Nothing, if you ask me, based on recent performance.
Nasim Taleb, the "black swan" guy, suggested to a conference in England, not more than the regulators who regulate them. Well, I'm not sure most of the regulators earned their pay recently, either.
Never happen, of course. Bankers who lost billions were hired off by other banks, in some cases with seven-figure signing bonuses. Makes you wonder about all those rightwingers who claim that only a free market can usefully allocate scarce resources.
There's no resource scarcer in the 21st century than a competent banker. It appears that the Bank of England scarfed up the only one, a Canadian who didn't even want the job.
Canada, by the way, refutes the notion that bank regulation is a bad idea. Worked great for the Canadians, both the banks and the citizenry.
I have not made up my mind about Taleb. I began reading his book "Black Swan" but -- unusually for me -- didn't finish it. Either I am too slow to understand him or what he wrote barely made sense. The "black swan" metaphor, in any event, was poorly chosen:
If you lmow the argument -- even if you don't know the book, the argument in some form has entered public consciousness as a meme -- Taleb scorned Europeans who said all swans were white -- true enough for Europe -- but turned out to be mistaken when white explorers got to Australia where there were black swans.
So, nu?
It is one thing to say, all the swans we know are white, another to say all swans have to be white.
Quite another to say, only a market can efficiently allocate resources. We already have evidence to show that markets frequently fail to efficiently allocate resources; and also that planned economies sometimes do a good job of it.
For Taleb's metaphor to work, you would have to have someone from Europe looking at a black Australian swan and say, "There can never be any black swans."
So far as I know, nobody was ever that stupid. On the other hand, we have numerous people who have seen markets at work and go on to claim that nothing can be better.
From this post we have:
ReplyDelete[1] "Quite another to say, only a market can efficiently allocate resources."
[2] "We already have evidence to show that markets frequently fail to efficiently allocate resources"
Note that [2] does not contradict [1], but that's a moot point because the vast majority of people who believe something that resembles [1] generally add qualifiers that significantly alters it meaning. For example, I might say something like this: for many goods and services, over the long haul, a free market operating within a domain characterized by the rule of law is likely to produce better outcomes than other alternatives.
Then there's:
[3] "planned economies sometimes do a good job of it."
My household is a sort of planned economy and hopefully my wife and I allocate resources reasonably well. I'm curious to see your examples of completely planned economies of any size that did a good job. If we consider Japan circa 1980, it was a partially planned economy that did quite well but that same planned economy has been a zombie for the last two decades. The USSR was a disaster and that was probably the most rigidly planned economy for a large entity ever.
Russia was a disaster before and after the USSR, so we might look elsewhere than planning for an explanation.
ReplyDeleteBesides, I didn't say anything about a completely planned economy, or even a whole economy. I said "a market."
Consider life insurance, a total failure under free market conditions and one of the biggest economic successes in all history once government intervened.
What are the annual revenues for life insurance? I wouldn't've guessed that it's big enough to be considered "one of the biggest economic successes".
ReplyDelete$2.9 trillion in 2009. Trillion with a T. A lot of that goes back out. Life insurance lending is one of the 2 or 3 biggest economic drivers of capitalist investment.
ReplyDelete