"That was like financial chicken soup for me"

I like this interview with Elizabeth Warren from the chair of the Congressional Oversight Panel in charge of the Troubled Assets Relief Program (TARP). She's so clearly nervous, but manages to come off as honest and dedicated (warning: rhetorical analysis. Actual person may differ), smart and surprisingly funny. The best bits are in the second part, where she explains why deregulation is bad for you.

The Daily Show With Jon Stewart	M - Th 11p / 10c
Elizabeth Warren Pt. 1
thedailyshow.com
Daily Show Full Episodes Economic Crisis Political Humor

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The Daily Show With Jon Stewart	M - Th 11p / 10c
Elizabeth Warren Pt. 2
thedailyshow.com
Daily Show Full Episodes Economic Crisis Political Humor

Høyresidens konkurs

Jeg må innrømme jeg ikke helt forstår meg på Torbjørn Røe Isaksen. Noen ganger er han fornuftig og faktabasert og rimelig og alt det der, og noen ganger er han bare fullstendig i den kognitive dissonansens lala-land.

Ta gårsdagens Klassekampen (der jeg i øvrig har et langt intervju med Roy Jacobsen, om du liker den slags) som et eksempel. Her skriver han sammen med Jan Tore Sanner et innlegg som heter "Venstresidens fallitt". Her åpner de med å skrive at "venstresidens fallitt i disse krisetider demonstreres av det fundamentale spriket mellom deres ideologiske og deres praktisk-politiske agenda." Ok, jeg skjønner den. En kritikk av spriket mellom vår anti-kapitalistiske ideologi og retorikk og de fornuftige blandingsøkonomien som Kristin Halvorsen styrer i regjering. Fair point. De kritiserer Heikki Holmås' mangel på alternativer til markedsøkonomi. Ok. Joda.  

Men så - hold deg fast - kommer vi inn på skyldfordelingsspørsmålet. Sanner og Isaksen presterer å si at:

Å hevde at det uregulerte markedet er høyresidens utopi er stråmannsargumentasjon. Markeder må reguleres, og det kreves åpenhet, ettersyn og riktige insentivstrukturer. Når dette perverteres svikter, markedet. Dette er ikke argumenter for venstresiden, men argumenter Høyre har fremført siden 1884.

Og så går de videre til å snakke om at nå må vi sikre økonomisk vekst, for gudene skal vite at vekst er viktigere enn velferd og bærekraftighet, og så avslutter de med en kritikk av SVs trang til ideologisk renhet heller enn praktisk politikk og bla bla bla. Den siste kan jeg nesten være med på. Det er kanskje litt sant at noen i SV er mer opptatt av å holde sin sti ren enn å dykke ned i politikken, som er, slik Ap-mann Roy Jacobsen uttrykte deti intervjuet jeg gjorde med ham, ugliness.

Men altså. Er det ikke litt hyklersk av to høyrefolk å hevde at de står for trygg regulering av markedet og rette insentivstrukturer, når alle som leser aviser utmerket godt vet hva Høyre har gjort i regjering og hva de har stått for i programmet sitt: deregulering. Ikke på samme loco måten som i USA, det skal de ha, men deregulering nonetheless. Om Høyre har hevdet dette siden 1884, så har de jammen gått stille i dørene med det. Deres politikk har konsekvent vært et mer konkurranseutsatt, mer utrygt, mindre regulert marked. Dette gjelder særlig for arbeidstakeres rettigheter (partiet er tross alt i sitt vesen en politisk koalisjon formet av arbeidsgivere), men også i stor grad for kapitalens flyt. Ikke en gang venstresidens fornuftige, moderate tiltak har Høyre gått med på. Delvis på grunn av deres motarbeiding har vi ikke Tobin-skatt eller regnskapsreform eller internasjonale reguleringsmekanismer. Høyre ror nå så det fosser rundt båten fordi de vet at om deres politikk hadde blitt gjennomført hadde norsk økonomi vært mye mer utsatt for verdensøkonomiens stormkast. Sånt vinner man ikke valgkampen på. La oss skape en avledningsmanøvre (og så i Klassekampen, av alle steder!) 

Men nok om det. Jeg hadde egentlig først og fremst lyst til å kommentere en gammel zombiefortelling som bare nekter å dø, nemlig at det er en sammenheng mellom økonomisk og politisk liberalisering og mellom økonomisk liberalisering og velferd. Kan vi ikke i det minste si, om man nå skal bli ved med å insistere på dette, at det er en nødvendig, men ikke tilstrekkelig sammenkobling? Jeg blir litt oppgitt når Sanner og Isaksen skriver at

Fra 1980 til 2007, i den "nyliberale æra" har verdens samlede bruttonasjonalprodukt økt med cirka 145 prosent. Flere hundre millioner mennesker har klatret ut av fattigdom. Andelen ekstremt fattige sank fra 34 til 15 prosent fra 1981 til 2005, ifølge Verdensbanken. Fraser Institutes [" a think tank based in Canada that espouses free market principles" ifølge Wikipedia. Friedrich Hayek var en av grunnleggerne, min anm.] "Economic Freedom of the World"-rapporter underbygger årlig koplingen mellom økonomisk frihet og øvrige velferdsindikatorer.

Spar meg. Dette er det reneste tøv, og Isaksen og Sanner burde vite bedre. Andelen fattige har blitt mindre siden 1981, riktignok. Men hva slags meningsløs fattigdomsdefinisjon er det de bruker når halvparten av verdens befolkning lever på under 15 kroner dagen? 80 % av verden lever på under 65 kr/dagen. Dette er ifølge Verdensbanken, også kilden til Røe og Sanner. 80 % av verden lever også i land der avstanden mellom rik og fattig øker. Dette ifølge UNDP.

Og kanskje viktigst av alt, for å skyte denne sammenhengen mellom økonomisk frihet og "øvrige velferdsindikatorer" totalt ut av vannet, så la meg henlede leserens oppmerksomhet på Kina. Kina er frimarkedsideologenes verste mareritt, og de hater å snakke om det. Det er et land med stadig mer utpreget frimarkedstenkning i sin økonomiske politikk og det er også, som du kanskje vet, et autoritært diktatur.

Her er tingen du kanskje ikke vet: Kina står for nesten 75 % av fattigdomsreduksjonen i Verden siden 1980. Det har vært en nesten ufattelig utvikling av økonomien i Kina. En middelklasse har vokset fram fra intet på 30 år, og nesten 600 millioner mennesker har blitt løftet ut av fattigdom. Med andre ord: Tar du Kina ut av regnestykket så har vi egentlig ikke fått til så mye i det hele tatt. Om du fjerner India også ser det enda styggere ut.

Med andre ord er det eneste landet som virkelig har fått markedsøkonomien til et autoritært diktatur. I tillegg så har Kina hatt en langsom deregulering i denne perioden, og faktisk hatt styringsøkonomi i store deler av de siste 30 årene. (Som du kanskje husker: Kina var et kommunistisk land, sort of.) Så jeg tror at de andre velferdsindikatorene sånn sett sliter litt. Så kan vi slutte å snakke så mye om hvordan velferd og liberalisering henger sammen med nødvendighet?

Dette desperate forsøk på å skyve bevisbyrden over på venstresiden, når høyresidens politikk har spilt så fallitt (som jo bare er et gammelt ord for konkurs) er dristig som faen. De har baller, det skal de ha. Og litt for mange av dem i luften samtidig. De prøver tilsynelatende å gjøre det kunststykket å på den ene siden si "Se! Vi er for regulering av markedet. Se! Se så vanvittig regulert vi vil ha markedet!" i desperat håp på å score noen poeng i valgkampen ved å late som om de alltid har vært for regulering. Jeg tenker litt på stakkars Winston i George Orwells 1984 som sitter og forfalsker historiske dokumenter og så mer eller mindre tror på den nye historien han nettopp selv har skrevet.

På den andre siden prøver Sanner og Isaksen samtidig å si "Se så bra et deregulert marked er! Se! Se så bra! Alle disse fattige som ikke lenger er fattige!" De vil ha både pose og sekk. Ha kaken og spise den.

Men som alltid så er høyresidens akilleshæl en fullstendig mangel på innsikt i kapitalismens faktiske oppførsel. Den kimen til en reell kritikk av venstresidens løsningsforslag som ligger skjult i den massive kognitive dissonansen som dette leserbrevet uttrykker kommer aldri til orde.

Collective action problems: a pox on the body politic which must be eradicated at any cost - or a big, fluffy, puppy-like animal? You decide!

At the end of the day, a short observation. Something I've been thinking about for years, but which keeps cropping up in conversation these days for some reason, so I feel like writing it down:

I think that the greatest single obstacle that I can think of to the advance of human civilisation is collective action problems in all their forms. The most basic form is, I think, the prisoner's dilemma, in which the solution obviously is honour among thieves - or rather, well-founded trust, the trick of the imagination on which our societies and economies are built, and the sense of collective responsibility which that trust creates. 

If the measurement of value is projected beyond the yardstick of the self into the society surrounding it as a whole, the collective action problems go away, or at the very least become organisational and not existential. This also avoids freeloading, the cause of collective action problems, commonly presented in the form of the Tragedy of the Commons.

In short, the reason we spend more money on weapons than anything else, the reason we can't raise taxes to the proper level across the globe, the reason we can't implement proper work management laws and human rights, the reason we need to put up with populist tabloid newspapers rather than substantial vehicles for public discussion is either:

a. The value system for the change does not yet exist on a large enough scale. (Not a problem e.g. with war - who doesn't oppose war?)
b. We can't organise a change on such a massive scale for reasons of coordination costs.
c. We can't change for fear of competitive oppositional advantage. "Somebody else is doing it, so we can't stop doing it!"

C is the reason that we...

- Have an army. If not, other countries will invade us with their armies which they have for fear that you will invade them. (I still think that standing armies represent the single greatest failure of the human imagination we have.)

- Can't fix the environment. Because if we start having carbon taxes and spending lots of tax money on green infrastructure, other countries will gain a purely temporary competitive advantage which they will later lose again when they are all drowned in the seas of armed refugees, mad with hunger, pouring out of the third world as their ecosystems collapse, a problem which we should maybe have thought about sooner.

- Can't have good labour laws in, say, Malaysia - because other countries might get Malaysian manufacturing jobs.

- Can't raise taxes in states struggling to create welfare societies. If they raise taxes, business will flee.

- Have to keep making bad tv and bad newspapers, or the other tv stations/newspapers will sell more. Because God knows we're not in the business to make good tv/newspapers - we're in the business of making money.

I think that the "solution" to a lot of these issues at the present time, since "...oh, you're such an idealist, Martin! [exasperated sigh, rolling of eyes] It will never happen, dreamer!" is the proliferation of welfare states. People who are hungry and uneducated are generally not capable of projecting value into things or other people, other than their own survival.* I read somewhere recently (I forget where) that the paradox of being poor is that you have less of a buffer, so every decision you make has to be right. But you are also lacking in the resources and personal security which help you make right decisions.  I think this is exactly right. The path towards the decline of collective action problems lies in welfare and education. 

Does any of this make sense? 

* However, the opposite can also be true. Some affluent people invest a lot of personal commitment to ideology which values selfishness. I remember sitting at my computer at University a year and a half ago, seeing the person at the desk in front of me reading Ayn Rand's The Virtue of Selfishness. I was reading an article on child mortality rates in the third world (30.000/day of easily preventable causes) and felt like: 

a. I wanted to smack him in the back of the head for callousness. 

b. I couldn't leave my laptop there when I went to lunch. I just couldn't trust him. 

linkage for 11-11-2008

Krugman on Roosevelt, the New Deal and Obama.

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Disturbing, haunting photos from the war in Congo.

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Great op-ed piece by Al Gore on climate change and what the Obama administration can do. I like the ending:

In an earlier transformative era in American history, President John F. Kennedy challenged our nation to land a man on the moon within 10 years. Eight years and two months later, Neil Armstrong set foot on the lunar surface. The average age of the systems engineers cheering on Apollo 11 from the Houston control room that day was 26, which means that their average age when President Kennedy announced the challenge was 18.

This year similarly saw the rise of young Americans, whose enthusiasm electrified Barack Obama’s campaign. There is little doubt that this same group of energized youth will play an essential role in this project to secure our national future, once again turning seemingly impossible goals into inspiring success.

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Pre-election profiles of Barack Obama and Rahm Emanuel.

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Long piece in the New Yorker on the psychopath. Who is he? Does he even exist? What are the diagnostic criteria? What is happening in their twisted little brains, etc.

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Best article I've seen so far on the financial crash of Iceland.

Overnight, people lost their savings. Prices are soaring. Once-crowded restaurants are almost empty. Banks are rationing foreign currency, and companies are finding it dauntingly difficult to do business abroad. Inflation is at 16 percent and rising. People have stopped traveling overseas. The local currency, the krona, was 65 to the dollar a year ago; now it is 130. Companies are slashing salaries, reducing workers’ hours and, in some instances, embarking on mass layoffs.

“No country has ever crashed as quickly and as badly in peacetime,” said Jon Danielsson, an economist with the London School of Economics.

It contains the mandatory-in-all-articles-about-Nordic-countries mention of Vikings. 

Shock doctrine from the left?

“Rule one: Never allow a crisis to go to waste,” Mr. Emanuel said in an interview on Sunday. “They are opportunities to do big things.”

This remark by chief of staff to President-elect Obama, Rahm Emanuel, made in an interview the day before yesterday, got me thinking that maybe the incoming administration has understood what Naomi Klein is talking about in The Shock Doctrine.

Klein's argument, in brief, is that the right has for a long time acted during times of national trauma and disarray to push through unpopular reforms. They have pieces of ideology lying around in think-tanks and contingency plans in lawmaker's offices around the country. Then when the crisis hits, these plans are pushed through while the opposition is disoriented or immobilized.

I've heard the argument put forward in any number of fora these past couple of days, the last time at the Globalisation conference in Oslo this weekend: the left should use the financial crisis, which has put the free-market thinkers of the right wing on the defensive worldwide, to push through market reforms and try to take the first steps in reforming the capitalist system. This argument is never put in these terms, but it is in essence the same strategy Klein is talking about. People are arguing for a reverse shock doctrine.

the Wall Street crash is a failure of the imagination

Yesterday was the 79th anniversary of Black Monday, and today is Black Tuesday, two important days in the 1929 crash on Wall Street. Just, y'know, as an observation.

"Anyone who bought stocks in mid-1929 and held onto them saw most of his or her adult life pass by before getting back to even." said Richard M. Salsman* about the crisis, according to the Wikipedia page. So there's that.

This is one of those classical "prisoner's dilemma" situations we find ourselves in frequently in our society. What this situation makes clear is that if everyone maintains trust in the collective illusion of the market, the market will keep stable. What the stock market crash really is, is something that us literature majors can tell you all about (see? We can be useful - even in a depression! Hire me! Hire me!). It's basically a wavering in suspension of disbelief. Everyone has suddenly realised that their money really is Monopoly money and are panicking. Like Wile E. Coyote going over the cliff, suddenly looking down like an idiot. Stock market crashes, in effect, are simply a colossal, systemic, collective failure of the human imagination. And bright ideas are what's going to get us out of it.**

Society is a consensus reality we choose to participate in. A story that we tell ourselves. But some parts of that story have a really bad plot, bad grammar and poor writing. We need to rewrite those parts of the story without anyone getting hurt. This is the time, in other words, to remember that all money is pretend money. The only thing we get to decide is what kind of game we're playing. Are we playing capitalism or socialism? Monopoly or Junta, so to speak?

In short, if everybody would just hold on to their damned assets and be cool, we would all be fine in a pretty short time, while the "real" economy and the market got back in synch. If we could also reimagine what the world economy is supposed to look like while we're at it, that would be a fantastic added bonus.

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* BONUS TRACK:

But then, Richard M. Salsman's Wikipedia page indicates that he is an objectivist Austrian school eejit. Let me share with you, as a gift, the titles of some of his papers and books:

* "The False Profits of Antitrust", chapter in The Abolition of Antitrust

* “The Cause and Consequences of the Great Depression”:

- “Part 1: What Made the Roaring ’20s Roar”,
- “Part 2: Hoover’s Progressive Assault on Business”
- “Part 3: Roosevelt's Raw Deal”
- “Part 4: Freedom and Prosperity”, January, 2005, pp. 14–23.

* “Bankers as Scapegoats for Government-Created Banking Crises in U.S. History”

* “‘Corporate Environmentalism’ and Other Suicidal Tendencies”

* “Banking without the ‘Too-Big-to-Fail’ Doctrine”

* Breaking the Banks: Central Banking Problems and Free Banking Solutions

Remember, my friends, this is not the time for gloating or schadenfreude. This is a time for honest, serious, dedicated work.

No, I'm just kidding. This is the time for merciless mocking. And it's a good time to put these people out of a job. And also a good time for reading Keynes and Marx.

** Mandatory endorsement: And obviously, that's going to be easier with an imaginative, creative, flexible US president. Like, say, candidate Obama. An inflexible, uncreative, volatile, insecure president like McCain? Not so much.

And now, a word from Karl Marx

The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state…. The necessaries of life occasion the great expence of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expence of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be any thing very unreasonable. It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion.

Oh, wait. That was Adam Smith.

I remember reading that quote years ago in this brilliant little email that was circulating. Anybody have that lying around? It's not on Google. Anyway, after I read that I started tittering every time conservative hacks argued for market fundamentalism using Adam Smith as an argument.

(I totally stole this post from Edge of the American West, btw, which you should all be reading.)

BREAKING NEWS: I make the international news

Ok, so when I say breaking news, I actually mean news that's stale like five days old fish. But my name features prominently, only 17 paragraphs into this Swedish Reuters story from five days ago about Paul Krugman: Bush critic Krugman wins 2008 Nobel* for economics. The money quote:

He said news of the prize took him by surprise. "I took the call stark naked as I was about to step into the shower," he told a news conference at Princeton on Monday afternoon.**

[just kidding - that's not the money quote. Here it comes]:

(...)

Readers of Krugman's blog posted hundreds of comments congratulating him as an accessible voice of common sense.

"Sometimes it feels as though you are the only sane person in America," said a writer who identified himself as Martin Gruner Larsen.

I am now prepared to reveal that this writer, who identified himself as Martin Gruner Larsen, is in fact me, Martin Grüner Larsen. I like to be incognito like that without the umlaut. Wait, except when I'm using the umlaut, like here, in the quoted comment (#42 - I was quoted because I got the news early, because I have my ear to the ground and my nose to the wind).

In short: these snooty (and Swedish) Reuters people have to learn to phone their work in like the rest of us. Whatever happened to just copy/pasting my comment into the "post" field like the bloggers do? Stoop to our level here, people.

I would also like to take this opportunity to assure my American readers that while I obviously don't think they are sane - and reading the blog of some Norwegian person isn't helping - I don't hold that against them in any way.

* Guys, it's the Swedish Riksbank Prize in memory of... Oh, you don't care either? Ok.

** I quoted that only because I had already used the term "money quote" - I might as well go all the way.

It's Paul Krugman day, here at (...)

Massive link collection (and comment thread) on Paul Krugman post Nobel Prize. More analysis of the win over at Crooked Timber.

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A lot of this is economese to me, but here is one article on Krugman's work I'm going to read soon: "How I Work". Will probably also have a look at his book (signed by Krugman himself! Thanks, Suttonhoo!) when I get back to Oslo tomorrow morning.

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For now, I'm in the University library in Bergen, trying to decide whether I'm more amazed that they still have secured wireless networks here or that my password still works a year and a half after I graduated.

DOW(n) 300

Ok, so the US economy is "collapsing". I'm not an economist, but that can't be good. The DOW dropped 300 points in 10 minutes this morning (2.3 %), and the stock exchange in Oslo was down 7 percent this morning, as well, I heard.

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Paul Krugman, world-class economist and newspaper columnist probably has some words to inspire us and calm us down, right, Paul?

Will the U.S. financial system collapse today, or maybe over the next few days? I don’t think so — but I’m nowhere near certain. You see, Lehman Brothers, a major investment bank, is apparently about to go under. And nobody knows what will happen next.

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Much, much more, most of which I do not understand, in this linky post.

Covert Economies

Since I am now mainlining The Wire while hearing John McCain - the presumptive Republican nominee for president - talking about how strict sentencing should be and how kids should be tried as adults, and, you know, spreading other good, rational ideas of modern criminology, I thought I should share a couple of links with you. Both are by Stephen "Freakonomics" Levitt and both are on the economic aspects of criminal activities. Which is obviously something we should know as much as possible about.

The first is a lecture he gave based on a chapter in the book Freakonomics. It's called "Why crack dealers live with their mothers". It details some of the findings from a study of an inner-city US crack dealing organisation, based among other things on their accounting books and organisational charts.

The second is "An Empirical Analysis of Street-Level Prostitution" (pdf) which he wrote with Sudhir Alladi Venkatesh. Since it's a complete (though not finished) article, it's much more substantial and far more interesting.http://www.blogger.com/img/gl.link.gif

Levitt & Freakonomics co-author Stephen Dubner blog over at the NY Times.

All that stuff you buy comes from somewhere and is made by someone. A blog post over at Crooked Timber - which you should be reading* - discusses this problem taking this series of photographs from a Chinese sweatshop as its starting point. It nicely connects the dots between Adam Smith's invisible hands and Karl Marx's commodity fetishism, using the metaphor of invisible hands.

* [Edit: Holy dangling modifier, Batman! I meant the blog, not the blog post. Although you should read the blog post as well.]

"In other words, they were a lot like us"

Lawrence Wright talks about Al-Qaeda. He's the author of The Looming Tower. The central argument is that the uniting sociological factor among jihadists today is alienation and cultural displacement. Most members join in a different country from where they were born. Also: moslems are 1/5th of the world's population, but roughly half of all poor people are moslem.

Looks like an incredibly interesting talk. I'm going to watch it later.