Archive for February, 2010

Yes men

Posted: 9 February 2010 in Uncategorized
Tags: , ,

If you’re in London, you should catch The Power of Yes, David Hare’s latest being staged at the National Theatre.

That’s the view of Colin Murhpy in Le Monde Diplomatique.

For a play about finance, it’s witty, accessible and presented with a breezy touch. As The Permanent Way [Hare’s 2003 play about the privatization of British Rail] was “a play about grief”, this is a play about arrogance.

But, according to Murply, it’s not really a play, or it doesn’t work like a play. So, what is it?

But perhaps the question, what is it?, is the wrong question. Perhaps the question should be: what does it do? To that, the answer is more straightforward, and more satisfying. The Power of Yes provides a densely layered, but intellectually accessible, insight into the origins and effects of the global financial crisis. It does so in the invigorating surrounds of a packed theatre, where the audience is perhaps communally more receptive to its political insights than if they were sitting at home, as isolated consumers, on the couch. It does so using the comforting conventions of the stage, with bright lights focusing our attention readily on the protagonists, and actors providing representations of real people that are larger, more presentable, and hence more digestible than real people ever are on stage. It does so for an audience that has paid and travelled to be here, and listens with an acute ear. . .

The Power of Yes may not be a play, and perhaps the material would more obviously make for a powerful article. But in the hands of David Hare, a playwright, it is well-marshalled rhetoric. At the end of the day, there’s something surprisingly theatrical about that.

Hopefully, it will make it to this side of the pond. And soon. . .

Overworked and underpaid

Posted: 9 February 2010 in Uncategorized

I’ve got to finish the book. So, I won’t be posting much the next few days. . .

Trust Your Money to Professionals [General Deposits Mattress]


Apparently, Wall Street is not happy with “its” president. All it takes is the threat of a few regulations on the financial sector, such as a “financial crisis responsibility” tax aimed only at the biggest banks and a restriction on “proprietary trading” that banks do with their own money for their own profit. So, Wall Street is shifting its campaign donations to the Republicans.

“I am a big fan of the president,” said Thomas R. Nides, a prominent Democrat who is also a Morgan Stanley executive and chairman of a major Wall Street trade group, the Securities and Financial Markets Association. “But even if you are a big fan, when you are the piñata at the party, it doesn’t really feel good.”

It’s time to share some good news with respect to the attempt to eliminate the Department of Economic and Policy Studies at the University of Notre Dame.

Here’s the text of the second resolution passed by the Faculty Senate at last week’s meeting:

II. The Case of Economics at Notre Dame

In 2003, the Department of Economics at the University of Notre Dame was renamed the Department of Economics and Policy Studies, and a new department, called the Department of Economics and Econometrics, was created in the College of Arts and Letters. Since then, Economics and Econometrics has grown in size, now including about eighteen T&R faculty members, roughly half of whom are tenured. Economics and Policy Studies has contracted in size, now including eight T&R faculty members, all of whom were tenured at Notre Dame prior to 2003 in the original Department of Economics.

A proposal is currently being considered which would change the status of these two departments as follows:
(1) The current Department of Economics and Policy Studies would be dissolved.
(2) The current Department of Economics and Econometrics would be renamed the Department of Economics.
(3) Current faculty in Economics and Policy Studies would be affiliated with other academic units in the University. Some might join the new Department of Economics, subject to that department’s approval; it is expected that no more than two or three would do so. Others might join other departments or academic units such as institutes or centers, subject to those units’ approval. If no other institutional home can be found, faculty will retain tenure at large in the College of Arts and Letters.

Normally, when a department is eliminated, the affected faculty must be scattered across the University, and may (as noted above) even be dismissed in the absence of a suitable home. But normally, when a department is eliminated, it represents a move by the University to abandon its concerted efforts in a field. In this case, by contrast, the University maintains a strong interest in economics and continues to sponsor work in this field. Should the above proposal be adopted, its net effect is that a cohort of faculty who were tenured members of the Department of Economics at Notre Dame in 2002, and who will still be called Professors (or Associate Professors) of Economics, will nevertheless in 2010 have been involuntarily excluded from the Department of Economics. The fact that this exclusion will have taken place in slow motion does not make it any less of an abridgment of the usual protections of tenure. Nor does the undoubted fact that the nature of the Department of Economics will have changed substantially over this time justify this exclusion. Departments routinely shift, often dramatically, as the nature of their fields and institutional aspirations change, and this does not negate tenure awarded earlier in the department.

Therefore, the Faculty Senate holds that, should a Department of Economics be reestablished at Notre Dame, faculty members tenured in the original Department of Economics should be allowed, if they so choose, to be members of that department.

I’d call that a touchdown.

Paul Romer’s solution to underdevelopment, in countries like Haiti, is the creation of “charter cities,” like the British colony of Hong Kong.

True to his neo-neoclassical origins (Romer was one of the founders of the so-called new or endogenous growth theory), the problem of development can be reduced to ideas and rules. Not exploitation or unequal land ownership. Not abuse of power or the commodification of society. For Romer, it’s all about barriers to the dissemination of “good” ideas and a lack of enforcement of the rules. The latter refers to what he calls the “commitment problem”:

How can a developing country promise to keep the rules that govern investment fair? . . .

Rich nations use well-functioning systems of courts, police and jails, developed over centuries, to solve such problems. Two people can make a commitment. If they don’t follow through, the courts will punish them. But many developing countries are still working their way down the same arduous path. Their leaders can fight corruption and establish independent courts and better rules over property rights, but such moves often require unpopular measures to coerce and cajole populations, making internal reforms excruciatingly slow. Subsequent leaders may undo any commitments they make. A faster route would seem to be for a developed country to impose new rules by force, as they did in the colonial period. There is evidence that some former colonies are more successful today because of rules established during their occupations. Yet any economic benefits usually took a long time to show up, and rarely compensated for years of condescension and the violent opposition it provoked. Today, violent civil conflicts have led some countries to again consider military humanitarian intervention, but this can only be justified in extreme circumstances.

And from this he invents his solution, “a middle ground between slow internal reforms and risky attempts at recolonialisation”: the West should set up “charter cities,” modeled on “export zones” (such as in Mauritius, where they removed trade restrictions) and the British colonial experience in Hong Kong.

Romer admits that attempting to colonize entire countries might be “risky.” Instead, he proposes the creation of new colonial cities, where ideas are freely disseminated and the rules enforced by the state.

What Romer fails to understand is that countries like Haiti have plenty of ideas and state-enforced rules. That’s not the problem. The problem is, the ruling ideas are those that have benefited only a tiny minority of the population, both domestic and foreign. The problem, then, is to change the existing ideas and rules, not enforce them in a new form of neoclassical colonialism.

* * *

Follow the thread of comments on the Real World Economics Review blog.

According to today’s Observer, the University of Notre Dame student government has decided the dissolution of the Department of Economics and Policy Studies is one of the “issues of most pressing concern” to students, and communicated just that to a committee of the Board of Trustees.

Here are excerpts from the article:

Students are concerned by College of Arts and Letters Dean John McGreevy’s lack of transparency as he moves to dissolve the Department of Economics and Policy Studies, student government chief of staff Ryan Brellenthin said.

“The decisions were made without student input and the process was not revealed to the student body,” Brellenthin said.

“It was almost as if they were hoping students weren’t paying attention,” he said.

Students are concerned that closing the department will narrow the economics education at Notre Dame, Brellenthin said. They are also concerned that this decision sets a precedent that students will be excluded from future academic decisions.

“Very little attention has been focused on the 400 students who are economics majors,” Brellenthin said. “No efforts have been made to engage student opinion on the topic.”

Schmidt said he is an economics major, but he first heard about the plans to dissolve the department from The Observer.

“We weren’t told about it,” Schmidt said.

The dissolution of Economics and Policy Studies will be voted on at the next meeting of the Academic Council, Brellenthin, who is one of the four students who serve on the academic council, said. “We can make statements against the dissolution, and we certainly will, but it has been on the agenda to dissolve before we could put it on the agenda to discuss,” he said.

Brellenthin said faculty members are also concerned about the dissolution of the department.

“They are asking what will happen if professors who teach something that isn’t the mainstream theory are pushed out,” he said.

“The fear is that the academic council is just going to be a rubber stamp” on McGreevy’s decision to dissolve the department, Schmidt said.

One trustee expressed her surprise after Weber ranked the dissolution of the department as the second most critical issue for students, but the issue is about students’ wanting to be respected, according to Brellenthin.

Brellenthin cited reports that McGreevy described the dissolution of the department as “too sensitive an issue for debate.”

“We respect the administration and the professors as top-tier educators, but we want to be respected as top-tier students,” Brellenthin said.