Conservative economists love “creative destruction.” They can’t wait to “get their Schumpeter on” when a business fails and thousands of workers lose their jobs. There is no more “creative destruction” conceivable than when we put a bank that has become a fraudulent enterprise into receivership, remove the controlling officers leading the fraud, and sell the bank through an FDIC-assisted acquisition. Indeed, the pinnacle of creative destruction would be doing this with a systemically dangerous institution (SDI) through a process that split the supposedly “too big to fail” bank into smaller components that (1) were no longer large enough to pose a systemic risk, (2) were more efficient than the bloated SDI, (3) no longer extorted a large (implicit) government subsidy that made real competition impossible, and (4) no longer had dominant political power via crony capitalism. Unlike the situation in which an SDI collapses suddenly in the midst of causing a global crisis when its frauds cause a liquidity crisis, it is vastly easier to put fraudulent SDIs in receivership in today’s circumstances. Unlike Arthur Anderson, the receivership power allows us to keep the enterprise alive and create more competitors rather than fewer.
Piketty’s Wikipedia page says that he’s a Keynesian. Well, I don’t see it at all. His book contains a section on the public debt in historical perspective and it is desperately misinformed.
Listen to Our Podcast- Randy Wray on Krugman and the Frustration of the Heterodox April 28, 2014
- Fred Lee Talks About his Contributions to Heterodox Economics April 18, 2014
- Feb. 27 Podcast with Randy Wray February 27, 2014
- Bill Black and Randy Wray October 21, 2013
- Political Theatre and the Government Shutdown October 2, 2013
- Randy Wray: The Taper, the Debt Ceiling and the Prospects for Growth September 23, 2013
- Stephanie Kelton Talks with Warren Mosler September 4, 2013
Recommended Reading
Click images to view details
Subscribe
