Author Archives: Devin Smith

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

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

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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The Divine Right of Bankers: Sorkin Proves Baroness Orczy Correct

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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Andrew Ross Sorkin Unmasks as Leading Occupy Wall Street’s (Three Star Restaurants)

By William K. Black

Andrew Ross Sorkin (ARS), long believed to be the sycophants’ sycophant who composes his odes to elite bank CEOs from his perch at the New York Times and CNBC has unmasked himself in a video entitled “Two Myths and One Reality.”

“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.”

ARS revealed in his video that he has posed as the modern-day leader of the League of the Scarlet Pimpernel, the undercover group of English aristocrats, led by an English baronet (“one to command, and nineteen to obey”) who saved French aristocrats from the Great Terror.  The twist is that ARS’ League is composed of financial journalists who pose as sycophants and that the modern-day French aristocrats are the elite bankers whose misconduct caused the Great Recession.  The purpose of ARS’ deception was to lure the elite bankers into admitting their misconduct so that they could be held accountable rather than aiding French aristocrats’ efforts to escape accountability.  ARS was the anti-Scarlet Pimpernel, the aristocrat posing as the friend of the aristocrats in order to “find that criminal element.”

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Money is not true wealth (Part III – The British Empire and its demise: 1815-1945)

By Glenn Stehle

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

Once rationalism raised the intellectual stakes, Catholics could not go on playing by older, more relaxed rules:  if formal rigor were the order of the day in physics and ethics, theology must follow suit….

In the Library of the Convent of Ste. Geneviève, near the Pantheon in Paris, is a manuscript entitled  Traité de l’autôrité et de la réception du concile de Trente en France.  It describes the struggle, after the Council of Trent, to uproot the “pernicious heresies and errors” of Protestantism, and paints a revealing picture of the intellectual position of the Catholic Church in early 18th-century France….  [I]ts final pages show how far the demand for “undeniable foundations” had made its way into Catholic theology by 1725.  Looking back, the author credits the Council with anachronistic motives, which are intelligible only if already, in the 1570s, it could invoke the principles of a philosophical rationalism that was invented in the 1630s.  The ambition of the Counter-Reformation, it tells us, was “to prove invincibly our most fundamental belief.”

–STEPHEN TOULMIN,  Cosmopolis:  The Hidden Agenda of Modernity

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Why do Conservatives Oppose Prosecuting Elite Corporate Frauds?

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

There are at least four principles that virtually all conservatives purport to support – except when the potential defendant is socially elite.  I have written previously about two of these principles on several occasions – the need for accountability and “broken windows” theory that calls for the prosecutors to make the prosecution of even minor street crimes a high priority if they have, even indirectly, a material effect on the community.

The third principle is that it is vital to punish in order to deter crime.  Gary Becker, the very conservative Nobel laureate in economics, emphasized this point (again, in the context of street crime).  Under Becker’s theory of crime our current practices of allowing elite banksters to become wealthy through leading the “sure thing” of accounting control fraud with immunity from the criminal laws will predictably lead to new, larger epidemics of fraud that will continue to cause our recurrent, intensifying financial crises.  It is rare, however, to find a prominent conservative who is demanding a priority effort to prosecute the elite bank officers who ran those frauds.  I know of no conservative member of Congress publicly making that demand today.  Senator Chuck Grassley has previously criticized the Obama administration’s failure to prosecute elite bankers.

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Against Regressive Taxation

By  Fadhel Kaboub

I was recently asked to testify before the Ohio House of Representative’s Tax Reform Legislative Study Committee. I urged the committee to carefully consider the long-term negative consequences of the regressive tax policy for the State of Ohio and its residents. What follows is the gist of my testimony along with some of the data that I presented to the committee.

Working class families continue to suffer from real income growth stagnation since the 1980s despite a steady rise in productivity (Figure 1). However, in order to continue supporting the growth of the U.S. economy, household consumption (the engine of GDP growth in the U.S.) became increasingly dependent on access to credit (credit card debt, student loans, car loans, home equity lines of credit, subprime loans, reverse mortgage loans, etc.). That is why household debt as a percent of disposable income has peaked at almost 140% in 2007 (Figure 2). The proper response to this problem is an increase in disposable income rather than easier access to credit.

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Why Understanding Fiat Currency Matters For Scientists: We Are Being Pitted Against Public Health

Cross posted from MikeTheMadBiologist.com

Because we’re being played off against food stamps by Republican congressmen:

We’re only asking for a 5 percent decrease [in SNAP] in a time of budgetary crisis, where this is being put up against funding the NIH for basic medical research, this is against putting money into defense.

But this is stupid, since it assumes the federal government can run out of money. It can’t, since it’s a currency issuer. Let’s work through a couple of thought experiments. First, the Mars rover (boldface added):

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The Dilemma of the Cooperative Gene

By J.D. Alt

In the simplest terms, at some level the efforts of human society are being directed by the interaction of two genetic predispositions. The first predisposition views society as a loose-knit group of individuals or family units who are competing with each other for scarce resources. The weave of the social agreements that knits these individuals together is for the purpose of establishing and protecting private property rights. Property (the scarce resources) is acquired through competition, and once acquired its ownership is recorded and protected by the judicial and police powers established by the social agreements (the “State”.) In essence, the State has no other purpose.

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Was money created to overcome barter?

By Reynold F. Nesiba
Professor of Economics
Augustana College – Sioux Falls, South Dakota

This past May, marked the one hundredth anniversary of A. Mitchell Innes’s (1913) publication of a paper titled, “What is Money?” in The Banking Law Journal.  In it, this British diplomat, then living in the US, reviewed the history and usage of money and its forms in credit and coinage.  On both historical and logical grounds, he asserts that the “modern science of political economy” rests on a series of assumptions regarding money and credit that are “false.”  One of the most important of these assumptions is the belief that “under primitive conditions men lived and live by barter.”  Who should we blame for this false assumption?  According to Innes, it is Adam Smith (1776), the father of economics, who in turn rests his arguments on the words of Homer, Aristotle, and those writing about their travels to the New World.

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