Monday, December 15, 2014

Why Repealing “Push-Out” Doesn’t Matter, and Why It Does | The American Conservative

Why Repealing “Push-Out” Doesn’t Matter, and Why It Does | The American Conservative:

From my perspective, we’ve never grasped the nettle of what we want our banking system to do. Classically, banks turn savings into capital, and classically they do it pretty directly, by taking deposits and lending to businesses and consumers. Banks are supposed to be good at evaluating the individual risks associated with these loans, as well as constructing portfolios of sufficient diversification to minimize the risk of them getting any of those individual evaluations wrong. Bank regulation is supposed to keep banks from pushing the envelope on either front in the interests of higher profit.
In our modern world, most of what banks do is intermediate in more complicated ways. They don’t do a whole lot of evaluation of individual loan decisions; instead, they are expert at aggregating and repackaging financial risk. The upside to this is that a much larger world of borrowers can access a much larger world of lenders, which should push down the cost of lending generally, and thereby facilitate growth. The downside, which has only manifested itself over time, is a financial system with an ever-increasing aversion to real risk (because nobody involved in large institutions can really evaluate it, and small institutions cannot achieve economies of scale to compete effectively with the large ones), coupled with an ever-increasing appetite for complexity that provides inherent reflexive self-justification (you need a really complex and well-paid operation to manage that complexity, so finance can never reliably be shrunk as a percentage of the economy).
I can’t help but believe that financial regulation and innovation in capital rules has facilitated the above development. In a world where hedge funds do more and more of the direct lending to small businesses – the kind of activity that used to be bread-and-butter for FDIC-insured banks – whatever financial regulation is doing, it isn’t forcing insured banks to return to their “proper” core economic function. And the kinds of activities that 716 tries to push out into uninsured subsidiaries are precisely the kinds of activities where much of the real risk lies in the tail of the distribution – the place where crises come from.
The repeal of 716 matters not because “push-out” was such a successful or important reform, but because it shows how the terms of debate have changed. We’re now debating whether it’s “time” to weaken financial reform, and let the banks operate more “efficiently,” when financial reform never actually achieved its core goal of taming finance’s role in the economy.
The core question is not whether uncleared derivatives are too risky to live in an insured bank, but whether we’re creating incentives to take risk or to hide it. Banks are supposed to do the former. They have a lot of natural incentives to do the latter. Financial regulation needs to be exceptionally vigilant about sniffing out that kind of behavior and punishing it. Encouraging banks to stuff those risks in an uninsured subsidiary that could then, in a crisis, bring down an insured bank doesn’t strike me as an especially auspicious solution. Scrapping that solution because it isn’t capital efficient, and replacing it with nothing, is even more alarming, because it implies that no solution is necessary. Bankers and politicians agree: the problem no longer exists. Which is exactly when we should start worrying that it’s about to smack the economy in the face yet again.

Can We Criticize Foucault? | Jacobin

Can We Criticize Foucault? | Jacobin:

I don't claim to understand this interview fully; indeed, it references many thinkers I've never even heard of, let alone read, but still:

Foucault was highly attracted to economic liberalism: he saw in it the possibility of a form of governmentality that was much less normative and authoritarian than the socialist and communist left, which he saw as totally obsolete. He especially saw in neoliberalism a “much less bureaucratic” and “much less disciplinarian” form of politics than that offered by the postwar welfare state. He seemed to imagine a neoliberalism that wouldn’t project its anthropological models on the individual, that would offer individuals greater autonomy vis-à-vis the state.
Foucault seems, then, in the late seventies, to be moving towards the “second left,” that minoritarian but intellectually influential tendency of French socialism, along with figures like Pierre Rosanvallon, whose writings Foucault appreciated. He found seductive this anti-statism and this desire to “de-statify French society.”
Even Colin Gordon, one of Foucault’s principal translators and commentators in the Anglo-Saxon world, has no trouble saying that he sees in Foucault a sort of precursor to the Blairite Third Way, incorporating neoliberal strategy within the social-democratic corpus.

Friday, December 12, 2014

it’s the economists, stupid |

Over the past fifty years, while sociology was looking inward, economics became the master policy science. Economics has a powerful set of tools, and lots of meaningful policy insights. But it wasn’t simply natural and inevitable that economics would become the dominant way of thinking about policy, and it didn’t happen overnight. It took decades of work, and there were at least four components to its success.
1. Economists established organizational footholds in government. The Council of Economic Advisers, created in 1946, was the first big success on this front. But there were others. The Planning-Programming-Budgeting System fad of the mid-1960s did not transform budgeting. But it seeded policy planning offices, typically economist-led, in nearly every executive agency. The Congressional Budget Office run by economists, was started in 1975. OMB’s Office of Information and Regulatory Affairs, OIRA, which employs lots of economists, was created in 1980. It’s easier to have a say if you’re already in the room.
2. Economists successfully exported their ideas to law and policy schools. By the early 70s, economics had made substantial inroads into law schools, with most top schools offering a course in economic analysis. Classes on antitrust and regulation had already added substantial economic components. Economics was integral to the creation of public policy programs, which did not exist before the mid-1960s and which were typically organized around a microeconomic core. This didn’t turn lawyers or policy analysts into economists, but it did familiarize them with an economic style of reasoning that their older counterparts hadn’t encountered.
3. Economists linked successful administrative techniques with disciplinary expertise. Cost-benefit analysis is the best example here. It originated (in the U.S.) with engineers carrying out water resources policy. But in the late 50s, economists grounded these bureaucratic practices in the framework of welfare economics. Over the next several decades, economists worked to expand the applicability of cost-benefit analysis by, for example, developing new ways to value life, or to measure the recreational value of natural resources. Economics didn’t invent cost-benefit analysis. But it made it its own, to its own benefit.
4. Over time, economists expanded into more policy domains, encroaching on the turf of competing experts — or converting them. Economists weren’t always go-to experts in education policy, or healthcare policy, or on crime. But over time, they staked claims in these areas. In the process, other types of experts — sociologists, psychologists, natural scientists — lost ground. In antitrust policy, economists not only gained a role for themselves, but converted lawyers to their way of thinking. I don’t want to overstate this; clearly economics has not entirely displaced other disciplines. But, just as clearly, it has gained ground.
This is “how economists succeeded.” I’ll save the question “why were they able to succeed” for another day. 

Thursday, December 11, 2014

Here's the Ugly Side of Bipartisanship | Mother Jones

Solid common sense from Kevin Drum:

This is one of those things that demonstrates the chasm between political activists and analysts on the one side, and working politicians on the other. If you take a look at the bill, it does indeed have a bunch of objectionable features. People like me, with nothing really at stake, can bitch and moan about them endlessly. But you know what? For all the interminable whining we do about the death of bipartisanship in Washington, this is what bipartisanship looks like. It always has. It's messy, it's ugly, and it's petty. Little favors get inserted into bills to win votes. Other favors get inserted as payback for the initial favors. Special interests get stroked. Party whips get a workout.
That's politics. The fact that it's happening right now is, in a weird sense, actually good news. It means that, for a few days at least, politics is working normally again.
I understand that this sounds very Slatepitchy. But it's true. Even at its best, politics is lubricated by venality, ego, and mutual backscratching. And you know what? By the normal standards of this kind of stuff, the obnoxious riders in the current spending bill are pretty mild. Really. The only one that rises above the level of a political misdemeanor is the provision that allows banks to get back into the custom swaps business, and even that's hardly the end of the world. Swaps may have provided a tailwind to the 2008 financial collapse, but they were far from its core cause.
So should working politicians avert their gaze from the muck and vote to keep the government functioning? Of course they should. Government shutdowns are immensely costly in their own right, after all. This kind of crass calculus sucks, but that's human nature for you. All things considered, I'd say we all got off fairly easy this time around.

Tuesday, December 9, 2014

Hindi cinema and the Anglophone viewer: MK Raghavendra on the new Bollywood

Hindi cinema and the Anglophone viewer: MK Raghavendra on the new Bollywood:

In the last decade and a half, the pendulum, propelled by rapid globalisation and the “India Shining” narrative, has swung very far in the other direction. In a shrinking world (or in a world that upper-class Indians can convince themselves has shrunk), our films have elaborate premieres at international festivals; American stars like John Travolta and Kevin Spacey shake a leg to the “lungi dance” at our award shows; the multiplex culture has seen many seminal movies being targeted at an audience that travels widely and for whom English is a first language. MK Raghavendra’s new book The Politics of Hindi Cinema in the New Millennium is about this shift in Hindi cinema’s idiom in the years following economic liberalisation. Its thesis is that during this period, films have increasingly been made for Anglophone viewers – so that the underprivileged have been marginalised or ceased to be subjects of the new cinema – and that the state’s withdrawal from the public sphere has had notable consequences for the filmic treatment of patriotism, community, aspiration and politics. Raghavendra proposes that even when the films themselves are celebratory, they carry bleak implications for the idea of an Indian “nation”.
Needless to say, this is a very big topic, and he tackles it by looking closely and in an organised manner at a number of key films released between 2001 (the year of Dil Chahta Hai, Lagaan andGadar) and 2012 (Paan Singh Tomar) – what are their implications and undercurrents, what might they tell us about the post-liberalisation nation? Thus, for instance, the section on the feel-good Lage Raho Munnabhai notes the curious, cynical ways in which Mahatma Gandhi’s teachings have been transformed and re-applied to the imperatives of modern India, while films such as Bunty aur Babli are analysed in terms of how the go-getting entrepreneurial spirit is now celebrated without agonizing much about moral compromises. Overall, the accent is on films that have been successful – to some degree or other – across India, but the choice of movies is also a reminder that the line between the categories “mainstream” and “non-mainstream” is now less clear than it was in the “commercial film vs parallel film” (or Manmohan Desai vs Shyam Benegal) era. There are blockbusters by Karan Johar and Farah Khan (Kabhi Alvida na Kehnaand Om Shanti Om respectively) and a stylish, glamorous thriller (Dhoom 2) but also lower-key movies such as Nagesh Kukunoor’s Iqbal and Anusha Rizvi’s Peepli Live; there are relatively commercial works by respected auteurs (Vishal Bhardwaj’s Kaminey, Mani Ratnam’s Guru), alongside the oeuvre of that most self-consciously “socially conscious” director Madhur Bhandarkar.

Tuesday, December 2, 2014

Airline seating as symbol and metaphor of inequality

Airline interiors are clearly interesting spaces to think about technology and politics.

Sociologist Elizabeth Popp Berman has a nice blog-post on orgtheory where she computes Gini indexes for the interior of different aircraft, based on the space they allocate to different classes of passengers (first, business, economy).

Speaking of transatlantic flights, she comments:
Unsurprisingly, though, these air-beds take up even more space than a nice comfy first class seat. So if we look again at how the space is distributed, we now have 21% of the people using about 40% of the plane, 27% using another 20%, and the final 52% using the last 40%. The Gini index has now increased, to 25. 
Of course, I’m fully aware that a very small proportion of the Earth’s population can afford airline tickets in the first place, so we’re really seeing growing inequality between the 10%, the 1%, and the 0.1%. (I assume the 0.01% have jet shares?)
Nevertheless, it’s not often you see such a clear visual representation of our collective acceptance of the right of a small fraction of people to consume a very disproportionate percentage of resources. I wonder how much of the shift is actually driven by increased inequality, as opposed to improved capacity for price discrimination? [my emphasis]
Taking her point one step further, on the Crooked Timber blog, sociologist Kieran Healy asks: what would airplane interiors actually look like if they were spatially representative of US income inequality.  Turns out they would look something like this (and interestingly, the people who get the most squeezed are those that fly in business, rather than economy):

All of which is to say: you should go read both blog-posts.  

Saturday, November 29, 2014

How the Strand Keeps Going in the Age of Amazon -- Vulture

Where The Strand gets its new books from: 

All of this suggests that the Strand is a used-book store. It isn’t, not exactly. Over the past decade or so, new books have come to represent about 40 percent of sales. They constitute, Bass explains, a more predictable business: “New books, we can sell 50, 100, 200 copies of. I make less money, but it’s a little bit more scientific. The used-book business, we have a bigger market — of course, we have to carry a bigger inventory.”
Those new books are also profitable because of a source almost unique to the Strand: broke editorial assistants. When the Strand buys their review copies, it pays about a quarter of the cover price, sometimes less. They’re indistinguishable from new, and the Strand sells most of them as such. (When Bass buys from wholesalers, he generally pays about 40 percent of list.) Publishers hate this gray market but accept it; one book publicist I know cringes when she sees her press releases peeking out of copies at the store. Bass shrugs: “I tell them it’s the cost of doing business.”