Re: My almost friend is not my enemy

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

Surely Summers was not made president of Harvard because he is a great
economist.  As an alumnae, I have met every president of Harvard since Pusey and
was impressed by none.  In fact, I am not impressed by Harvard in general.  It
is an institution full of people who did their most creative work earlier
somewhere else.

Histroy will not be kind to neo-liberal economists.

Henry C.K. Liu

"J. Barkley Rosser, Jr." wrote:

>      I have just finished writing a
> commissioned piece for a journal about
> the recent Nobel recipients.  After
> digging through the work of Stiglitz in
> more detail over his whole career (the list
> of his publications is 30 pages long, in
> small font size), and also hearing some
> personal insights from various folks, I am
> convinced that Stiglitz has evolved and
> changed his mind about things.  He is clearly
> not a "full blown heterodox," but he is also
> very clearly not the "golden boy of neoclassicism"
> that he was early in his career.
>      I think two things have happened.  One
> is clearly his experiences within the policy
> making arena, especially once he got to the
> World Bank.  Major international crises erupted
> after he got there and he clearly differed with
> what the rest of those running things in Washington,
> Summers and the IMF folks, were doing about it.
> The other is that he has been through a long
> process of gradual intellectual evolution that has
> made him open to such a shift of views.  He has
> always from a very early time been interested
> in development problems and has written on how
> peasants could be exploited by landlords, using
> the asymmetric information approach.  Indeed, those
> were some of his very earliest papers using that
> approach and idea, after he picked it up from
> George Akerlof's "lemons" paper of 1970.  This
> evolution in turn reflects a broader opening up
> that is going on among many economists who are
> identified as "mainstream."  But, Stiglitz has
> had a "slap across the face" experience at the WB.
> I think the guy is someone who came in "looking
> safe" and got "unsafe," partly based on his own
> intellectual evolution, but I think partly taking
> his own intellectual evolution seriously.  After all,
> Larry Summers went through many of the same
> intellectual paths, although not the sympathetic
> to peasants work on development.  But, look how
> he behaved and where he has ended up (Pres. of Harvard).
> Barkley Rosser
> ----- Original Message -----
> From: "Clifford Poirot" <cpoirot@xxxxxxxxxxx>
> To: <pkt@xxxxxxxxxxxxxxxx>; "Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>
> Cc: <gang8@xxxxxxxxxxxxxxx>
> Sent: Wednesday, May 15, 2002 9:55 AM
> Subject: My almost friend is not my enemy
>
> > I have argued in the past ( now in print in two places as of June) that
> > Stiglitz is guilty of the sin of theoretical inconsistency on a number of
> > points.
> >
> > That said, in many ways Stiglitz is probably the best of the New
> Keynesians
> > and has developed models that are in many ways consistent with at least
> some
> > Post-Keynesian directions in research. For example, Stiglitz' work on
> credit
> > rationing is certainly consistent with the view of some Post-Keynesians
> that
> > credit markets can be "lumpy" and that agents might have to resort to
> rules
> > of thumb in decision making. Of course, it would be good if Stiglitz would
> > move from here to full acceptance of uncertainty.
> >
> > Stiglitz conception of the Microeconomy as characterized by non-market
> > clearing, imperfect competition is at least not inconsistent with views of
> > the Microeconomy advanced by heterodox economists such as Ingrid Riima.
> >
> > I will grant everyone on here that Stiglitz is not the second coming of
> > Keynes. But is he really our enemy-or is he almost our friend?
> >
> > Stiglitz has made a lot of interesting theoretical contributions, that
> IMO,
> > are useful to some directions in Post-Keynesian research.
> >
> > -----Original Message-----
> > From: Henry C.K. Liu [mailto:hliu@xxxxxxxxxxxxxx]
> > Sent: Tuesday, May 14, 2002 10:26 PM
> > To: Gunnar Tomasson
> > Cc: pkt@xxxxxxxxxxxxxxxx; gang8@xxxxxxxxxxxxxxx
> > Subject: Re: Argentina and the IMF
> >
> >
> > Gunnar,
> >
> > I agree.  Hence the McNamara comparison.  Michsel Hudson's post on Peter
> > Bauer
> > was along the same thread.  The World Bank changed its mission from one of
> > helping the poor to one of creating "friendly" conditions for private
> > enterprise
> > in poor countries.
> >
> > Had Bauer lived for a few more years, he migh see how his theories of
> > economic
> > development delivery the world into the hands of neo-fascism.
> >
> > Henry
> >
> > Subject:  Re: [gang8] Another bastard bites the dust
> > Date:     Tue, 14 May 2002 21:24:16 -0400
> > From:   "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>
> >  To:  gang8@xxxxxxxxxxxxxxx
> >
> > The evil that men do lives after them - Shakespeare.
> >
> > Neo-liberal market fundamentalism, after 2 decades of running amok all
> over
> > the
> > world, has destroyed
> > not only the economies of the developing world, but the advanced economies
> > as
> > well.  All the
> > economies that followed neo-liberal policy advice, Hong Kong, Singapore,
> > Argentina, Turkey, Russia,
> > are all in emergency wards waiting for intensive care. Neo-liberal
> > globalization
> > has unleashed global
> > terrorism that forces all societies to suspend civil libery in the name of
> > national security. The US
> > economy is heading for a collapse that makes the Great Depression of 1929
> > look
> > like a minor upheaval.
> > The self destruction of financial capitalism may well originate from its
> > fountainhead - the US, in the
> > form ofneo-protectionism and neo-state interventionism.  Just look at
> steel
> > and
> > agriculture, not to
> > mention high tech.
> >
> > Henry
> >
> >
> > Hudsonmi@xxxxxxx wrote:
> >
> >    "Peter Bauer, British Economist, Is Dead at 86," NYT, May 14, 2002.
> >   In 1982 Mrs. Thatcher made him a life peer for his belief in free
> markets
> > rather than government planning. "Lord Bauer challenged the widely
> accepted
> > belief that development required extensive government involvement in
> > economic
> > life and large infusions of foreign aid, since so-called developing
> > countries
> > were trapped in a vicious circle  of poverty, lacking the income needed to
> > produce savings and investment capital. He argued that if these
> assumptions
> > were true, the Western world would still be living in the Stone Age.
> > Opportunities for private profit, not  planning and aid, held the key to
> > economic growth, he said, and the duty of government was merely to ensure
> > individual freedom, safeguard private property and enforce contracts."
> >   But this was precisely what Mesopotamia did not do, at least in the
> sense
> > that
> > it annulled debt contracts and
> >   subordinated the idea of private gain to the long-term survival of the
> > social
> > community. (But then Mrs. Thatcher said  that there is no such thing as
> > society.
> > If she and Bauer had there way we would not be living in the Stone Age, to
> > be
> > sure; we wouldn't be living at all.)   He accused government planning of
> > providing "'preferential treatment of the incompetent, the improvident and
> > the
> > dishonest' and tends to promote the 'politicization of economic life,'
> > encouraging central planning and diverting a  country's energy from
> economic
> > to
> > political ends."   "Lord Bauer's true intellectual affinity was with the
> > Austrian economist Friedrich Hayek and the American Milton  Friedman, who
> > helped
> > inspire the economic policies introduced by Mrs. Thatcher and Ronald
> Reagan
> > that  emphasized the importance of giving free play to market forces and
> > rejecting the centralized planning and demand  management associated with
> > the
> > Keynesian school of economics."
> >   Bauer died on May 2, 2002. "The Cato Institute, a conservative research
> > institution [the New York Times here uses a  euphemism for lobbying effort
> > for
> > financial raiders and tax-cutters] in Washington was scheduled to give him
> > the
> > first  Milton Friedman Prize for Advancing Liberty last Thursday [May 9],
> a
> > week
> > after his death. The $500,000 prize has  now gone to his estate."   "He
> > elaborated on these ideas in publications that included Economic Analysis
> > and
> > Policy in Underdeveloped  Countries (Duke, 1957); The Economics of
> > Underdeveloped Countries (Nisbet, 1957); Markets, Market Control and
> Market
> > Reform (Weidenfeld & Nicholson, 1968), and Two Views of Aid to Developing
> > Countries (Institute of Economic  Affairs, 1966)."
> >   "Critics called his views extreme and exaggerated. But over the years
> Lord
> > Bauer and his allies brought about a shift  in the priorities of
> aid-giving
> > institutions [sic; they should have said aid-lending, or better yet,
> > anti-aid
> > lending] like the  World Bank. Financing dams and other large development
> > projects went out of fashion, replaced by a new emphasis  on making
> > developing
> > countries [sic, he means non-developing ones] more friendly toward private
> > entrepreneurs by  helping them foster an educated, healthy work force,
> > provide
> > basic infrastructure and, above all, ensure individual  freedom, good
> > governance
> > and the rule of law." Ie, the king of rule of law that will block and
> > distort
> > education, cut  back health care of the work cost and loot the basic
> > infrastructure by turning it all into a Railtrack.
> >  Good riddance.
> >
> >   The Wall Street Journal (Claudia Rosett, "A Toast to Liberty," also May
> > 14)
> > gives some more details about the Cato  affair. "At one table of
> > dignitaries,
> > the Nobel laureate and free-market economist Gary Becker noted:
> 'Twenty-five
> > years ago it would have been hard to believe that free-market ideas could
> > triumph so much.' Nearby, another Nobel  laureate, James Buchanan,
> observed,
> > 'We're not the back of the bus anymore.'"
> >   This reference to blacks obliged to ride in the back of busses led the
> WSJ
> > to
> > note that an Uncle Tom libertarian,  Walter Williams, was there, "one of
> the
> > first black intellectuals who years ago chose to turn against conventional
> > thinking and promote the invisible hand, not welfare, as the way to a
> better
> > life for all, blacks included."
> >   But the key guest was Milton Friedman, who had just come from the White
> > House
> > where Pres. Bush proclaimed him 'a  hero of freedom' in anticipation of
> his
> > 90th
> > birthday. 'We've moved from an era of galloping socialism to an era of
> > creeping
> > socialism,' "but what we now need is an era of "'declining socialism.'"
> >   The right-wing comedian P.J. O'Rourke concluded: 'The ugliest strip-mall
> > shopping development is better than the  most beautiful gulag.' He then
> > suggested that 'we all get drunk.'
> >   So much for the libertarian caricature of government's role!
> >
> >   Michael
> >
> >
> > Gunnar Tomasson wrote:
> >
> > > Henry:
> > >
> > > I don't know Stiglitz from Adam - but I do know that he would never have
> > > been appointed as Chief Economist of the World Bank unless the powers
> that
> > > be had reason to regard him as "reliable".  That is to say, someone who
> > > would not rock the boat.
> > >
> > > Galbraith wrote something to the effect that an astute scholar in
> > economics
> > > knows when to break with the past - that when the parade passing down
> the
> > > street is set to pass him by, he will step out smartly and take up the
> > > banner of whatever the parade is about and march up front.
> > >
> > > All of which leaves me with but one question:
> > >
> > > Where the hell was Stiglitz when it counted?
> > >
> > > Gunnar
> > >
> > > ----- Original Message -----
> > > From: "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>
> > > To: <pkt@xxxxxxxxxxxxxxxx>
> > > Sent: Tuesday, May 14, 2002 6:57 PM
> > > Subject: Re: Argentina and the IMF
> > >
> > > > Stiglitz parallels Robert McNamara as part and parcel of the
> > establishment
> > > > that got the world in a mess and late in life repented.  Stiglitz was
> on
> > > the
> > > > faculty of MIT, Yale and Stanford, joined the Clinton administration
> in
> > > 1993
> > > > as member of the Council of Economic Advisors, later was named the
> > > Council's
> > > > Chairman. In 1997 he took the post of Senior Vice President and Chief
> > > > Economist at the World Bank, the same year of the Asian financial
> > crises.
> > > > Though a consummate political insider, and up to 1997 a card carrying
> > > memeber
> > > > of neo-liberal market fundamtalism and globalization, Stiglitz grew
> > > > increasingly disillusioned with the failures of neo-liberal policy and
> > > began
> > > > to voice his thinking in public speeches. He was ousted from his World
> > > Bank
> > > > post, allegedly on orders from US Treasury Secretary Larry Summers.
> His
> > > > current policy
> > > >
> > > > Responding to Economic Crises:
> > > >       Policy Alternatives for Equitable Recovery and Development
> > > >
> > > >                            Remarks at the North-South Institute
> Seminar
> > > >                                       Recovery from Crisis
> > > >
> > > >                                                by
> > > >                                         Joseph Stiglitz
> > > >                         Senior Vice President and Chief Economist
> > > >                                        The World Bank
> > > >
> > > >                                Ottawa, Canada, September 29, 1998
> > > >
> > > > The most important policy for socially equitable development is full
> > > > employment.
> > > >
> > > > In approaching the challenges of globalization, we must eschew
> ideology
> > > and
> > > > over-simplified models.
> > > > Today, with the continuing decline in economic activity in East Asia,
> > with
> > > the
> > > > new crisis in Russia, with
> > > > the contagion threatening economies elsewhere, faith in the market
> > economy
> > > is
> > > > eroding in many parts of
> > > > the world. It is now clear that the emphasis on privatization,
> > > liberalization,
> > > > and macroeconomic stability
> > > > that dominated thinking about developing economies, represented
> neither
> > > fully
> > > > captured the essentials of a
> > > > market economy, nor provided a recipe for growth and stability, let
> > alone
> > > for
> > > > the broader goals of
> > > > democratic, sustainable, and equitable development.
> > > >
> > > > Our challenge today is to prevent the pendulum from swinging too far
> to
> > > the
> > > > other side. A sound market
> > > > economy integrated into the global system is the key to economic
> > success.
> > > But
> > > > this requires sound
> > > > institutional infrastructure, which in turn requires an effective and
> > > > efficient government focusing on the
> > > > essential functions of the public sector. We have a huge task in
> > > redesigning
> > > > the international architecture.
> > > > But if we set our sights high, if we keep our objectives broad, if we
> > keep
> > > our
> > > > instruments wide, if we
> > > > eschew ideology but use all of the limited knowledge that we have
> > > effectively,
> > > > we can make progress.
> > > >
> > > > We must not let the perfect be the enemy of the good. In a downpour,
> it
> > is
> > > > better to have a leaky umbrella
> > > > than no umbrella at all. There are reforms to the international
> economic
> > > > architecture that can bring the
> > > > advantages of globalization, including global capital markets, while
> > > > mitigating their risks. We are beginning
> > > > to see a new consensus forming around ways to restrain the risk of
> "hot
> > > money"
> > > > and the goal of
> > > > developing procedures for orderly workouts. Hopefully the continuing
> > > > international dialogue on these and
> > > > other issues will continue to make progress in these and other areas.
> > > >
> > > >
> > > > dkostzer@xxxxxxxxxx wrote:
> > > >
> > > > > Dear PKTrs:
> > > > > A very interesting article by Stiglitz on Argentina was published
> last
> > > > > sunday in the Washington Post.
> > > > > http://www.washingtonpost.com/wp-dyn/articles/A3893-2002May10.html
> > > > > I think it is worth taking a look at it.
> > > > > The world press highlights the role of corruption on the Argentinean
> > > > > crisis, something that it is fully true, but nobodies says that
> > > corruption
> > > > > is a bilateral crime. Look to whom were the beneficiaries of the
> > > > > corruption and you will have the other side of the coin.
> > > > > Stiglitz highlights the role of the privatization of the pension
> fund
> > > > > schema on the fiscal deficit, that reduced state revenues and
> enlarged
> > > its
> > > > > obligations, but at the same time there was a reduction by half of
> the
> > > > > contributions by employers, what enlarged the deficit, not to
> account
> > > the
> > > > > debt servicing, and all that under the pressure of the IMF.
> > > > > The privatization of the pension funds implied an enormous transfer
> to
> > > the
> > > > > private sector of 5 billion dollars per year. The reduction of the
> > > > > contributions is of the same amount and benefits mainly the service
> > > > > sector, not the tradables.
> > > > > Since the beginning of 2001 the banks, mainly international ones,
> flew
> > > the
> > > > > money taking advantage of the currency board. 83% of the reduction
> of
> > > > > deposits was explained by the private banks, while 59% by the first
> 10
> > > > > banks. The IMF encouraged the internationalization of the banking
> > system
> > > > > under the argument that the local branches will require funds from
> > their
> > > > > centrals in Spain, England or USA. None of that happened.
> > > > > Didn? know the IMF that silently banks were inducing capital
> flights?
> > > It
> > > > > is almost funny to see that public banks saw a reduction of 4.9% in
> > > their
> > > > > balance sheets of  the item "other credits" and "other liabilities"
> > > while
> > > > > private banks presented reductions of 48.5%. Something was happening
> > > there
> > > > > and the IMF and the Central Bank looked to the side.
> > > > > To have the silent and ordered withdrawal of reserves from
> Argentina,
> > > > > banks had the complicity of the IMF auditors and the Central bank.
> Is
> > it
> > > a
> > > > > mere coincidence that the IMF was pushing to abolish the laws that
> > made
> > > > > the heads of the central bank liable for their acts? Is it to adhere
> > to
> > > > > conspiracies theories to think that there are second intentions in
> the
> > > > > abolishment of the white collar crime law or the reform of the
> > > bankruptcy
> > > > > law are a requirement in order to achieve IMF support? One of the
> > > bankers
> > > > > in jail is the partner of David Mulford . Their bank is accused of
> > major
> > > > > capital flights after the December crisis.
> > > > > On top of that, there is the suggestion of major  orthodox
> adjustments
> > > in
> > > > > the economy.
> > > > > Dear PKTers, there should be an alternative for us Argentineans.
> > Perhaps
> > > > > many of you had thought on that. Will be nice to discuss ideas and
> > > > > alternatives.
> > > > >
> > > > > Daniel Kostzer
> > > >
> > > >
> >