By William K. Black
May 14, 2016 Bloomington, MN
This is the second column in my series on the “Mankiw’s myths and Mankiw morality.” In the first column I showed that N. Gregory Mankiw’s own unprincipled principles of economics predicted that the financial system would be rigged by and for the financial CEOs. In his New York Times column Mankiw purported to be writing to dispel myths, but actually did the opposite, asserting that the financial system could not be rigged. I explained in the first column how Mankiw famously decreed that it would be “irrational” (rather than ethical) for a CEO not to “loot” a firm that he controlled. I term this view that being ethical is irrational for a CEO “Mankiw morality.” Under Mankiw morality, financial CEOs would have the incentive and the ability to rig the system and would do so repeatedly.
My second column responds to some of Mankiw’s myths about the “trade deals.” I again apply Mankiw morality and theory to refute Mankiw’s myths about “trade deals” being good for America. Mankiw morality predicts that CEOs, whenever they can personally get away with it, will rig the system to create a “sure thing” allowing the CEO to become wealthy through fraud and other abuses. The CEOs see regulators and prosecutors as the paramount risks to their ability to get away with rigging the system. They look for every opportunity to discredit and render ineffective regulation, to make it difficult to prosecute elite white-collar criminals, and to ensure that agency heads and attorney generals will be appointed who are unwilling to effectively regulate and prosecute corporate elites.