Hi Robin,
> What do progressive economists think of how well speculative markets
> aggregate information, relative to feasible alternatives?
I would suggest looking at speculative market reactions to downsizing
reports in the 1980s and 1990s. Job cuts were greeted by jumps in stock
prices. Subsequent analysis, however has found no significant relationship
between reductions in staffing and increases in productivity.
see http://www.unites.uqam.ca/ideas/data/Papers/nbrnberwo4741.html
There have also been studies that show increased labour costs from
long-term disability. In this case you might say that the markets were
efficient in aggregating misinformation. Bre-x was another instance where
I would suggest that people were buying into a swindle largely because
they felt that Bre-x was a nasty piece of business and that they were
somehow in on the scam. Same with the heights of NASDAQ fever, people were
buying BECAUSE the rise was not credible and they didn't want to miss out!
> Can progressive economists identify some other specific social
> institution that they believe does better at aggregating information,
> and which hence consistently makes more accurate timely estimates of
> things like who will win an election or a horse race?
The library, conversation, critical reflection.
Tom Walker
Sandwichman and Deconsultant
Bowen Island
(604) 947-2213
