Firstly, after maintaining radio slience on her blog for a few months Going Private returns with a whopper of a post in defence of the Chicago School that is worth a read. As usual whilst I'm not on the same page, there are a few direct hits in there, especially in respect of the intellectual laziness of many critics of free markets:
If only we hadn’t deregulated so far. Of course, no proponent of these positions seems to have any real grasp of how regulated and artificial mortgage markets were at this point- but that takes some work to uncover through the miasma that is today's political rhetoric on the subject. That, in short, is too much work to try and understand.
Pretty accurate for a lot of us lefties I suspect.
Separately I thought I'd mention that I spent an enjoyable couple of hours in the bar with some Rightie bloggers just before xmas, at the invitation of Nick from Capitalists@Work. Also there were Cityunslicker himself from C@W, Dizzy, Devil's Kitchen, Croydonian and Blue Eyes. I'm sure some of you will be disappointed to hear that they were all normal, and a couple of them are ex-Trots. There seemed to be a bit of a consensus that the Right blogosphere is more libertarian than the Right in the UK as a whole. Not a surprise really I guess, but interesting that they recognise this.
Finally, there's quite an interesting blogging duel between Richard Murphy and Tm Worstall here.
I'll be posting some of my own ill-informed blah shortly.
7 comments:
Ignorance is universal: the only issue is what any one of us happens to be ignorant about.
So I'm sure it is true that many lefties paint a overly simplistic picture of the world and of the constraints of allegedly 'free markets'.
But, quite often, the phrase 'free market', in Leftwing speak, is used as short-hand for something rather more complicated. Most leftwingers ground their world view in in political economy , not economics. In essence they see the nature of markets as being politically or culturally determined - nor is this just a 'hard left'/Marxist view. Remember Polanyi. So many leftist may, indeed, lack detailed practical understanding of market conditions - very few of them work on the Exchanges after all - but they do, quite often, know something about the wider power relations in which markets are embedded which tends to escape those focused on merely on 'the dismal science'.
Yes, I think I agree with all of that.
On a policy level I do think it's important that lefties put more effort into understanding how financial markets actually work. Something pretty significant is going on at present and my concern is that the Left will not learn the right lessons from it if we don't tak the time to actually look into the detail. Far too much lefty commentary falls at the first hurdle - either getting simple stuff wrong, or suggesting simplistic solutions ('tougher' regulation etc).
That said I agree that lefties have the edge in what I guess what you would call economic sociology, which people on the Right consider 'soft'. And I suspect that there will be growth in this area of analysis in the wake of the crisis.
PS. cheers for the link you posted a few weeks back to te paper on risk management, very interesting stuff.
good to see you, Tom: glad we count as normal :+)
the Going Private essay is excellent, n'est-ce pas ? don't see many like that in the UK 'sphere: wonder why ? (seriously)
PS can you direct me to the Risk Management link mentioned ?
Hi Nick
It was an interesting evening. Though I know plenty of Right-leaning folks in the real world, bloggers by nature come across as more opinionated. So I was expecting a rougher ride to be honest! Anyway, thanks for inviting me along.
Here's the paper that Charlie posted previously:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1031745
PS yes the Going Private piece is good, even though I don't agree with her general view of the world. I think the fact that she actually knows what she is talking about (as opposed to being an interested observer) is obviously a big plus point. I agree I can't think of good UK equivalents.
The Tim Worstall vs Richard Murphy battle is also worth following. Tim is another blogger who I disagree with politically, but whose stuff I often find enlightening (when he actually goes into detail rather than having a pop). I never thought I would say that about a UKIP supporter!
expecting a rougher ride
come on, Tom, it's Christmas ! we can do mean too, trust me
Tim W can obviously do limitless patience, I don't know how he keeps at it
thanks for the risk management abstract: I noted with amusement the familiar focus on Black-Scholes, i.e. theory related to options. Professionals in this space always get to option-theory at 1.02, because it's sexy & fun for them (& they tacitly assume everyone understands the basic stuff backwards)
but the joke is, all too many players don't fully grasp the basics of RM, i.e. RM for Price Risk as manifest in simple open positions and use of 'linear' derivatives (forwards / futures / swaps), it's amazing how ignorant most industrials are at this level - and they don't (knowingly) go anywhere near options (quite sensible, in the circumstances)
you're interested in governance: how about the gap between stated policy and reality in most corporates' risk management ? every Annual Report recites splendid pro forma stuff (drafted by the auditor), but you'd be hard pressed to find anyone at home who could speak to it intelligently
check the Mitchells & Butlers case, for example (also here)
Glad you thought us "normal"!
Nice to meet you.
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