Re: My almost friend is not my enemy

["J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>]

Henry,
     My remark was not made to praise Summers,
quite the contrary.  I was comparing him unfavorably
to Stiglitz.  Summers is clearly a big sellout who
does not give a rat's behind about world poverty,
whereas all the evidence suggests that Stiglitz
really does, whatever one thinks of his theoretical
framework or his editorial management of the JEP.
     A sign of Summers' basic attitude is his famous
signing off on the memo that justified sending polluting
industries to poorer countries, although he was apparently
not the actual author of that memo, when he was the
chief economist at the World Bank prior to joing the
Treasury Department in the Clinton administration.
This is quite a striking contrast with Stiglitz's conduct
when he held the same position and after.
Barkley Rosser
----- Original Message -----
From: "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Wednesday, May 15, 2002 4:30 PM
Subject: Re: My almost friend is not my enemy


> 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
> > > > >
> > > > >
> > >
>
>