Category Archives: Social policy

Philip Pilkington: Marginal Utility Theory as a Blueprint for Social Control

By Philip Pilkington, a journalist and writer living in Dublin, Ireland

A prisoner kneels before the watchtower in a drawing of Jeremy Bentham’s ‘Panopticon’. The Panopticon was an architectural form that Bentham envisioned for a variety of social institutions. The idea was to have a central platform where an observer could cast their gaze over all the observed, thus making them feel constantly under watch and ensuring, in Bentham’s own words, “a new mode of obtaining power of mind over mind, in a quantity hitherto without example.” Jeremy Bentham is also the father of modern utility theory – a theory often associated with individual liberty, which is actually at heart a blueprint for social control.

It’s not hard to forget just how nonsensical, simplistic and childish the so-called theory of marginal utility is.

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Mark Provost: Occupy Boston – Day One (and Other OccupyWallStreet Updates)

Yves here. Police efforts to contain OccupyWallStreet have had the opposite effect to what the officialdom no doubt assumed would happen: that the demonstrators would either become discouraged or become violent, which would make it easy to discredit them. Instead, the macing of a group of women last weekend, followed by the arrest of over 700 people on Brooklyn Bridge on Saturdy, has given the movement legitimacy and media attention. It was the lead item on the BBC website over the weekend.

Press efforts to diminish the potential of this effort are now shifting.

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Is JP Morgan Getting a Good Return on $4.6 Million “Gift” to NYC Police? (Like Special Protection from OccupyWallStreet?)

No matter how you look at this development, it does not smell right. From JP Morgan’s website, hat tip Lisa Epstein:

JPMorgan Chase recently donated an unprecedented $4.6 million to the New York City Police Foundation. The gift was the largest in the history of the foundation and will enable the New York City Police Department to strengthen security in the Big Apple. The money will pay for 1,000 new patrol car laptops, as well as security monitoring software in the NYPD’s main data center.

New York City Police Commissioner Raymond Kelly sent CEO and Chairman Jamie Dimon a note expressing “profound gratitude” for the company’s donation.

“These officers put their lives on the line every day to keep us safe,” Dimon said. “We’re incredibly proud to help them build this program and let them know how much we value their hard work.”

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Friedrich Hayek Joins Ayn Rand as a Hypocritical User of Medicare

We’ve been a bit hard on the left of late, so we figured we’d take some steps to balance our programming. Mark Ames, who has been doggedly on the trail of the Koch brothers, found a delicious failure to live up to his oft-repeated standard of conduct by a god in the libertarian pantheon, Friedrich Hayek. And this fall from grace was encouraged one of the chief promoters of extreme right wing ideas in the US, Charles Koch.

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Matt Stoller: #OccupyWallStreet Is a Church of Dissent, Not a Protest

By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller.

Last weekend, I spent a few days with the protesters downtown near Wall Street, and it was an eye-opening experience. The people there want something, but it’s not a list of demands, and it is entirely overlooked by the media and most commentators on the protest.

If all you read are news stories and twitter feeds about #OccupyWallStreet, the most trenchant imagery that will stick in your mind is that of police brutality, and the politics of Wall Street greed. The debate seems to be organized around whether the protest will be “successful” or not, how the protesters are stupid or a new American Tahrir Square, or rhetoric designed in a media sphere that maximizes attention. Glenn Greenwald suitably demolishes the sneering commentariat. But I think there’s something to add about what exactly this protest is, what it is doing, and most of all, what the people there “want”.

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Obama’s Work for Almost Free, Maybe You Get Hired Program

I so often criticize the New York Times for doing stenography for officialdom that I feel compelled to point out a case of good reporting on an Obama initiative I’ve seen criticized in other venues and failed to shred on NC.

The Times piece focuses on a Georgia “tryout” program in which workers still on unemployment get to work for free for prospective employers for a maximum of 24 weeks. The employer is under no obligation to hire anyone. Needless to say, this program is more than a tad skewed in favor of companies. But it costs no money and creates the impression the government is Doing Something. So since no one in DC wants the government to spend more money, particularly on little people, this gimmick is perfect fit with the “let them eat cake” zeitgeist.

Key sections of the Times piece:

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The False Dichotomy of Greed

By Sell on News, a macro equities analyst. Cross posted from MacroBusiness

The Euro crisis appears to be developing into something similar to the 1980s Latin American debt crisis when the idea that, to quote Walter Wriston, who ran First National City/ Citibank from the 1960s into the 1980s it was assumed that: “countries don’t go out of business.” The Latin American leadership demonstrated that they, in effect, could, by defaulting. As a number of bloggers at MacroBusiness have pointed out, government finances are not like household finances, although they are often seen that way. That much is well understood in the financial community, although perhaps not as well in the wider public.

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Richard Kline: Progressively Losing

By Richard Kline, a Seattle-based polymath and poet

Those anywhere to the liberal side of the Anglo-American political spectrum have been on a long losing streak. As of this summer of 2011, they are wholly in disarray. In my considered view, ‘progressives’ lose because they do not have it as a goal to win. Their principal concern is to criticize the moral failings of others in society, particularly the moral failings of those in power.

At best, progressives seek to convert. In the main, they name and shame—ineffectively. American ‘progressives’ distrust political power, period, are queasy about anyone having it, and suspicious toward anyone who actively seeks it, including other putative progressives. The contest as progressives conceive it is fundamentally a moral one: they believe they are right, and want their opposition to see the light and reform/conform. Thus, they don’t frame what they engage in as a fight but rather as a debate.

There has been another and more radical trend on the left-liberal end of the spectrum previously. That trend derived from radicalized, Continental European, immigrants, it sourced much of labor activism, and is largely extinct in America as of this date. It is the atrophy of this latter muscle in particular which has rendered progressive finger-wagging impotent.

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The Decline of Manufacturing in America: The Role of Government Neglect

As I mentioned in a Labor Day post, I grew up in an America where manufacturing was still the backbone of the economy. I may be more aware of that than most in my age group by virtue of spending much of my childhood in small towns where the local paper mill was the biggest employer. Similarly, when I went to business school, many of my classmates had worked for major manufacturing firms, and the ones who had been in finance (for the most part, two year credit officer programs at major banks) weren’t seen as having better backgrounds than their classmates.

While as other economies developed, the US share of global production was bound to decline, I’m disturbed by the assumption that labor costs are the sole determinant of success. My contacts is that it is an article of faith in Washington is that the US can be competitive only in finance (and presumably in commodities businesses like agriculture). This story line is terribly convenient, since it gives diseased, greedy, and incompetent American managers and policymakers a free pass.

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Mike Wallace 1959 Interview of Ayn Rand

I found this interview intriguing for two reasons. First, I must confess to not realizing that Rand’s philosophy was rooted in the counterfactual belief that people are rational. Every social science (ironically, save mainstream economics) puts human irrationality and inconsistency front and center. Nobel prize winner Herbert Simon studied how woefully limited human cognitive capacities. More Nobels have been awarded for behavioral economics, which (among other things) has catalogued numerous cognitive biases.

Second, the questions that Wallace raises with Rand illustrate how much social values have changed in 50 years.

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Quelle Surprise! New York Fed Director Shills for Bank of New York, Argues Against Rule of Law

Given the Federal Reserve’s abysmal regulatory record in the runup to the crisis (even the uber bank friendly Office of the Comptroller of the Currency was more aggressive in going after subprime abuses, for instance), it should be no surprise that some of its directors are utterly lacking in propriety and common sense when it comes to defending the rights of banks to profit at the expense of customers and society at large.

The only good news about the latest example is that it was so ineptly done that it appears to be backfiring.

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Kucinich on Creating Jobs in America

I normally steer away from political posts, but this two part interview with Dennis Kucinich on Keith Olbermann’s Countdown focuses on economic issues. The interviewer was admittedly throwing softballs, but the critique of Obama was blunt. Is a primary challenge in the offing?

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James Galbraith on How Fraud and Bad Economic Thinking Got Us in This Mess

Yves here. Our resident mortgage maven Tom Adams pointed me to a speech by James Galbraith via selise at FireDogLake, which discusses, among other things, how certain key lines of thinking are effectively absent from economics, as well as a lengthy discussion of the failure to consider the role of fraud. Galbraith is not exaggerating. The landmark 1994 paper on looting, or bankruptcy for profit, by George Akerlof and Paul Romer, was completely ignored from a policy standpoint even though it explained why the US had a savings and loan crisis.

Similarly, Galbraith refers to an incident at the most recent Institute for New Economic Thinking conference, in which he stood up and said, more or less, that he couldn’t believe he has just heard a panel discussion on the financial crisis and no one mentioned fraud. The stunning part was how utterly unreceptive the panel and the audience were to his observation. You’d think he’d had the bad taste to say the host had syphilis.

I strongly urge you to read the entire piece; non-economists may want to skim the first third and focus on the crisis material and what follows. This is the key paragraph:

This is the diagnosis of an irreversible disease. The corruption and collapse of the rule of law, in the financial sphere, is basically irreparable. It’s not just that restoring trust takes a long time. It’s that under the new technological order in this field, it can not be done. The technologies are designed to sow and foster distrust and that is the consequence of using them. The recent experience proves this, it seems to me. And therefore there can be no return to the way things were before. In other words, we are at the end of the illusion of a market place in the financial sphere.

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