Author Archives: Dan Kervick

By Dan Kervick

James K. Galbraith presents a summing up of the recent public debate over President Obama’s consideration of Lawrence Summers to replace Ben Bernanke as Fed Chair.  These are the key observations:

Summers drew immediate fire, mostly from liberals. Some were from Harvard, where, as president, he’d alienated many faculty with, among other things, his ill-chosen remarks about women and his handling of a U.S. government lawsuit over dealings between Harvard and Russia. Some foes focused on his time at Treasury under Bill Clinton, when the Glass-Steagall law regulating banks was repealed and the Commodity Futures Modernization Act, which outlawed regulation of derivatives, was passed. Some judged him for his income from Wall Street, including his huge speaking fees and the money he made working for a hedge fund. And his abrasive personality and bruising personal style didn’t make him many liberal friends.

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By Dan Kervick

The UN Conference on Trade and Development released its 2013 report on September 12, and it is both an invigorating read and a welcome break from the stagnant and conservative thinking that dominates most US economic discussion. The full report can be downloaded from the UNCTAD website, and a much shorter overview of the report is also available.

You can also listen to this podcast of a public event at the London School of Economics marking the release of the report last Thursday. The Podcast features Richard Kozul-Wright, who heads the unit on Economic Integration and Cooperation Among Developing Countries at UNCTAD, and Robert Wade, professor of Political Economy and Development in the Department of International Development at LSE.

Here is an UNCTAD synopsis of the report’s main messages.  I have highlighted the remarks that struck me as most important:

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By Dan Kervick

It was deeply gratifying to learn today that Lawrence Summers has withdrawn his name from consideration for Chair of the Federal Reserve Board of Governors. Summers was a key architect of the late 20th century neoliberal economic system that failed catastrophically in 2007 and 2008, and he was implicated in some of the most notorious regulatory misjudgments of that era. There is no evidence that Summers has substantially altered the economic philosophy that animated him when he was helping to design and implement that system, so if he had acceded to the job of Fed Chief he would have been well-positioned to block stronger financial regulation and extend the unreconstructed regime of too-big-to-fail banks, loose rules, hegemonic financial sector growth and systemic financial instability that he helped create.

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By Dan Kervick

The government released a disappointing August jobs report today. And unfortunately, the hype and misinformation surrounding the Fed’s quantitative easing program has created a perverse situation in the capital markets which may contribute to sustaining that job market stagnation for some time.

For several months now, we have seen the establishment of an entrenched pattern in which investors routinely respond to a bad jobs reports with bullish behavior and respond to a good jobs reports with bearish behavior. Bad jobs news is treated as good news for investors; good jobs news is treated as bad news for investors. Why in the world would they respond in this way? Because in a classic case of the madness of crowds driven by misinformation and disinformation, the markets have convinced themselves that the fate of the world now depends on whether or not the Fed will choose either to continue or “taper” its quantitative easing program in the near term.

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By Dan Kervick

Joshua Gans raises some doubts at Digitopogy.org about Mariana Mazzucato’s argument in Slate and New Scientist that it is time for the state to get something back for its investments. Gans’s brief argument isn’t very thorough, but he makes an interesting point. Let’s first establish the context. Mazzucato’s article recapitulates some of the central points from her book The Entrepreneurial State about the sizable role governments have played in driving innovation:

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