October 21, 2008 at 5:45 pm · Filed under Health, london
I managed to make it through the seminar I had to give today, and I think I did well. I still need to work on speaking slowly and clearly, but I think the content came across well enough anyway. Here’s a link to the slide show, if you’re interested in a bulleted version of my talk (apologies to Flickr randoms I borrowed, and Google Docs seems to have mangled my PowerPoint slightly).
The ride home today was serene. On the train in West London, passing through trees changing color and football pitches waiting for players, it seemed there was nothing better or more peaceful than a sunny, autumn afternoon, when the sunlight shines strong at low angles to the Earth, lighting everything with an ethereal glow, and there’s a chill in the air and Midlake in my headphones. The Midlake is key.
I’m sitting in a cafe near London Bridge, trying to prepare for a presentation I have to give on Tuesday. I’m speaking on the topic of pertussis (whooping cough), and how its resurgence in some parts of the US could display a lack of trust in the medical establishment. Finding good, recent articles on the subject is proving difficult. Perhaps my focus is too narrow. Any advice is appreciated.
I’m just curious how the housing market in Austin is faring with this whole recession thing happening. Anyone have their ear to the ground on real estate? I’m especially interested to know how the condos are doing. This blog has some interesting info, and gives a slightly mixed / partially negative outlook on the market, but I’m needing a more distilled version.
October 6, 2008 at 2:41 pm · Filed under economics
Because I love nothing more than to belabor, I bring you this MeFi thread, in which there are two excellent This American Life episodes discussing the financial crisis. One of the salient points made by Adam Davidson:
“One option is I come and I give you a thousand bucks, and I take all the crap out of your basement, and you get to keep the thousand bucks – that’s the Paulson plan. The other option is I come and I give you a thousand bucks, and I get to move into your house, I become a co-owner of the house, I might get to kick you out of the house and take all of your stuff.”
The latter option he describes is a stock injection plan, a plan that would have a far more beneficial effect on the economy, if only for its punitive value. For the banks (and their influential lobbyists), it’s pretty simple: a stock injection plan was never an option. However, apparently a clause was eventually included in the bill that was passed that allows a stock injection option at the Treasury Secretary’s discretion. This is excellent news, considering that our government’s money is actually our money, and I’d like for it not to evaporate.
Americans have lost faith not only in the administration, but in its economic philosophy: a new corporate welfarism masquerading behind free-market ideology; another version of trickle-down economics, where the hundreds of billions to Wall Street that caused the problem were supposed to somehow trickle down to help ordinary Americans. Trickle-down hasn’t been working well in America over the past eight years.
The very assumption that the rescue plan has to help is suspect. After all, the IMF and US treasury bail-outs for Wall Street 10 years ago in Korea, Thailand, Indonesia, Brazil, Russia and Argentina didn’t work for those countries, although it did enable Wall Street to get back most of its money. The taxpayers in these other poor countries picked up the tab for the financial markets’ mistakes. This time, it is American taxpayers who are being asked to pick up the tab. And that’s the difference. For all the rhetoric about democracy and good governance, the citizens in those countries didn’t really get a chance to vote on the bail-outs. Had they, most would have suffered the same fortune as Paulson’s.
I’m going to unwisely quote Chomsky out of context here, in the hopes that it will whet your appetite for the whole article:
The designers of the international economy sternly demand that the poor accept market discipline, but they ensure that they themselves are protected from its ravages, a useful arrangement that goes back to the origins of modern industrial capitalism, and played a large role in dividing the world into rich and poor societies, the first and third worlds.
This wonderful anti-market system designed by self-proclaimed market enthusiasts is now being implemented in the United States, to deal with the very ominous crisis of financial markets. In general, markets have well-known inefficiencies. One is that transactions do not take into account the effect on others who are not party to the transaction. These so-called “externalities” can be huge. That is particularly so in the case of financial institutions. Their task is to take risks, and if well-managed, to ensure that potential losses to themselves will be covered. To themselves. Under capitalist rules, it is not their business to consider the cost to others if their practices lead to financial crisis, as they regularly do. In economists’ terms, risk is underpriced, because systemic risk is not priced into decisions. That leads to repeated crisis, naturally. At that point, we turn to the IMF solution. The costs are transferred to the public, which had nothing to do with the risky choices but is now compelled to pay the costs – in the US, perhaps mounting to about $1 trillion right now. And of course the public has no voice in determining these outcomes, any more than poor peasants have a voice in being subjected to cruel structural adjustment programs.
A basic principle of modern state capitalism is that cost and risk are socialized, while profit is privatized. That principle extends far beyond financial institutions. Much the same is true for the entire advanced economy, which relies extensively on the dynamic state sector for innovation, for basic research and development, for procurement when purchasers are unavailable, for direct bail-outs, and in numerous other ways. These mechanisms are the domestic counterpart of imperial and neocolonial hegemony, formalized in World Trade Organization rules and the misleadingly named “free trade agreements.”
(Emphasis mine.) Think about that highlighted phrase: essentially our system of credit burdens all of us with the risk, and bestows upon us none of the reward. And as for companies being too big to fail, I think Senator Sanders is right when he says, “If a company is too big to fail, it is too big to exist.”
The Chomsky article as a whole is actually much more broad in its scope than the financial crisis and bail-out; but then, Wall Street’s relationship to government is much broader in scope than just money. It’s very thought-provoking stuff, especially if like me, you rarely take South America’s role into account. History is being written on this mess right now, and it’s bigger than just bad debt causing companies to fold. We need a major philosophical paradigm shift in the corporate financial model if we want something that is sustainable and shields the average person from harm.
Blendor is run by a guy named Ali in Austin, Texas. It fits neatly in the Photography / Politics / Health Care / Music / Technology / Miscellany category.
