On Wed, Dec 3, 2008 at 10:50, McDonough, Terrence <[EMAIL PROTECTED]> wrote: > Re a throwaway line in Frasers article. I'm struck by how behavioral > economics mirrors the Third Way (social neoliberalism) > concern to discover clever policy interventions that don't threaten > redistribution through fiscal policy. >
I think this is a perfect way of describing it. Obama's pal Cass Sunstein has been trying to meld this and his legal background (mostly from the Chicago School, Law and Economics paradigm, which sees Keynes and Roosevelt as dangerous as Marx and Lenin) His latest book, NUDGE, with Behav. Econ Thaler seems right up this alley. They both wrote pieces on the Bailout recently http://nudges.wordpress.com/sunstein-and-thaler-on-the-origins-of-the-financial-crisis/ and advocated for use of behavioral econ in creating regulations for finance industry. http://nudges.wordpress.com/2008/10/29/ten-financial-regulations-inspired-by-behavioral-economics/ the latter points to a paper commissioned and hosted by the New America Foundation, a liberal-left think tank in DC. This is the new third way and watching it unfold makes me see the reason that David Harvey, in a lecture last month, adamantly said there should be no new regulations: derivitives should just be made illegal. They are so complex the only people able to regulate them would be insiders and letting them guard the henhouse will inevitably lead to regulatory capture. It seems a compelling argument and I have yet to understand what the long term upside would have been of these complex "innovations." Thaler and Sunstein say, of the latter, "A potential response to complexity would be to require simplicity - for example, by allowing only the standard 30-year fixed-rate mortgages. This would be a big mistake. Eliminating complexity would stifle innovation. A TiVo is a more complicated product than a VCR, but it is also better." mutatis mutandis financial innovation is therefore better. Harvey makes the case that most innovations are just ways of squeezing surplus out of more people more of the time. I can't do his view justice in brief, but it is worth a listen if you get the chance. It's available here: http://links.org.au/node/762 s _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
