Yearly Archives: 2013

The Faux Hyper-Meritocracy that Threatens to Destroy Us

Posted on October 8, 2013 by | 7 comments

By William K. Black

I have written two prior columns about Tyler Cowen’s praise of the faux “hyper-meritocracy.”  Cowen assumes that productivity determines personal wealth and is measured by wealth.  He celebrates financial managers as the exemplars of this hyper-meritocracy.  In my first column I explained that it should have given Cowen pause that his meritocratic vanguard caused the greatest loss of wealth to society and that so many financial CEOs not only destroyed societal wealth, but also became wealthy through accounting control fraud.  I explained how the bank CEOs that led the accounting control frauds also created the Gresham’s dynamics that suborned other professions (e.g., appraisers, loan brokers, and auditors) that cause bad ethics to drive good ethics out of the professions.  Cowen could not have picked a less meritocratic group as his heroes than the financial CEOs running the systemically dangerous institutions (SDIs).

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Behind the Crisis in American Governance: Delusions about the Economy Treated As a Matter of Differing Economic “Taste” – Pt. 2/2

Posted on October 8, 2013 by | 5 comments

By Michael Hoexter

[Part 1] [Part 2]

Why It’s Delusional:  The Critical Dependencies of Capitalism

The mythical market and view of an autonomous, self-managing capitalism is contradicted by the multiple real critical dependencies of our economy.  These critical dependencies, i.e. necessary relationships with other non-capitalist systems/entities, are integral to capitalism rather than optional features.   Dependencies between these social and natural systems are the object of any meaningful economic policy or, for that matter, any government policy with economic effects.  They are “critical” because they are non-optional and therefore not a matter of individuals deciding that for ideological reasons they “don’t like” one or the other of them and we can therefore jettison them, while maintaining something that is recognizably capitalism.  If people in society were to seek to change the economic system to some other system, either by conscious effort or by historical accident, it then may be the case that one or the other of the dependencies listed below may no longer be “critical”.  However no mainstream political actors in this drama are claiming that they are making a break with capitalism; in fact, to the contrary, right-wing Republicans claim to be its sole political defenders.

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Money is not true wealth (Part IV: The United States)

Posted on October 7, 2013 by | 4 comments

By Glenn Stehle

[Part 1] [Part 2] [Part 3] [Part 4]

Even a small-time gang of hoodlums has its own melodramatic ideology and pathological romanticism.  Human nature demands that vile matters be haloed by an over-compensatory mystique in order to silence one’s conscience and to deceive consciousness and critical faculties, whether one’s own or those of others.

If such a ponerogenic union could be stripped of its ideology, nothing would remain except psychological and moral pathology, naked and unattractive.

–ANDREW M. LOBACZEWSKI, Political Ponerology

Capitalism is “the astonishing belief that the nastiest motives of the nastiest men somehow or other work for the best results in the best of all possible worlds.”

JOHN MAYNARD KEYNES, Attributed by Sir George Schuster, Christianity and human relations in industry

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Behind the Crisis in American Governance: Delusions about the Economy Treated As a Matter of Differing Economic “Taste” – Pt. 1/2

Posted on October 7, 2013 by | 7 comments

By Michael Hoexter

[Part 1] [Part 2]

While the US political system (federal, state and local) has been assumed to be one of the more stable political institutions in the world, over the last two decades a series of confrontations between the Republicans and the Democrats has started to expose serious faults in American governance.  The current government shutdown is just the latest and in all probability not the last in a long line of aggressive efforts originating almost always from the right-wing of the Republican Party intent on destabilizing and delegitimizing its opposition with no seeming regard for the integrity of the institutions of government as a whole.  There is a sense of “entitlement to win” on the Right that is not mirrored on the supposed “Left” represented by the Democratic Party.  From that sense of entitlement, the Right feels justified in using extreme measures to get its way, including shutting down government to extract political concessions from the party that currently controls both the Presidency and the Senate.

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Bank Failures are “Inconceivable” under the Latest Neoclassical Fantasy

Posted on October 6, 2013 by | 8 comments

By William K. Black
(Cross posted at Benzinga.com)

Only theoclassical economics constantly recycles variants of its worst ideas that have proven disastrous when they have influenced policy.  Other fields advance because they embrace the scientific method.  Theoclassical economists repeat their worst errors because they embrace anti-governmental dogmas that blind them to the inherent weaknesses of the corporate form and limited liability.  This represents a dramatic regression in understanding from over 200 years ago when classical scholars like Adam Smith were warning that corporations were inherently criminogenic and likely to produce what we now label “control frauds.”

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Stop “the Great Betrayal:” Kabuki Update

Posted on October 4, 2013 by | 23 comments

It now looks like the big media and leaders in both parties are no longer focusing on the Government Shutdown crisis, but are now moving on to the notion that the shutdown is melding with the upcoming probable breaching of the debt limit to create a combined mother of all fiscal crises. Along with this, the media and many politicians, encouraged by the President’s standing “strong, strong, strong,” are now directing attention away from whether ObamaCare will be delayed or compromised, to other types of ransom the Administration might pay in return for both re-opening the Government and also providing an increase of an undetermined amount in the debt limit. Meanwhile there are reports that under increasing Wall Street pressure John Boehner is preparing to negotiate with House Democrats and allow a vote to pass a CR and a clean debt limit increase bill, in return for concessions he can take back to his caucus.

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The “Hyper-meritocracy” – an Oxymoron Led by Criminal Morons

Posted on October 4, 2013 by | 34 comments

By William K. Black

This column was prompted by William Galston’s review of Tyler Cowen’s new book Average is Over.  Galston’s column worries about the huge, permanent underclass that Cowen envisions will grow in the United States.  I write to challenge Cowen’s assumption that winners will prevail through a process of “hyper-meritocracy.”  Cowen’s embrace of Social Darwinism assumes that the winners have a selective advantage that arises from “merit” – which Cowen conflates with the ability to create wealth.  This is passing strange as we are still suffering from an orgy of wealth destruction led by the “winners.”  The people who grew wealthiest were often the people must responsible for the largest destruction of wealth in history.  In this first column I show that it is the most anti-meritocratic system.  We do not live in a “winner-take-all” Nation.  We increasingly live in a “cheater-take-all” system.

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Sorkin’s Paradox: Elite Bank Officers are “Worse” than “Repugnant” but Never Criminal

Posted on October 3, 2013 by | 9 comments

By William K. Black

This is the third installment in my Sorkin Saga.  The saga was prompted by Andrew Ross Sorkin’s (ARS) video in which he “outed” himself as the leader of an undercover effort by the journalists of the New York Time’s “Dealbook” and CNBC to discover and “out” the “criminal element” among the elite bankers.  Here is the key passage from his video.

“If there’s one question that I get just about more than any other, ‘So why didn’t anybody go to jail, and did nobody try?’ And there’s an answer to that too.

A lot of people had an incentive to try to find a way to bring not justice, but to put people away.  Prosecutors, law enforcement, journalists; it would have been a better story.  But for the last five years we’ve tried, all of us have tried, to find that criminal element.  And while things happened that were upsetting and frustrating and unethical and immoral sadly, it may not have been criminal.”

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Heisenderp

Posted on October 2, 2013 by | 8 comments

By Dan Kervick

The Bitcoin phenomenon has always been an interesting concoction: part radical libertarian currency scheme inspired by the anti-government monetary musings of Ron Paul and Austrian school of economics; part black market drug exchange empowered by a hackertopian computer architecture providing anonymity to its aliased participants; and part speculative Ponzi-scheme-in-the-making based on a strange built-in deflationary coding that seems designed to make its early adopters filthy rich – if they can somehow succeed in getting enough other suckers Bitcoin enthusiasts to buy in.

The speculative dimension of Bitcoin has sometimes crashed up against its alt-monetary aspirations in comical ways, as was noted earlier today by John Carney:

But now Bitcoin has really broken bad in a whole new direction, as federal prosecutors have indicted one of the Bitcoin marketplace’s star performers for a variety of crimes, including conspiracy to commit murder.  The FBI claims to have unmasked and apprehended the man behind the Bitcoin-powered online drug market Silk Road.  His name is Ross William Ulbricht, and the charges are rather amazing:

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The Divine Right of Bankers: Sorkin Proves Baroness Orczy Correct

Posted on October 2, 2013 by | 7 comments

By William K. Black

In yesterday’s column I discussed the fact that Andrew Ross Sorkin (ARS) of the New York Times and CNBC has unmasked himself in a video entitled “Two Myths and One Reality” as the scourge of Wall Street who had worked tirelessly for five years to find the “criminal element” that caused the financial crisis.

“If there’s one question that I get just about more than any other, ‘So why didn’t anybody go to jail, and did nobody try?’ And there’s an answer to that too.

A lot of people had an incentive to try to find a way to bring not justice, but to put people away.  Prosecutors, law enforcement, journalists; it would have been a better story.  But for the last five years we’ve tried, all of us have tried, to find that criminal element.”

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