Pity quote
-- Wise Person
In this week's Sift:
- First Story. description
- Second Story. description
- Third Story. description
- Short Notes. description
- This Week's Challenge. description
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One of the stranger ideas to float around in right-wing circles is that we should have desecrated bin Laden's body.
Did the Dalai Lama really say that killing Bin Laden was OK? No, he didn't. Was Rush Limbaugh serious when he said, "Thank God for President Obama"? No, he wasn't.
Once in a while, it helps to go outside the polarized American system of Left/Right, Republican/Democrat, and get a view from somebody who on occasion will either please or annoy either side -- like the Peruvian economist Hernando de Soto.
De Soto's book The Mystery of Capital is an icon in certain right-wing circles, because it outlines a capitalistic path for third-world development, one that focuses first and foremost on establishing the rule of law and the transparency of markets. If you think, "They don't need billions in foreign aid, they need to follow our example", then you're likely to be a de Soto fan. That's why he won prizes named after Barry Goldwater and Milton Friedman and Adam Smith.
But de Soto has one decided drawback as a right-wing hero: He really means it. De Soto-ism is not just a compassionate veneer to slap onto a policy of plutocratic class warfare. He really wants a legal/economic system that is lawful and transparent. What's more, he believes that the first world would do well to practice what it preaches to the third world.
So de Soto's view of the 2008 economic collapse is not likely to win him another Friedman award.
One basic idea runs through all de Soto's writings: Markets work well when everybody knows what they're buying and selling, but they work badly when doubts start to creep in. (Maybe what you're buying doesn't really exist, maybe the guy selling it to you doesn't really own it, maybe owning the thing entails drawbacks and restrictions you don't know about, and so on.) When a market is rife with those kinds of doubts, even an honest seller can't get what his property is worth. And sometimes doubt gets so extreme that the market just breaks down, the way credit markets broke down in 2008.
When he looks at third-world urban poverty through this lens (in The Mystery of Capital), de Soto sees that a lot of people are not destitute, but everything they own is either off the books or otherwise ambiguous. They can use it, but they can't take it to a bank and get a loan. So they can't start family businesses or send their kids to college, or do any of the other things that people with recognized property do. De Soto wants to get their unofficial property into a lawful transparent system, so that they can use it as capital.
But when he turns that lens to the 2008 financial collapse, de Soto sees that the first world had the kind of system he wants for Peru, but threw it away by de-regulating.
It is the business of government, de Soto argues, to create and enforce standards that allow people to know what they're buying. In the financial markets, that means allowing investors to know what they're investing in. The great achievement of the West was the creation of "public memory systems" that standardized and kept track of who owned what, who owed what, and who was responsible for what risks. These systems replaced informal relationships and handshake commitments with publicly verifiable facts.
Over the past 20 years, Americans and Europeans have quietly gone about destroying these facts. … The results are hardly surprising. In the U.S., trust has broken down between banks and subprime mortgage holders; between foreclosing agents and courts; between banks and their investors—even between banks and other banks. Overall, credit (from the Latin for "trust") continues to flow steadily, but closer examination shows that nongovernment credit has contracted. Private lending has dropped 21 percent since 2007. Outstanding loans to small businesses dropped more than 6 percent over the past year, while lending to large businesses, measured in commercial loans of more than $1 million, fell nearly 9 percent.
… When then-Treasury Secretary Henry Paulson initiated his Troubled Asset Relief Program (TARP) in September 2008, I assumed the objective was to restore trust in the market by identifying and weeding out the "troubled assets" held by the world's financial institutions. Three weeks later, when I asked American friends why Paulson had switched strategies and was injecting hundreds of billions of dollars into struggling financial institutions, I was told that there were so many idiosyncratic types of paper scattered around the world that no one had any clear idea of how many there were, where they were, how to value them, or who was holding the risk. These securities had slipped outside the recorded memory systems and were no longer easy to connect to the assets from which they had originally been derived. Oh, and their notional value was somewhere between $600 trillion and $700 trillion dollars, 10 times the annual production of the entire world.
De Soto understands that there is no "free" market, if by free we mean unregulated. Markets are created by regulation.
Markets were never intended to be anarchic: It has always been government's role to police standards, weights and measures, and records, and not condone legalized sleight of hand in the shadows of the informal economy. To understand and repair one of mankind's greatest achievements—the creation of economic facts through public memory—is the stuff of nation-builders.
To avoid another 2008 collapse, he argues, we need to re-regulate. Governments need to standardize and keep records on all the new financial instruments, and insist on accounting standards that make them transparent. Otherwise, how can investors know whether they are buying the next AIG?
Best satire of the last month: The Borowitz Report -- Exporting Democracy Has Led to Shortages of it in U.S., Expert Say.
a new study commissioned by the University of Minnesota ... predicts that if the U.S. continues to export democracy at its current pace it may completely run out of it at home by the year 2015.
House Speaker Boehner is quoted as recommending that we deal with the shortage by exploring "alternative forms of government, such as oligarchy or plutocracy."
I never get enough of Jon Stewart talking to Rachel Maddow.
Lawrence O'Donnell introduces his audience to David Barton, a "historian" well-known in right-wing circles. The main drum Barton beats is that separation-of-church-and-state is unhistorical, and he's not above making stuff up to "prove" that point. If you have relatives in the religious right, you may be hearing arguments and examples that come originally from Barton.
People for the American Way have a debunking report.
In 2007, the possible presidential candidates who were making appearances in early primary states went ahead to run, while the ones who weren't, didn't. Using that criterion, Nate Silver says:
the 2012 Republican field is far more defined than most people think, with Mr. Gingrich, Gary Johnson, Mr. Pawlenty, Michele Bachmann, Herman Cain and Mr. Romney as likely’s and Mr. Huckabee, Mr. Trump and Mr. Paul as maybe’s.
In a multiple-bank-shot way, I think Bin Laden's death helps Ron Paul. In the 2008 cycle, his opposition to the wars in Iraq and Afghanistan was an unforgivable heresy among Republicans, so he never got taken seriously. But if we're now in a post-war-on-terror era, he's a legitimate candidate.
The Houston Fox affiliate devoted a news segment to whether Glee is too gay to be on before young children go to bed. Salon sums up the segment as "Is Glee turning our kids gay?" The supposedly neutral interviewer mentions "product placement" -- as if going from straight to gay was like switching between Pepsi and Coke.
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