Former Representative Brad Miller: Naked Capitalism – My Hot Sheet on Finance

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By Brad Miller, who was a member of the U.S. House of Representatives from 2003 to 2013 and is now Of Counsel to the law firm of Grais & Ellsworth LLP

Matt Taibbi described in “How Wall Street Killed Financial Reform” the many ways “the banks strangled the Dodd-Frank law,” including the effort by House Republicans after the 2010 election to “pass a gazillion loopholes.”

“You might wonder,” Taibbi wrote, “how a bunch of lunkhead Republican Congressmen would even know how to write a coordinated series of ‘technical fixes’ to derivatives legislation, a universe so complicated that it has become hard to find anyone on the Hill who truly understands the subject. (One Congressman who sits on the Financial Services Committee laughingly admitted that when the crash of 2008 happened, he had to look up ‘credit default swaps’ on Wikipedia.)”

Yeah, that was me.

I don’t remember going off the record with Taibbi and he quotes me by name elsewhere in the article, but he probably assumed that no Congressman would publicly admit to being that clueless. I tell that story all the time, and in public.

How was I supposed to know about credit default swaps? Congress put derivatives beyond the reach of federal and state regulation in 2000, two years before I was elected to Congress. In the time I had been in Congress there had not been a single hearing in the Financial Services Committee on derivatives. It turned out that jurisdiction for derivatives legislation was disputed between the Financial Services Committee and the Agriculture Committee, since derivatives were originally a way to hedge commodity prices. The Agriculture Committee wasn’t on the case either. And that was just the way the industry wanted it. In the industry’s view, nothing good would come from Congress asking questions about derivatives.

Certainly no lobbyist said one word to me about derivatives, except to celebrate derivatives as the kind of innovation that can only come from unfettered capitalism. Robert Crouch’s testimony on behalf of the Mortgage Bankers Association on November 5, 2003, was typical. Crouch said that “through innovations in the mortgage finance industry, and through various financing and risk enhancing tools created for the specific purpose of extending credit to our more needy communities, credit-impaired individuals now have ample opportunity to obtain loans through this ‘non-prime,’ or ‘sub-prime’ market.” Credit default swaps were one of those nifty new tools that made subprime mortgages possible.

So by the time I finished reading the Wikipedia entry, I may have known more about credit default swaps than any other Member of Congress.

The megabanks’ influence in Washington is not just about campaign money, although I might have a hard time convincing Sherrod Brown of that right now. There’s the revolving door between Capitol Hill and the industry. It is hard for Congressmen, Senators and key staff not to think about how good life must be on the other side. Regular Naked Capitalism readers already know about the revolving door. See this, this and this.

There is much more to the industry’s power in Washington, however. The industry has a near-monopoly on critical information. Equally important, their approval is highly valued, whether consciously or unconsciously, by policymakers and opinion leaders. The leaders of the financial industry are impressive. They are fabulously rich, schooled in the social graces, well-educated and well-spoken. Who would not want to be held in their good opinion?

Yves discusses “cognitive capture” in Econned, citing Willem Buiter. Buiter explained the response of policymakers to the financial crisis as “cognitive regulatory capture,” in which “those in charge of the relevant state entity internaliz[e], as if by osmosis, the objectives, interests and perceptions of reality of the vested interest they are meant to regulate.” (Buiter was a prominent academic economist at the London School of Economics when he wrote that. He has since become the chief economist for Citigroup.) James Kwak, who blogs at Baseline Scenario, argues that the acceptance of the virtue of financial deregulation was largely the result of “cultural capture,” or “an idea that people adopt in part because of the prestige it confers.” When leaders of the financial industry dismiss “populist” proposals as “well meaning” and perhaps appealing to the uninformed rabble, but simplistic and counterproductive, many in Washington want to agree. Getting past the many cultural cues of seriousness and credibility, the “perceptions of reality” and the need for approval, to the substance requires an ability to distinguish gravitas from pomposity – a rarity in Washington.

After the financial crisis, however, a few in Washington were unwilling to take the industry’s word for it that the crisis was a “perfect storm” of unforeseeable macroeconomic events, and certainly not the result of blameworthy conduct. I was one of them.

So I’m perversely proud to have read Wikipedia for a source of information not completely controlled by the industry. And I was even reduced to reading blogs for information, including Naked Capitalism.

Naked Capitalism does not always come with the cultural cues of seriousness and credibility upon which we are accustomed to relying. Bill Black wrote that Naked Capitalism was an “indispensable source” of “bluntness (in a world plagued with euphemisms and excuses).” Black may himself be guilty of resort to euphemism in that description. But the information here, however incandescent the tone, is generally correct, and comes with links to other authority. Naked Capitalism says what the industry won’t, and is an important alternative to “the captured superstars of the media who long ago transformed their brand of journalism into an access-based celebration of the elites and the status quo,” to use Neil Barofsky’s (not at all euphemistic) phrase.

In Men In Black, the Tommy Lee Jones character turns to “hot sheets” for tips that an alien had landed on earth. The “hot sheets” turn out to be supermarket tabloids. “Best investigative reporting on the planet,” he said to a disbelieving Will Smith. “But go ahead, read The New York Times if you want. They get lucky sometimes.”

I still read The New York Times, but I contributed $100 to Naked Capitalism today so reformers on Capitol Hill and elsewhere will have an important hot sheet on “the dark and seamy corners of finance.”

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  1. Dominic Smith

    So we all got here somehow. I can remember most of the evolution. LA Land blog with Peter Viles in the LAT leading to Calculated Risk & (Bill McBride and Tanta), Then hours into the Hocoodanone comment site for CR. Then over here to NC and now, well, I can read here about as much as I have time to read, stepping out to check major newspapers, foreign and domestic from time to time.
    I subscribed last year, I can’t think of every feeling a tinge of regret when the paypal “payment made to Aurora Advisors” note pops in each month.
    Best subscription choice I ever made.
    The links are great, the commenters polite and with good insights, and Yves, you are the great glue that holds it all together. Lambert, don’t want to leave you out either, support you too over on your own Corrente.
    I’m not an ex pol, i’m a small business owner (plumber) in a small town in Southern Oregon who makes a lot of time to read I loves being able to be directed through the clutter.
    Thank you again Yves.

    1. evodevo

      Same here – Calculated Risk (and the fabulous comment section – at least in those days), Naked Capitalism, Jesse and Barry Ritholz, and their links, gave me the tools to educate myself on economics. Seeing as how my field of expertise is Biology (Genetics and Evolution), I knew little or nothing when I started looking around in ’06. I just knew that what I was seeing on the ground in central Ky real estate and economy was making NO sense, and I wanted A LOT more answers than I was getting from the MSM.
      Here’s my $40 – wish it was more.

    1. Brooklin Bridge

      Disgusting? Sad? Really? What’s sad? That a House Representative reads NC? That a congressman from the South reads period? That a politician can sound sincere?

      I might agree that these were small miracles, but they don’t disgust or make me sad unless you are talking about the fact that this is a former member of the House who was gerrymandered out of a job. Alas, that happens all the time and Democrats are as ruthless about it as Republicans.

      If you are sad or disgusted about the fact that the finance industry holds and controls all the oxygen, or that congressmen are people and subject to the same influences as other people, you probably haven’t been reading this blog for very long, or you wouldn’t find it the singular or salient feature of this particular post. It’s been common knowledge for some time…

      Thanks to Mr. Miller for being willing to post for this fundraiser and for an eloquent post at that. It is interesting and makes a lot of sense though as usual it is impossible, I suppose, to answer the usual question most of us have which is simply how these people can live with themselves and how they can stay so out of touch with what is becoming a truly horrific reality.

  2. Cheyenne

    “There is much more to the industry’s power in Washington, however. The industry has a near-monopoly on critical information.”

    Fascinating. So only the financial industry has the dope on how to swear in witnesses like Jamie Dimon, who got up and lied his ass off with complete impunity in the Senate last year, do I have that right? Because if memory serves, Congress had no difficulty swearing in Roger Clemens, and then filing a criminal referral for perjury against him based on the pitiful evidence it had gathered.

    Since Miller likes movies so much, he can check out this short feature on why corrupt congress lets Dimon walk all over it and hammers Clemens with a farcical perjury case: (in which Dimon’s lying grape is peeled with an ax by Henry Fonda in a re-working of Sergio Leone’s Once Upon a Time in the West; enjoy)

    “How was I supposed to know about credit default swaps?”

    I actually can’t believe I just read that.

    1. scraping_by

      Many kudos to the recovered congressman for admitting limits on his knowledge. A fair number of the suited minority have little knowledge outside their small specialties.

      Difference is, they say nothing and nod wisely. Which is pretended they know what they don’t. Which is one of the best ways to turn a mark into a stooge.

      Glad Mr. Miller got unstooged.

    2. BillC

      “How was I supposed to know about credit default swaps?”

      Did you? Did anyone who was not an industry insider? It’s real easy to be a Monday-morning quarterback.

      Brad Miller’s record in Congress shows he’s a hero for our side. Despite representing a southern district (Winston-Salem area of North Carolina IIRC), he fought the good fight for financial industry regulation until the Repugs redistricted him so as to make running again a futile gesture.

      As for going after Jamie Dimon and his ilk … even if the Dems on the committee know Dimon purjured himself, it takes a majority to file charges. Miller is condemning the same institutional corruption problem you are, but you seem to have missed his central point.

      Your unkind put-down shows a lack of reflection on the realities of representative politics — or perhaps just a failure to read carefully — far more than on ex-Rep. Miller’s record in Congress.

    3. ChrisPacific

      It’s a fair question. Politicians are not omniscient. Given the range of possible issues they may be called upon to deal with once they are elected, they can’t possibly hope to know everything about everything. Especially as the one skill they absolutely must master, namely how to get elected, often consumes a very large proportion of their time. It’s especially pertinent in the case of an industry sector that has actively tried to avoid regulator attention, as in this case.

      Any elected official who hopes to do a competent job must accept the fact that they will be relying on trusted advice for much of their decision making. That makes it crucial to understand how those advisers are chosen, what motivates them, how they get their funding, and the basis for their arguments. That is the central question Miller is addressing in this article.

      Re: I actually can’t believe I just read that, what would you do if you were elected to Congress and suddenly faced a nationwide crisis in something like food safety, or pediatric health care? (Or if you have some personal expertise in those, pick a field you don’t know about). How would you approach it? How would you ensure you weren’t unconsciously allowing your opinions to be swayed by parties seeking to advance their own interests?

    4. s spade

      I too find Congressman Miller disingenuous. It is very difficult to get a man to understand something when his financial future depends upon his not understanding it. Every one of these critters is simply on the make. Miller gets himself appointed to the Financial Services Committee and then he looks up credit default swap on Wikipedia to find out what it means? Makes you wonder what he does know about; probably raising campaign money.

      1. Yves Smith Post author

        This is really out of line.

        First, did you miss that CDS has been officially deregulated, hence were not part of his job description?

        Second, do you have the foggiest idea how broad the scope of financial products and markets is? I’ve spent my entire career in it, have been lucky enough to be cross disciplinary and stick my nose in a lot of tents, and there is still a ton I don’t know. Even people who are in finance tend to have very narrow focuses, they do a certain type of investing or they sell a particular product. Even pros in the industry don’t have the knowledge level you demand of Miller. And as a Congressman, even on the Financial Services Committee, finance and banking is only one of many beats he is expected to cover.

        1. s spade

          You don’t have to know anything about CDS beyond the fact that they make the entire financial system hostage to just about any rare event. The only way to regulate them is to make bank participation in them illegal, which means to restore Glass Steagall. If Miller didn’t “know” that he either didn’t want to know it or is too dim a bulb to do the job he never stops running for.

      2. LucyLulu

        ” Every one of these critters is simply on the make.

        And constituents like you deserve the sleaziest representative in Congress.

        Miller was an outstanding Congressman. One of the few ethical and honest ones that earned my respect. He learned what he needed to know, and was a quick study. Not mentioned was how he stayed on top of DeMarco leading up to the filing of FHFA’s 17 suits against the lenders. He was no friend to TBTF. Losing him was a big loss for NC and the country.

        He was my representative but I never met or spoke with him, nor have I ever been a fan of any other local representative. His replacement, in Congress for 20 or 30 years now, is worse than worthless. There are a few good people in Congress.

  3. Sebastian

    Beautifully stated, persuasively argued.

    One of the most sincere judas’ kisses I’ve ever witnessed.

  4. Klassy!

    Excellent points. I believe these ideas of cognitive and cultural capture are just as important as any discussion of campaign cash. I
    It’s not just Washington insiders, though. I know more than a few NYT reading, NPR listening people that would call themselves hardcore liberals who are quite uncomfortable with any argument of a populist bent. I’m not sure when exactly populism became so discredited.

  5. steve from virginia

    “The leaders of the financial industry are impressive. They are fabulously rich, schooled in the social graces, well-educated and well-spoken. Who would not want to be held in their good opinion?”

    Al Capone had the same sort of cultural cachet. He and his ‘organization’ provided services the public was eager to pay for. He was fabulously rich, gentle with the ladies and children, had some social graces … e was canny and smart, direct and to the point. Capone also could beat your brains out in a meeting with a baseball bat, something I’d pay a dollar to see Jamie Dimon do.

    I wonder how much cachet these bank dudes would have after a stretch inside Leavenworth Prison?

    … nah … that’s a fantasy.

  6. der

    Pretending they have Larry’s End Game casino under control, the elites raised so well and schooled in their finer ways, the upper classes have fucked it all up and continue to do so whether they care to admit it or not because this is how they roll:

    The New York City Opera Is Done – “Today, the board and management will begin the necessary financial and operational steps to wind down the company, including initiating the chapter 11 process.”

    Junior to and often feistier than the Metropolitan Opera, City Opera was a spawning ground for top opera talent that included Beverly Sills, Placido Domingo, Renee Fleming and Samuel Ramey.

    But it was derailed by a series of decisions by its board, which included going dark for the 2008-09 season while its auditorium at Lincoln Center was reconstructed; hiring Gerard Mortier as artistic director only to have him back out before starting; and leaving Lincoln Center after the 2010-11 season and playing at various venues throughout the city under general manager George Steel.

    “City Opera’s demise is the fault of people with a lot of money but no common sense, from Susan Baker’s absurd flirtation with Gerard Mortier to (board chairman) Charles Wall’s foolish support of George Steel when the singers and orchestra unanimously had no confidence in Steel’s artistic vision,” said Alan Gordon, national executive director for the American Guild of Musical Artists that represents the chorus, stage directors and principal singers.

    New York mayor Michael Bloomberg declined to intervene.

    “The business model doesn’t seem to be working,” he told reporters Monday.”

    Lord Grantham investing it all with James “Jamie” Ponzi, commissions to Bob “Bob” Rubin. Even the rich are screwed, they just don’t know it. Yet. God help us.

    And that business model is known as Quantative Easing, or free money for rich people.

  7. bh2

    There is apparently some expectation that congress-critters are remotely competent to reckon the entire, sweeping scope of authority claimed (but never fulfilled) by the government.

    The recent case of NSA carrying out actions undisclosed even to the select few honorables “in the know” from briefings in secure rooms should offer some evidence that government needs to be shrunk a lot smaller, allowing it to focus on those few tasks appointed to it as a matter of convenience to society at large.

    The claim by government to an ability to observe and catch every sparrow that falls is simply comical. Making government regulators “responsible” by law (with no consequences for failure) to detect wrong-doing is a giant FAIL. How much more evidence is needed?

    The only way financial services companies will ever behave responsibily is when the entire industry is made collectively and directly responsible for any financial failure of any of its members — not the government and not the people.

    Regulation must become more outcome oriented and less process oriented. A bad result (regardless of cause) can be more easily apportioned than can specific bad behavior be detected and prosecuted. This is particularly true when “regulators” ignore even the most obvious warnings from industry insiders. Basically, they are all just a waste of space.

    When the insiders have real skin in the game, they’ll be a lot more inclined to act in defense of their own selfish interests. Greed is good when it serves to temper excesses of the greedy.

  8. JCC

    Good editorial but I’m surprised there are no comments on Mr. Miller’s statement, “Buiter explained the response of policymakers to the financial crisis as “cognitive regulatory capture,” in which “those in charge of the relevant state entity internaliz[e], as if by osmosis, the objectives, interests and perceptions of reality of the vested interest they are meant to regulate.” (Buiter was a prominent academic economist at the London School of Economics when he wrote that. He has since become the chief economist for Citigroup.)

    Yet even more “Economist Capture”?

  9. Code Name D

    ” There is much more to the industry’s power in Washington, however. The industry has a near-monopoly on critical information. Equally important, their approval is highly valued, whether consciously or unconsciously, by policymakers and opinion leaders. The leaders of the financial industry are impressive. They are fabulously rich, schooled in the social graces, well-educated and well-spoken. Who would not want to be held in their good opinion?”

    Thank you for that information, it supports a suspicion I have had for some time.

    My sister is a librarian at the university level, and part of her job is to participate in, if not author academic papers on library sciences. Having never gone to collage myself, I was quite pedestrian about her career choice until I had an opportunity to sit down and have a nice long conversation about library sciences. I have no idea it was so fascinating or complex. (It also helps that she is passionate about the subject.) Okay, maybe its not astrophysics, but it was still interesting.

    At the time, she lamented to me that she was always on the lookout for interesting topics to research. Part of that publish or die sort of thing.

    Suddenly I saw a connection with my own activism, and it came down to a question of how academically healthy our concessional libraries are.

    Liberians don’t just opposes censorship, they view it as the scourge of academia in general and are almost sworn to oppose it on their honor as Liberians. So any book submitted to a library will on principle be accepted and added to the inventory.

    My question focused not on censorship, but on fake academics, materials authored to look like academic or research papers. This poisoned-knowledge as I called it, was intended to undermine real academic research. So I came up with the question of Pandas and People, a fake textbook about evolution that intended to smuggle biblical creationism into biology. If this book was to be introduced to a library – what would happen to it?

    Her answer: She responded, almost in jest – Liberians’ to not censor – they categorize. Elaborating she explained that all libraries offer specific categories of books. Biology books are sent to the biology shelves, while books about creationism would be relegated to the theology area. Of Pandas and People might even be assigned to special category commonly labeled as evolutionary contrarianism or even as theological critiques of science.

    Thus a student conducting research in biology would not likely come across it, unless their research needed to examine those issues.

    Question: Ah, but the intent of the book is to disguise itself as a legitimate biology text book. Liberians are not biologists, how would you know this book needed to be placed in the theology isles and not in the biology area?

    Her answers: They don’t. Of Pandas and People probably was included in the biology area when it was first introduced into the library. But this categorization is not static, and it is the job of the librarian to constantly review where books are placed. Its category was only changed when the true nature of the text book is revealed. Liberians also retain the knowledge that this publishing house is not to be trusted next time they publish a book.

    In the mean time, academics are expected do to THERE job and adequately vet the resources they use in their research. If they come across Pandas and People in the biology section, skepticism is still default position. The same is true for academics reading The Origins of Species.

    This is where my conversation started to get interesting.

    My question: What if Pandas and People are miss-categorized in a public library? An ordinary library patron is not a researcher, and will have not have the training, time, nor resources to properly vet their resources. In fact, they are likely to assume that all books found in the biology sections… are reliable books about biology. Indeed, this is the intention of poisoned-academics, to confuse the reader as to the true nature of biology and unjustly erode the theory of evolution.

    I could see that my sister was running out of map, and here their be monsters.

    Her answer: So what?

    She admitted that these readers will be deceived in the short term. But risk is still a part of the game, crossing the street means dealing with the possibility of being run over by a school bus. And it also means picking up a book that will lie to you.

    However, the average citizen, while not being an academic, will also not have the duties of an academic. So their being misled about the subject will not have any consequences (I disagree with this point, which I will discuss later.) At any rate, this is only temporary. Eventually, once the true nature of the book is known, it will be placed in the correct category.

    That’s a good answer actually, so she hadn’t run out of map just yet. But we fell off the Liberians’ world with my next question.

    Question: What about congressional and other government libraries?

    Congressmen consist of mostly average persons consisting of average education. Most are not qualified researchers and can not vet their books. Even those who ARE qualified researchers, and who can vet their books, likely still to not have the time and resources to do so, as their duties likely reside elsewhere. And, these people actually do have power, and craft legislation on their research. A book like Pandas and People, if introduced at the right time into the library inventory, before its true intent can be known, could have a profound influence on policy.

    Her answer: “Librarians are not truth police.” Yep, we fell off the map here. Actually, she didn’t have a response to that line of reasoning. Clearly, we fell off the map.

    To her knowledge, these librarians probably have typical practices, not unlike at her university. But she did admit that she didn’t know that for sure.

    This was my idea for a paper – what is the academic integrity or “academic health” of a congressional library.

    There are some problems with the idea. First, just what is “academic health”? I tentatively definite it as the reliability of the materials contained within the library. If you have a lot of Pandas and People in biology areas, then this lends itself to a poor state of academic health. But some one else later recommended it be defined as how rigorous the libraries’ own vetting process is.

    My suspension is that congressional libraries are soft targets for propaganda campaigns. Think tanks could be organizing with a broader legislative agenda. Just as a key bill comes up, think thanks will submit fake academic papers to the libraries to shape the dialog.

          1. Code Name D

            I don’t have any. But this is kind of my point; there is no evidence at all. So the point that congress exists in a bubble is just an assertion. What I have forwarded is a possible hypothesis that attempts to explain that bubble, and attempts to offer a means of objectively identifying and measuring the bubble itself.

    1. bh2

      It’s likely the last genuine intellectual in Congress was Daniel Patrick Moynihan. And he may remain the last, at that, for a very long while.

    2. They didn't leave me a choice

      While your post was fascinating, could you please spell-check it the next time around, the number of typing errors was pretty high. And don’t just leave it to the machines, otherwise those think thanks just might thank you for you are service.

    3. s spade

      There really isn’t any solution to the problem you describe except reader intelligence. Propaganda works for the very good reason that few people know how to think or what to think about. Education has dumbed down the population and students now emerge from college knowing less than savvy high school graduates of seventy years ago. Most economics graduate students know nothing of Veblen and Henry George, two of perhaps five economic thinkers of the past two hundred years having anything useful to say. One could proliferate examples to the same effect in other disciplines.

      Propaganda rules. Don’t expect some poor librarian to save things. They have enough trouble living on air and hoping the library will not be razed to create a shopping mall.

      1. Code Name D

        Uh uh. The “Johnny can’t think” argument is a non-answer, and also blames the victim for the problem. My experience says that the nature of propaganda is not in the deception they would have you believe, but the lack of an alternative narrative or evidence that would challenge the deception.

        The point of propaganda is to deceive, that is its nature. So even if we manage to fill congress with intelligent academics, propaganda arms will simply change and adapt to the new condition and find a way to deceive the scholars. This is an adversarial problem that adapts.

        Here is a specific example: A single study that was published by economists Reinhart and Rogoff is pretty much the foundation for the austerity movement. But Robert Pollin, also an economist, published a paper debunking Reinhart and Rogoff’s work.
        So here is a question. Is the Reinhart and Rogoff paper currently listed at the Congressional Library, and under what category? Is the Pollin paper listed, and under what category? And if some one comes across the Rogoff paper, will they also be directed to the Pollin papers? If not, why not?

        1. anon y'mouse

          this depends upon how the paper is accessed. through many databases, you can sort for “papers that cited this piece” as a method to find more current research.

          also, discussion below vis a vis collection size, space issues is a lot less relevant here in journal article land. once something is in the “peer reviewed journal” section and is tagged with subject tags and put into the searchable database, your only limitation is server storage.

          i think that you are right in that libraries are possibly soft targets. they go with the fashion of the times in reading material. if a thinktank gets together, or something like that Powell memo someone was discussing the other day gets sent out, then the plan of attack is to put “friendly minds” into the academic stream, found an institute or 20 (Chicago school), produce research, have it vetted in friendly (owned by someone so perhaps slanted towards a particular philosophy; they are expensive to run/maintain) peer-reviewed journals, and then have your colleagues talk it up until it becomes the only thing that anyone can see (“Deregulation is bad” “Globalization is good”) and a sort of left-side blindness takes over.

          the chain has to start further back in time and in a lot more places than at the endpoint. then, whether that item stays “on the shelf” is assured, as every academic will hand it out and force the students to read it (more likely they will summarize it for them) and it will continue as a hot item in the catalogue/database.

          1. anon y'mouse

            sorry, “Regulation is Bad.”

            as an experiment, i will try to log in and see what my university library (not the same as Library of Congress) databases tell me about Reinhart & Rogoff tomorrow.

            as for books, those appear mostly meant to influence the public, general reading audience and frequently cite the afore-mentioned peer reviewed studies to back up their claims, along with specialist knowledge and interpretations and analysis by the writer(s).

            i am not really sure that books as we know them are the initial way that (propaganda) ideas get out there in the open anymore. i suspect that once an item is in a book, it is almost old hat to what the academics and thinktanks have already determined is the currently correct narrative.

            we no longer have someone like Darwin publishing his theory in a book form first (after probably vetting it through his own networks of academics, etc.) as a “new theory” to the world. everything is vetted by the system in some way. how rigorous and biased that vetting system is will probably be your week link in the chain.

            i only know about the peer review process via what my professors have discussed. that said, some of them have pointed out some things that might be a bit concerning:

            how likely is it that someone will try to replicate your study? even if they do, often not enough detail is given to really do so. the general idea is that enough info is given so that, should someone choose to dig into it themselves (funding issues, time issues, relevance to own ongoing work issues arise) i have had a prof. say within the past week that this is usually only possible “in theory”.

            “peers” are unpaid and sound like volunteers, even though they are official academics within the field. who volunteers and why? is it upon request of a particular journal that a particular individual ends up in the list of peers? this is a large commitment of free time that these folks are giving to this task, and we all know that time=money.

            what are they vetting it against? validity against a standard of checks that they have set up to safeguard against bias and ethics concerns, and probably heavily influenced by whatever is “currently accepted truth” in the field. if you suddenly publish something quite astounding and out of step with what “everybody knows”, most likely your paper will get extra scrutiny.

            just ideas to throw out there from a neophyte.

    4. anon y'mouse

      aside to your main point:

      “So any book submitted to a library will on principle be accepted and added to the inventory.”

      this is not necessarily true. yes, librarians do not censor, but collection issues, space, and circulation prevent every library from taking each and every book.

      selection of what is on the shelf, and what remains on the shelf, is a very careful procedure based upon what will be most useful, most used, and most relevant to the patrons served by the particular library you are in. there is not infinite space, money etc. and therefore they will want a book that is being used regularly vs. something no one will ever look at. books that aren’t used as often are put in storage, and books that are never used (no matter how unique, interesting, informative, etc. they are) are frequently disposed of. it’s not about censorship. it’s about circulation. your only hope for these is that somewhere else within the linked library system, someone has managed to justify keeping that book around and can send it to you through interlibrary loan.

      at least, this is what they dispense in library classes. this might be a “do as I do, not as I say” thing with reference to real life practice.

      1. Code Name D

        You are quite correct. (I do recall my system explaining this.) Liberians will reject books based on relevance and usage based on their resources. I stand corrected. But I do not think it injures the thrust of my argument.

  10. skippy

    Just a simple – thanks Brad.

    skippy… good to know the hill is not just one big cementitious block.

  11. proximity1

    More for (or from?) the “Hotsheet” :

    Recommended reading for Rep. Brad Miller–

    Abrupt rise of new machine ecology beyond human response time

    Nature , Scientific Reports ( open access to full text )

    * Neil Johnson,1 * Guannan Zhao,1 * Eric Hunsader,2
    * Hong Qi,1 * Nicholas Johnson,1 * Jing Meng1
    * & Brian Tivnan3, 4

    Journal name: Scientific Reports
    Volume: 3,
    Article number: 2627
    DOI: doi:10.1038/srep02627

    Received 19 November 2012
    Accepted 22 August 2013
    Published 11 September 2013


    “Society’s techno-social systems are becoming ever faster and more computer-orientated. However, far from simply generating faster versions of existing behaviour, we show that this speed-up can generate a new behavioural regime as humans lose the ability to intervene in real time. Analyzing millisecond-scale data for the world’s largest and most powerful techno-social system, the global financial market, we uncover an abrupt transition to a new all-machine phase characterized by large numbers of subsecond extreme events. The proliferation of these subsecond events shows an intriguing correlation with the onset of the system-wide financial collapse in 2008. Our findings are consistent with an emerging ecology of competitive machines featuring ‘crowds’ of predatory algorithms, and highlight the need for a new scientific theory of subsecond financial phenomena.”

    LINKS :

    Key findings from the report —

    … “Specifically, our resulting dataset comprises 18,520 (ultrafast extreme events) UEEs (January 3rd 2006 to February 3rd 2011) which are also shown visually on the NANEX website at These UEEs are of interest from the basic research perspective of understanding instabilities in complex systems, as well as from the practical perspective of monitoring and regulating global markets populated by high frequency trading algorithms.


    “We find 18,520 crashes and spikes with durations less than 1500 ms in our dataset, with examples of each given in Fig. 1A (crash) and 1B (spike). We define a crash (or spike) as an occurrence of the stock price ticking down (or up) at least ten times before ticking up (or down) and the price change exceeding 0.8% of the initial price, i.e. a fractional change of 0.008. We have checked that our main conclusions are robust to variations of these definitions.” …



    This research cites Farmer, J. D. & Skouras, S. An Ecological Perspective on the Future of Computer Trading. U.K. Government Foresight Project (2011)


    J. Doyne Farmer has been mentioned in blog posts previously at N.C.

  12. Melody

    The leaders of the financial industry are impressive. They are fabulously rich, schooled in the social graces, well-educated and well-spoken.

    Now if they would all join the Richard Cory School of Desirable Outcomes we would ALL be better served.

  13. Kim Kaufman

    Thank you, Mr. Miller, for supporting NC and writing this piece. You are one of the good ones who even bothered to find out what credit default swaps are. I suspect there are many in Congress right now who didn’t know then and still don’t know. Or care. And, btw, we all know that the right wing has teams of people rewriting Wikipedia… right? At least according to Thom Hartmann, who saw for himself a roomful of them when touring AEI, or one of those wretched places, a number of years ago (they didn’t know who he was).

  14. the idiot

    As a fellow North Carolinian I would like to say thank ou for the work you did in Congress, Brad. We have to get the state turned back around now.

  15. anon y'mouse

    Growth in a Time of Debt

    Author: Reinhart, Carmen M.; Rogoff, Kenneth S.

    Author Affiliation: U MD; Harvard U

    Source: American Economic Review, May 2010, v. 100, iss. 2, pp. 573-78

    Publication Date: May 2010

    Macroeconomics: Production (E230)
    Price Level; Inflation; Deflation (E310)
    National Debt; Debt Management; Sovereign Debt (H630)
    Macroeconomic Analyses of Economic Development (O110)
    Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence (O470)

    Keywords: Debt; Growth

    Geographic Descriptors: Selected Countries

    ISSN: 00028282

    Publication Type: Journal Article

    Digital Object Identifier:


    Update Code: 201005

    Accession Number: 1098801

    Database: EconLit

    Full Text Database: Business Source Premier

    —so there’s your entry for one of the papers that has been discussed lately. they also have listed in the same database 39 separate entries, which include 23 working papers, 12 academic journal entries, 2 books and 2 “collective volume entries” (?) most of these other papers, one can see from the title, are related to the same subject. these two have been pretty industrious.

    this particular database does not handily offer the link to “search for articles citing this one” but one could get around that through using Advanced search and entering the title as a “search through complete text of articles” most likely.

    so to the poster above, your main weak point is the publisher of the book or article, and the vetting process it would go through. luckily, this particular item was revetted by other economists. one wonders how many items get the same kind of scrutiny, and one also wonders how many items are languishing in the back catalogues/databases with handy reference tags just waiting for some sap to cite them that have never even been significantly remarked on by other academics.

    the research mountain is high. since academics spend a lot of their time trying to get funding to do research, doing it, vetting others’ research for publication, reviewing their own, and teaching and so on how much time do they really have to make sure that what is published in the thousands of journals out there every year is completely accurate?

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