It boils down to two or three things.

One: the extent to which it was animal spirits and mistakes versus distorted incentives.

Two: the importance of the banking system. If you let them all collapse, can they regenerate immediately, or is there a difficulty in rebuilding organizations once they collapse? Some people say liquidate and from the ashes you will see the phoenixes rising. Other say no—ashes are ashes and you get nothing from that.

Three: there is also some argument about the extent of the financial center-political system nexus. Those on the left and the right basically think they are in bed with each other. Those at the center think that [policymakers] are in a difficult situation.

So you have some sympathy for Tim Geithner, Larry Summers, and others in the Obama Administration who are being attacked for being too soft on Wall Street? After all, people tend to forget how dire things seemed at the end of 2008 and the start of 2009.

(Nods) Here’s the thing. A lot of people were saying the only way out was to nationalize the banks, and now they are not revisiting what they talked about then. And what about the guys who said, “Let them all fail”? They aren’t going back to what they said either…. Maybe if we had let them fail we would have had a better outcome—who knows? But I think you have to give the authorities credit for at least putting a floor under the panic. And I think [Hank] Paulson deserves some of the credit. This Administration followed some of what he did.

Now, they were playing in an environment where they really were making it up as they went along, so I have a lot of sympathy for what they did. But I do think in hindsight, and even at the time, that they could have been a lot tougher. Their fear was that if they were a lot tougher they would have taken the bottom out. I think even at that time they could have been tougher.

You mean when they were handing out debt guarantees and equity injections and so on?

Yes. At that time, they could have asked for more [in return], but I don’t think they were focussed on it. The problem now is the banks act as if there was never a problem. It’s the ex post rationale: we paid you back with profits. Well, nobody was willing to lend to you then. The effective interest rate the government should have charged would have been infinity. When there is no quantity available, the price was infinity. (Laughs) So to argue that it wasn’t a subsidized loan just because you paid it back is ridiculous. They know it, but, obviously, it’s harder to make the case to the public.

Where do we go from here?

The real problem is that the United States has, in many ways, been encouraging too much consumption as a palliative for other things that haven’t been solved. So we muddle along because the crisis wasn’t deep enough [to force big changes]. We used all our bullets. We don’t have any bullets left, and we are in the process of encouraging risk-taking all over again. I’m not saying we are necessarily going to have another crisis soon. But what do we have in reserve if we haven’t dealt with the fundamental problems? That’s my worry—that we will emerge without a serious sense that there are problems we need to fix. We will have identified bonuses as an issue, or something like that, and imposed some constraints. But we won’t have dealt with the underlying deep problems.

Back to your own research on banking: Did you encounter any opposition to it internally?

No, we weren’t raising any hackles. Our research was about liquidity and the possibility of it drying up. It wasn’t about market efficiency, or anything of that sort. It was technical and a bit obscure. In a sense what we did was we added some institutional detail to the traditional theory.

Were there are precursors at Chicago to your line of work?

Well, there is Ronald Coase. Coase is an important figure at Chicago, and he started this whole thing about worrying about organization.

We have talked about the efficient-markets theory. What about the other big modern theory associated with Chicago—the rational-expectations hypothesis? What’s left of that one?

The fault of the macroeconomics profession was not so much rational expectations, which is a convenient and useful device. It was to ignore the plumbing. Economists could afford to do that for a long time because the plumbing didn’t back up. Now that the plumbing has backed up you find that loans aren’t really made in a pristine, pure market. Things can break down. There can be quantity constraints, when nobody is willing to lend to anybody at any price.

It’s not so much rational expectations, which I think was an important advance. The mistake was that we thought the economy works reasonably well, and we could ignore the institutional details. We learned that was wrong.

Root cellar, Theodore Roethke

Nothing would sleep in that cellar, dank as a ditch,
Bulbs broke out of boxes hunting for chinks in the dark,
Shoots dangled and drooped,
Lolling obscenely from mildewed crates,
Hung down long yellow evil necks, like tropical snakes.
And what a congress of stinks!
Roots ripe as old bait,
Pulpy stems, rank, silo-rich,
Leaf-mold, manure, lime, piled against slippery planks.
Nothing would give up life:
Even the dirt kept breathing a small breath.

Entrevista com James Heckman

I interviewed Heckman by telephone in late October. I began by referring to a piece in the University of Chicago Magazine in which he appeared to absolve Chicago economics of any blame in causing the financial crisis. How did he react, then, to the recent criticisms of Chicago School economics from Joseph Stiglitz, Paul Krugman, and others?



James Heckman: Well, I want to distinguish between two different ideas. The Chicago School incorporates many different ideas. I think the part of the Chicago School that has been justified is the claim that people react to incentives, and that incentives are important. Nothing in what has happened invalidates that idea. People did react to incentives—clearly they did. It turned out that the incentives they were reacting to weren’t socially beneficial, but they definitely reacted to them. The other part of the Chicago School, which Stiglitz and Krugman have criticized, is the efficient-market hypothesis. That is something completely different.

I think it is important to put it into historical perspective. In the late nineteen-forties and nineteen-fifties, when Keynesianism was really dominant, that sort of Keynesianism—so-called hydraulic Keynesianism—completely ignored incentives and the way people reacted to them. What Chicago did—Milton Friedman, George Stigler, and others—was to redress that balance. They did a whole lot of empirical studies that showed how people did react to incentives, such as changes in taxes or prices. That was incredibly influential, and it is still is.

In the early nineteen-seventies, Martin Feldstein, of Harvard, showed how changes in unemployment benefits had a big impact on labor supply. That had an enormous impact on policy, and it was an application of Chicago economics. Feldstein said he read [Friedman’s] “Capitalism and Freedom” when he was at graduate school in Oxford, and it had an enormous influence on his thinking. That was the Chicago influence, and it still stands up. Linking empirical work to theory, and showing how things like taxes and government programs impact behavior.

O.K. People were reacting to incentives—the mortgage lenders, the Wall Street bankers, the homebuyers—I agree. But weren’t market prices sending them the wrong signals, and isn’t that an indictment of Chicago economics, which, going back to Hayek, at least, has stressed the role of prices in coordinating behavior?

I tend to think of it more in terms of the market reacting too slowly. Certainly, from the end of 2007 onwards, when it was clear that problems were emerging, many Wall Street professionals steered away from mortgage securities. For a long time, though, the market was sending the right signals. People made a lot of money—the traders, and so on. It turned out not to be socially optimal, but that is a different issue.

[Heckman then criticized behavioral economists, such as Berkeley’s George Akerlor and Yale’s Robert Shiller, for suggesting that the roots of the crisis lay in irrational behavior: overconfidence, animal spirits, and so on. For the most part, individuals responded to market incentives and reacted rationally, he insisted.]

Look, I could subsidize people to murder children, and if I offered enough money I don’t think I would find much trouble finding a ready supply of murderers.

Also, I think you could fault the regulators as much as the market. From about 2000 on, there was a decision made in Washington not to regulate these markets. People like Greenspan were taking a very crude and extreme form of the efficient-markets hypothesis and saying this justified not regulating the markets. It was a rhetorical use of the efficient-markets hypothesis to justify policies.

What about the rational-expectations hypothesis, the other big theory associated with modern Chicago? How does that stack up now?

I could tell you a story about my friend and colleague Milton Friedman. In the nineteen-seventies, we were sitting in the Ph.D. oral examination of a Chicago economist who has gone on to make his mark in the world. His thesis was on rational expectations. After he’d left, Friedman turned to me and said, “Look, I think it is a good idea, but these guys have taken it way too far.”

It became a kind of tautology that had enormously powerful policy implications, in theory. But the fact is, it didn’t have any empirical content. When Tom Sargent, Lard Hansen, and others tried to test it using cross equation restrictions, and so on, the data rejected the theories. There were a certain section of people that really got carried away. It became quite stifling.

What about Robert Lucas? He came up with a lot of these theories. Does he bear responsibility?

Well, Lucas is a very subtle person, and he is mainly concerned with theory. He doesn’t make a lot of empirical statements. I don’t think Bob got carried away, but some of his disciples did. It often happens. The further down the food chain you go, the more the zealots take over.

What about you? When rational expectations was sweeping economics, what was your reaction to it? I know you are primarily a micro guy, but what did you think?

What struck me was that we knew Keynesian theory was still alive in the banks and on Wall Street. Economists in those areas relied on Keynesian models to make short-run forecasts. It seemed strange to me that they would continue to do this if it had been theoretically proven that these models didn’t work.

What about the efficient-markets hypothesis? Did Chicago economists go too far in promoting that theory, too?

Some did. But there is a lot of diversity here. You can go office to office and get a different view.

[Heckman brought up the memoir of the late Fischer Black, one of the founders of the Black-Scholes option-pricing model, in which he says that financial markets tend to wander around, and don’t stick closely to economics fundamentals.]

[Black] was very close to the markets, and he had a feel for them, and he was very skeptical. And he was a Chicago economist. But there was an element of dogma in support of the efficient-market hypothesis. People like Raghu [Rajan] and Ned Gramlich [a former governor of the Federal Reserve, who died in 2007] were warning something was wrong, and they were ignored. There was sort of a culture of efficient markets—on Wall Street, in Washington, and in parts of academia, including Chicago.

What was the reaction here when the crisis struck?

Everybody was blindsided by the magnitude of what happened. But it wasn’t just here. The whole profession was blindsided. I don’t think Joe Stiglitz was forecasting a collapse in the mortgage market and large-scale banking collapses.

So, today, what survives of the Chicago School? What is left?

I think the tradition of incorporating theory into your economic thinking and confronting it with data—that is still very much alive. It might be in the study of wage inequality, or labor supply responses to taxes, or whatever. And the idea that people respond rationally to incentives is also still central. Nothing has invalidated that—on the contrary.

So, I think the underlying ideas of the Chicago School are still very powerful. The basis of the rocket is still intact. It is what I see as the booster stage—the rational-expectation hypothesis and the vulgar versions of the efficient-markets hypothesis that have run into trouble. They have taken a beating—no doubt about that. I think that what happened is that people got too far away from the data, and confronting ideas with data. That part of the Chicago tradition was neglected, and it was a strong part of the tradition.

When Bob Lucas was writing that the Great Depression was people taking extended vacations—refusing to take available jobs at low wages—there was another Chicago economist, Albert Rees, who was writing in the Chicago Journal saying, No, wait a minute. There is a lot of evidence that this is not true.

Milton Friedman—he was a macro theorist, but he was less driven by theory and by the desire to construct a single overarching theory than by attempting to answer empirical questions. Again, if you read his empirical books they are full of empirical data. That side of his legacy was neglected, I think.

When Friedman died, a couple of years ago, we had a symposium for the alumni devoted to the Friedman legacy. I was talking about the permanent income hypothesis; Lucas was talking about rational expectations. We have some bright alums. One woman got up and said, “Look at the evidence on 401k plans and how people misuse them, or don’t use them. Are you really saying that people look ahead and plan ahead rationally?” And Lucas said, “Yes, that’s what the theory of rational expectations says, and that’s part of Friedman’s legacy.” I said, “No, it isn’t. He was much more empirically minded than that.” People took one part of his legacy and forgot the rest. They moved too far away from the data.

Sociedade, Caridade e Verdade

Otima apresentação do importante - mas pouco conhecido - conceito de desenvolvimento integral.



A encíclica papal “Caridade na Verdade” aponta luzes, soluções, saídas para novo modelo de sociedade. Vejamos os princípios que regem o desenvolvimento integral, segundo Bento XVI, para a construção de uma nova mentalidade.

1. O mundo é uma família. Somos imagem e semelhança de Deus, somos irmãos e não apenas vizinhos. A comunidade internacional é uma grande família porque é possível a relação entre os povos, a integração a comunhão. Quanto mais reciprocidade tanto mais nos relacionamos como irmãos, vivendo o bem comum.

2. O primado do “capital humano”. Nossa grande riqueza é a vida, a pessoa, a sociedade. Este é o capital mais precioso a defender. A “lógica do mercado” destrói as riquezas humanas e sociais e cria novas pobrezas: desigualdades sociais, absolutismo do mercado e da técnica, o consumismo, a competição internacional. O “capital humano” consiste em ser mais, conviver como irmãos na confiança mútua, respeito, credibilidade. O “capital social é que importa porque é o desenvolvimento integral e a paz.

3. O principio da gratuidade. É a economia da comunhão que se fundamenta na “lógica do dom” e se expressa na solidariedade, na partilha, na comunhão fraterna. A “economia da gratuidade” significa democratização do sistema econômico, ir além do lucro, superar a corrupção e a criar riquezas para todos. Os ricos devem rever seus abusos, desvios, desperdícios, burocracias, especulações. A economia de comunhão se apóia no da “responsabilidade de proteger”, isto é, dar atenção aos pobres, rever o desarmamento, melhorar a segurança alimentar, regular as migrações, proteger o meio-ambiente.

4. A força do amor. a Doutrina Social da Igreja tem no amor sua via mestra. O amor torna verdadeira a relação humana pessoal e internacional. Cria diálogo, comunhão, confiança e responsabilidade social. O amor vai além da justiça significa “dar do que é meu”. Justiça é dar ao outro o que é dele. A justiça é o primeiro passo do amor. Sabemos que amar é querer o bem do outro. O amor é a possibilidade do bem comum que é caminho político do amor. Este amor fraterno é expressão do amor de Deus. A força do amor possibilita a partilha dos bens, a reciprocidade dos povos, o primado da vida e da pessoa. O amor cuida do outro.

5. A mobilização do coração. O desenvolvimento deve nos levar a “ter mais para ser mais”. Este é o coração da mensagem cristã. Anuncia Cristo, seu evangelho e seu reino, é colaborar com o desenvolvimento. A técnica e as instituições não conseguiram construir um desenvolvimento humano global, integral. Cresce a riqueza e aumenta a pobreza. Vivemos num “hiperdesenvolvimento técnico e num subdesenvolvimento moral”. Os “prodígios da técnica e das finanças” geraram a crise, econômica mundial.
O homem precisa reencontrar-se a si mesmo, reconhecer a lei natural no seu coração. Um coração novo nos dá olhos novos. Novo humanismo se faz com homens novos com novo coração.

6. A fidelidade à verdade. Este é o remédio contra a corrupção. A fidelidade ao homem exige a fidelidade à verdade que é garantia da liberdade. O verdadeiro humanismo é aberto a Deus, à ordem natural, ao bem comum. A exploração, a exclusão, a ilegalidade, as desigualdades sociais vem da perda de valores, do relativismo, da ausência de Deus. Fechados a estes valores estamos sem respiro e inventamos um “humanismo desumano”. Somos prisioneiros da moda. Não pode haver desenvolvimento pleno, nem bem comum sem o bem espiritual e moral. A razão é purificada pela fé e a religião é purificada pela razão para que encontremos o autêntico rosto humano. A verdade promove a “civilização da economia” que consiste em ir além do lucro.

Dom Orlando Brandes

Fonte: CNBB

Entrevista com Gary Becker

I met Becker in his office at the economics department. I began by telling him I had been speaking with his friend and co-blogger Richard Posner, and I asked whether he agreed with Posner that the events of the past two years had called Chicago School economics into question.


Gary Becker: No. I think the last twelve months have shown that free markets sometimes don’t do a very good job. There’s no question, financial markets in the United States and elsewhere didn’t do a good job over this period of time, but if I take the first proposition of Chicago economics—that free markets generally do a good job—I think that still holds.

If I were running an economy, and I was looking for the best way to run it, I would do what India and China did—move much more to a free-market economy. The second proposition of Chicago economics—that governments don’t do a good job. I really don’t understand how, if Posner said that had been undermined, he can infer that. I don’t think the government did a good job in the run-up to the crisis. Posner has himself criticized Alan Greenspan’s low-interest-rate policy. The S.E.C. should have done a lot of things it didn’t do. It’s hard to sustain the belief that governments do well.

What I have always learned to be the Chicago view, and taught to be the Chicago view, is that free markets do a good job. They are not perfect, but governments do a worse job. Again, in some cases we need government. It is not an anarchistic position. But in general governments do a worse job. I haven’t seen any reason to change that other than, yes, we’ve seen another example where free markets didn’t do a good job: they did a bad job. But to me there is no evidence the government did a good job either, leading up to or during the process.

Posner says that the government’s interventions have staved off another Great Depression.

Well, that’s a separate argument. Market economists—take my teacher and close friend Milton Friedman: [he was] a big advocate that the government should have done more during the Depression. The Fed should have done more. It was too passive and the money supply dropped, and so on. So it’s been long recognized that there are situations when you need very strong, temporary government interventions. [Policymakers] did come in here, and they did help. It was a very mixed bag of different policies. I don’t blame them too much for that. It was a novel situation and they were experimenting a lot. I definitely think they helped, though, overall in averting a much more serious recession. A lot of people, including Posner, thought that things were going to turn out a lot worse. We had a bunch of arguments about that on our blog.

Two of the big theories associated with Chicago are the efficient-markets hypothesis and the rational-expectations hypothesis, both of which, some say, have been called into question. How do you react to that?

Well, these are not areas that I have particularly specialized in, but let me give you my reaction. The people who argue that markets were always efficient and there was no problem, that was an extreme position—something a lot of people at Chicago had recognized before. The weaker notion that markets, particularly financial markets, usually work pretty well, and it’s very hard to beat them by investing against them, that I think is still very powerful.

What I think we experienced, and where I think we went wrong, is that we’d developed a lot of new financial instruments, derivatives, and the like. Neither some of the people that developed them nor the practitioners really understood how these derivatives worked in different situations. Like mortgage-backed securities—I don’t think you are going to see them being very popular in the future. So, there were innovations. They had good aspects, but they had aspects that didn’t work out very well, and so the markets weren’t very efficient in these cases.

Yeah, markets aren’t fully efficient. Expectations go wrong. We’ve seen many other episodes in the past where expectations have gone wrong, where it looks like there were bubbles that happened. Certainly, in the housing market it did look like there was a bubble going on, and people were anticipating prices still going up. Nevertheless, the notion that people are forward looking and try to get things right, and often they do get things right—I still think that comes through O.K. You just have to be more qualified and more careful in how you state it.

That would be my interpretation. Yes, weakened in terms of simple mechanical application, but the general thrust that markets are more efficient than any alternative—that aspect I don’t think is going to be changed. I don’t think you are going to see the world moving away from markets, including financial markets…. I don’t see China or Brazil, or a lot of other developing countries, making any radical changes in their movements towards the market, and I think for good reason.

If you take the last twenty or thirty years—take the good and the bad, including this big recession—growth rates are pretty good…. That’s not only due to markets, but, certainly, market orientation and trade were the major factors responsible for that.

But what about speculative bubbles? I recall interviewing Milton Friedman, in 1998, I think, and he said he thought the stock market was in a bubble. The idea that Chicago economists don’t believe in bubbles—was that more Greenspan?

Absolutely. I think bubbles have been recognized. Certainly, Friedman and others, including myself, said there are phenomena that are hard to explain without thinking it’s a bubble. The people working in macro theory have had difficulty deriving these bubbles from any reasonably rational set of actors that are somewhat forward looking, although there are models that can do it now. That’s an analytical challenge. But the fact that there have been episodes throughout history that were clearly bubbles, that foreign-exchange rates overshoot and undershoot their real values—yes, I don’t think there’s any question about that. I don’t think that most Chicago School economists thought that these things didn’t happen. I think most Chicago economists recognized that, and, certainly, Milton Friedman did.

Lots has changed at Chicago in recent years. What if anything is distinctive about Chicago economics these days?

It’s not as distinctive as it was when I graduated with my Ph.D. from Chicago. In those days, there was a great belief in the price system, in people’s incentives, and in linking theoretical research to empirical research. That wasn’t common at most of our competitors. Both in micro and in macro, there were major differences. Chicago was hostile to Keynesian economics when I was in graduate school. Now there’s been a lot of convergence, particularly in the micro side of things. Chicago is less unique than it used to be.

But I do think there is still a considerable distinctiveness about what might be called Chicago economics. One is skepticism about governments—that governments can organize activities well…. I think that is still a much stronger view in Chicago than in most other places.

Two, more from the micro economists who analyze markets and how people respond to incentives, I think Chicago economists still consider that more important than most other places and don’t believe you can begin to understand how economies work, either empirically or theoretically, without giving that a major role. That’s not as sharp a difference as it was, but I still think it is significant enough to say there is a difference between Chicago and other places.

Are these differences reflected in teaching?

It’s certainly reflected in our course. [Becker and his colleague, Kevin Murphy, teach a graduate course in price theory.] Students tell us they haven’t had a micro course like this before. It would be reflected in a number of courses taught in both the business school and the economics department, and also in the law school courses, including some of Posner’s.

So the rest of the world has moved closer to Chicago?

No question. Quantitative work linked to theory and incentives—that’s much more commonly found at our competitors. When I went out on the job market, there were some places that wouldn’t hire a Chicago economist, like Berkeley, for example. For decades they didn’t hire a graduate of Chicago. Harvard wasn’t too thrilled with the idea either.

Do Chicago economists now get hired more widely?

Well, much more so than they did. Harvard has a number of Chicago people, liked Ed Glaeser and others. M.I.T. has several Chicago people. Princeton has several. Even Berkeley has one or two. I’m not sure. Stanford certainly does.

What about the notion of rationality and economics, which you yourself are closely associated with. How much of that is still valid?

I think most of it is still valid. It depends on what you mean by rationality. But if you take the view that consumers, on the whole, react to incentives in the way you would predict they would respond—you get very misled in the world if you don’t put a lot of emphasis on that.

Now there’s behavioral economics, which has two strands. One is extending the motives of people, which I worked a lot on from my dissertation on. Chicago was a pioneer in that. It’s gone further, but Chicago was a pioneer.

The other aspect is that consumers make a lot of mistakes. I think there is no question that consumers make mistakes, and I think some of the behavioral-economics literature has made useful contributions in pointing out some of the types of mistakes…. That has been very useful but it certainly doesn’t overthrow the notion … one, that consumers most of the time make pretty good choices for themselves; and two—now I come back to the government—they generally make better choices than a government body would make for them. That thing we started our discussion with, I think has to be brought into play in evaluating the implications of, say, behavioral economics or books like “Nudge.”

A lot of behavioral economics has been devoted to finance. What about investors—are they rational?

Well, in the following sense. Not all investors are—surely not. But I think it’s not very easy to do better than the market. If you look at the behavioral economists who run hedge funds, I don’t think, on the whole, they have done much better than others.

It’s not easy. Yes, there are a lot of mistakes made, but to take these mistakes and make money from them…. Some trends have been found—the small stock bias, and so on. It shows there are trends that can persist. But on the whole, if you look at financial markets they do a pretty good job—not a perfect job. And I think pointing that out has been a useful contribution. There was some theology built into the efficient-markets literature—some of it in Chicago. It became more theological than based on empirical evidence. So I think the attacks on it didn’t eliminate the real heart of it—these markets work pretty well—but there have been things that are puzzling to explain in a simple efficient-markets hypothesis.

What about the revival of Keynesianism, which, again, Posner is associated with? That goes directly against the Chicago School. What is your response to that?

Well, firstly, as a factual matter, there certainly has been a strong resurrection. That led me to believe that ninety per cent or so of economists were closet Keynesians all along, but they were afraid to admit it.

How much it has been resurrected? I have a bit of an open mind on that…. A lot of the more explicit Keynesian remedies, like stimulus spending and the like, will need an evaluation of what they did in stemming the tide…. I’m not yet convinced that fiscal policy was very effective in containing this recession. Take the fiscal stimulus package—eight hundred billion dollars. They’ve hardly spent any of it yet. The traditional argument against fiscal stimulus spending, even from those that believed in it, was that by the time Congress got around to deciding how to spend it the recession was pretty much over, so you were spending it at the wrong time. Some of that is going to be happening now…. I think history will say, once we understand it, that it wasn’t very effective. The flexibility in financial response—it was understate in a lot of the previous literature, Keynesian and unKeynesian. That turned out to be important, I think. That’s why I think the Fed, despite some mistakes, did a pretty good job.

What about the area of macro-economic theory. I know it’s not your field…

It’s not Posner’s field either. (Laughs)

The models that Bob Lucas is associated with—rational expectations, dynamic general equilibrium models, and so on. Some people now say that they omitted so much—the entire financial sector was excluded—that they left the economics profession unprepared for this type of eventuality.

Well, I think [Lucas] made a major contribution. I think there is no doubt about it. On the other hand, I think some of the dynamic general equilibrium models that were being promoted in macro didn’t turn out to be that helpful in helping us to understand what to do to combat a major recessionary event. If you look at the policies that were being advocated, both here and elsewhere, they were based on more traditional, I would say Friedmanite, type arguments. So I think there is some validity to that conclusion.

Obviously, other people took that approach even further than Lucas.

Yes, they did. And now we know that you’ve got to add more things into it. And I think we are going to improve macros, but I think some of the models were too simplistic. They captured important parts of the economy, but they weren’t really preparing us for how to handle a crisis, I think that is pretty clear, particularly financial crises.

Surely, the models weren’t merely designed not to handle crises. These models and their builders ruled crises out by assumption, did they not?

Well, some [did]. I don’t think Bob would be one, because I think Bob always thought that money was important. Maybe some of his disciples, or others in the field, did, but I think you’ve got to make a distinction. I don’t think everybody was on the same page on that. Some people did rule out the whole financial sector, seeing money as being unimportant. I think that stuff just turned out to be wrong.

The whole argument of money as a “veil”?

Right.

How do you think that the financial crisis will change economics? The nineteen-thirties revolutionized economics. Do you see that sort of change?

No, not of that magnitude. If this recession had got a lot worse, we would have seen two major changes: much more government intervention in the economy and a lot more concentration in economics in trying to understand what went wrong. Assuming I’m right and, fundamentally, the recession is over—a severe recession but maybe not much greater than the 1981 recession, or those in the nineteen-seventies—I think you are not going to see a huge increase in the role of government in the economy. I’m more and more confident of that. And economists will be struggling to understand how this crisis happened and what you can do to head another one off in the future, but it will be nothing like the revolution in the role of government and in thinking that dominated the economics profession for decades after the Great Depression. The Great Depression was a great depression by any measure you want to take—unemployment, decline in output, and so on. This recession pales in comparison. As a result, I think we are not going to have anything like the reaction we had at that point.

You already see it. There’s been a backing away from some of the things that were being talked about. Pay controls—we are getting some, but less severe ones than people were talking about at the height of the recession.

Do you think that Wall Street needs re-regulating?

Well, I do. I think some additional regulation is needed, and I’ve called for some. But I don’t think you can rely on regulators, because they fail along with the market. If we install rules for capital requirement that would work more or less automatically—I think there is a good case for that, particularly for larger institutions which we know we are going to bail out if they get into trouble.

Some people at Chicago don’t accept the too-big-to-fail doctrine. They say, “Let them go.”

There are two questions. What we should be doing and what we actually will be doing. I don’t think we are going to let them go. We didn’t let them go. We never let them go. Continental Illinois bank we bailed out at a time when it wasn’t such a crisis situation. We bailed out Chrysler. So if you accept that we are going to bail them out you’ve got to do something to reduce the probability that we are going to have to bail them out.

Number two, should we bail them out? I think in this crisis we had to do it. I don’t accept the view that in this crisis we should just have let everything fall where it may. Yeah—the economy would have picked itself up, but I think it would have been a much more severe recession.

So, you are in favor higher capital requirements on banks. Anything else?

Increase capital requirements. I would have a differential requirement for bigger institutions, so they can’t get as big a multiple on their assets. Maybe derivatives markets—those are things I don’t feel very expert on, but I follow the literature a little bit, and I think some changes are needed.

There are a number of things we should be thinking about. But one thing I should stress: I don’t think the regulators did very well during this period, and we don’t want policies that depend on a group of people living in Washington deciding on whether we should be doing something now or not. They didn’t do it well this time. There is no reason to believe they are going to be any smarter the next time, because it’s not going to be exactly the same situation that arises next time.

Do you favor a return to some sort of Glass-Steagall framework? Should we try to separate deposit taking from speculation?

I don’t believe so. I think there are some advantages to combining them. But you may want to force derivatives to go through an organized market. Capital requirements. Swaps—you may want to have some controls on. I hesitate to say more. There are a lot of people out there who know a lot more than I do. But those are the directions I would go in.

A historical question. Chicago was always known for advocating deregulation of various industries—trucks, airlines, and so on. At the time, did people here talk much about deregulating the financial markets as well?

Absolutely. We got rid of Regulation Q—interest rate controls. Milton Friedman and most of us were big advocates of that. Glass-Steagall, there was a lot of opposition to. Derivatives—they came in during the nineteen-seventies, and they weren’t fully understood…. But on the whole, in the nineteen-seventies, there is no doubt that there was support for deregulation of many aspects of the financial markets.

In retrospect, was that position right? Isn’t finance different from other industries?

It depends. We’ve always had regulations on bank reserves and so on. So, clearly, yes, there are differences. You don’t want to think in terms of free banking. I don’t think people at Chicago ever thought… I’ll speak for myself. I never thought, even outside the financial sector, that there should be no regulation. There are externalities. There’s pollution. There are a lot of things you can do. In the education area, the government financing students, and all that. Those things go back a long time. So it was never zero regulation. It was just an observation that in many sectors regulation seemed to be throttling industry—like the airline industry, the trucking industry, all the stock-market regulations: prices were kept up. Nobody wants to go back to the time when you had a cartel and price-setting.

So people at Chicago did accept the need for dealing with externalities? What about Ronald Coase? [Coase, an English transplant who won the Nobel Prize in 1991, is famous for arguing that, under some circumstances, bargaining in the market will take care of externalities.]

Chicago didn’t deny that there were externalities in the world. Chicago people were not anarchists. They always believed there was a significant role for government, and not simply in the obvious areas, like law and the military, and so on. In the educational area, take the vouchers system. It is government financed. There may be competition among providers, but it is government financed. Some help at the college level for people from poor backgrounds—there were many policy areas where Chicago economics tried to analyze what was wrong, and how you should go about fixing it, finding a better way to do it.

Was there anything, looking back, that Chicago got wrong?

(Laughs) There are a lot of things that people got wrong, that I got wrong, and Chicago got wrong. You take derivatives and not fully understanding how the aggregate risk of derivatives operated. Systemic risk. I don’t think we understood that fully, either at Chicago or anywhere else…. Maybe some of the calls for deregulation of the financial sector went a little too far, and we should have required higher capital standards, but that was not just Chicago. Larry Summers, when he was at the Treasury, was opposed to that. It wasn’t only a Chicago view. You can go on. Global warming. Maybe initially at Chicago there was skepticism towards that. But the evidence got stronger and people accepted it was an important issue.

But it hasn’t changed my fundamental view, and I think [the view of] a lot of people around here, that, on the whole, governments don’t manage things very well, and you have to be consistent about that. So I supported, say, the invasion of Iraq. In retrospect, I think that was a mistake, not only because things didn’t go that well, but because I didn’t really take into account enough that governments don’t manage things very well. You really have to have strong reasons for going in.


Fonte: New Yorker

Why not socialism? G.A. Cohen

O grande filosofo marxista(analitico) G.A.Cohen, apresentou em uma Seminário na UCL, em 2008, uma versão do que viria a ser seu último trabalho recentemente publicado:Why not socialism? Comprei meu exemplar na Amazon. com, em 4 de novembro, mas ainda não o recebi . Incrível, mas não tinham em stock e quando finalmente conseguiram enviar um exemplar já estavamos no natal... dai... Vale a leitura, principalmente, para aqueles acostumados com a qualidade sofrivel do marxismo nos dois lados do rio pinheiros.


The question that forms the title of this short book is not intended
rhetorically. I begin by presenting what I believe to be a compelling preliminary case for socialism, and I then ask why that case might be thought to be merely preliminary, why, that is, it might, in the end, be defeated: I try to see how well the preliminary case stacks up on further reflection.
To summarize more specifically: In Part I I describe a context, called “the camping trip”, in which most people would, I think, strongly favour a socialist form of life over feasible alternatives. Part II specifies two principles, one of equality and one of community, that are realised on the camping trip, and whose realisation explains, so I believe, why the camping trip mode of organization is attractive. In Part III, I ask whether those principles also make (society-wide) socialism desirable. But I also ask,in Part IV, whether socialism is feasible, by discussing difficulties that face the project of promoting socialism’s principles not in the mere small, such as within the confined time and space of a camping trip, but throughout society as a whole, in a permanent way. Part V is a short coda

Para ler o resto clique aqui

Annabel Lee, Edgar Allen Poe

It was many and many a year ago,
In a kingdom by the sea,
That a maiden there lived whom you may know
By the name of Annabel Lee;
And this maiden she lived with no other thought
Than to love and be loved by me.

She was a child and I was a child,
In this kingdom by the sea,
But we loved with a love that was more than love -
I and my Annabel Lee -
With a love that the wingéd seraphs of Heaven
Coveted her and me.

And this was the reason that, long ago,
In this kingdom by the sea,
A wind blew out of a cloud, by night
Chilling my Annabel Lee;
So that her highborn kinsmen came
And bore her away from me,
To shut her up in a sepulchre
In this kingdom by the sea.

The angels, not half so happy in Heaven,
Went envying her and me: -
Yes! – that was the reason (as all men know,
In this kingdom by the sea)
That the wind came out of the cloud, chilling
And killing my Annabel Lee.

But our love it was stronger by far than the love
Of those who were older than we -
Of many far wiser than we -
And neither the angels in Heaven above
Nor the demons down under the sea,
Can ever dissever my soul from the soul
Of the beautiful Annabel Lee: -

For the moon never beams, without bringing me dreams
Of the beautiful Annabel Lee;
And the stars never rise but I see the bright eyes
Of the beautiful Annabel Lee:
And so, all the night-tide, I lie down by the side
Of my darling, my darling, my life and my bride,
In the sepulchre there by the sea -
In her tomb by the side of the sea.