By Arnold Kling
The New York Times hosts me and two other participants discussing the social value, or lack thereof, of financial innovation. I like what I wrote, although it was hard to fit what I wanted to say within the suggested length.
I didn’t watch the hearing today on the Goldman deal. Megan McArdle writes,
Claire McCaskill’s rant was particularly irrelevant to the actual question at hand, but all of them are mostly trying to express outrage, not make any coherent assessment of the strengths of the SEC’s case.
Basically, the McCarthy era never ended. The objective of every Congressperson at every hearing is to get on the evening news by bullying a witness. The only question I have is whether McCarthy is the one who started it, or whether he happened to be the one guy who got called out on it.
Too bad somebody at Goldman could not have called out a Senator. It must have been tempting to say, “Look. You can’t make a market by bending over backwards giving buyers every reason not to buy and sellers every reason not to sell. Sophisticated investors understand how we operate. Just like everybody who goes to play blackjack understands that some of the cards are dealt face down. You can complain that you think all the cards should be face up, but that would totally change the game. Do you hold to such high standards in your election campaigns? Do you think your disclosure of the consequences of your votes is honest? Do you disclose how lobbyists told you to vote? Do you go out of the way in your campaigns to give people all the possible reasons not to vote for you? You want to tell me about my responsibility to my clients? How would you like to hear my opinion about your responsibility to your constituents?”
Blame deflection. That is what this whole financial “reform” theater is all about.
Here, I argue for auditing the Fed to determine whether taxpayers gained or lost from its speculative purchases. Of course, until you either sell them or have a reliable mark-to-market price, it is hard to know. It could very well be that an audit would make them look good, by the way.
Here, From Poverty to Prosperity gets mentioned in a London Times column. Nice to know we made it across the pond.
Richard Cooper writes a review for Foreign Affairs. This won’t juice our Amazon sales as much as David Brooks’ column, but in the long run it may be more gratifying to me. Assuming that this is the Richard Cooper, whose writings were assigned back when I was a student.