Brad replies to Michael P.:
Re:
>"As if he were a school marm correcting wayward children"
Michael. Look what I'm dealing with here:
>... repeated smart-ass intrusions... deigns... self-delusion
>...confirmation of prejudice... disciplinary
>culture of condescension... "brilliant" economist... disgusting
>Schleifer... countries about which he knows very little
>...red-baiting ...preposterous assertions ... produce to order
>analyses "showing" public bad, private good ...how it can enrich me
>personally ...criminal enterprise...
=====
Of these, most were directed at the economics _profession_ and typical
examples of its nature, such as the incredible gall with which your former
roomie can wax lyrical on the inherent corruption of state enterprise whilst
being involved in (and investigated for) allegedly criminal undertakings in
the fire sale that was the privatisation of Russian state assets. Simply to
be associated with the catastrophe of the former Soviet Union's economic
demise should be enough to merit a lower profile, rather than carry on
producing to order analyses which fit the preconceptions of a belief system
you, in political guise, profess to disdain yet, in economist guise, advance
via the solution of systems of equations and regressions "showing" highly
correlated unicausal relationships. I understand that Schleifer and Summers
are pals -- personal loyalty is understandable and even admirable. But it is
still worth pointing out that defending these guys on the basis of their
technical ability as economists serves only to indict the profession as a
whole, if it is somehow thought acceptable that economic "logic" should
prevail over people's lives, regardless of the consequences. This is how it
seems to work at the IMF. If that is what it takes to be a "brilliant"
economist, then let's try to be something else.
BTW, you take offense at my imputing self-enrichment motives to Schleifer.
Surely that's a legitimate assumption. Economists routinely make it
regarding everyone else.
As for you personally, the irritation I expressed is as the result of an
accumulation of factors over a number of discussions and months in which the
_style_, as much as the substance, of your contributions has served to, say,
distract. Maybe this is indicative of what passes for "discourse" at
Berkeley Dept of Economics. It seems to be a very diluted version of what
goes on the NBER. But it's hardly what I (and most others here) regard as
desirable or helpful. To have annoyed the sympathetic Rob so much as to
provoke his outburst ought to tell you to wake up and smell the coffee.
If I regret saying anything, it is in describing the person of Andrei
Schleifer as disgusting. It is his actions that I find disgusting. Until I
meet the man or learn more about his character I should not make such
definitive attributions regarding his personality. I do wonder, however,
just how shameless he can be, given his current plight (which is as nothing,
of course, compared to the plight of the vast majority of those
"beneficiaries" of his and Summers' advice).
If it were clear to me that your contributions here were intended to be
constructive, if you were not so routinely dismissive of points that are
somehow exogenized from the "economic" viewpoint, if you were less inclined
to reproduce standard Cold War liberal interpretations of historical events,
then I would not, could not, use such terms as "deign", "preposterous",
"smart-ass".
For the rest, regarding the IMF my point is simple: the 1976 intervention
can be understood as at least as much a political act as an economic act,
and was instrumental in turning the tide towards Thatcherism and all that
that entailed. The loans were never taken up, but the conditions
nevertheless imposed effectively locked the Callaghan government into a
lingering death and further legitimised the rational madness of its
successors. It's all of a piece, marking also a new form of politicoeconomic
power as exercised by US finance capital over its "allies" and honed to
perfection in the more recent debacles involving Argentina, Indonesia,
Korea, Thailand, etc. Your point seems to be that the IMF is a worthwhile
institution (theoretically yes) and that it provides options for governments
in need of them. Has the IMF ever achieved a notable success? My point was
that the "options" given to Callaghan were not really such at all, and that
the vast majority of opinion, encompassing even the not-at-all-Left like
David Smith and, in truth, Jim Callaghan, agrees that conditionality was
unnecessarily harsh. A prelude to even greater notoriety to come, I say, but
most effective in bringing the UK to heel at a crucial moment. In that
respect, depending upon which criteria are used, UK 1976 counts as probably
the most notable success of all the IMF's supercharged conditionality
interventions. Hell, they didn't even have to lend any money!
As for your treatment of British history, which I find overly simplistic, if
not seriously threadbare, my take on the period rests on a recognition of
the high stakes that were very apparent even then, and, for the suitably
inclined, even more so now. The destabilisation of Harold Wilson's
government by MI5 and BOSS, the efforts of semi-clandestine agencies with
close links to the "Establishment" (comprising military, civil service, City
of London banks, corporate boardrooms, Conservative Party, security services
-- all sharing a common public school Oxbridge educational background), the
feeling of crisis -- all were palpable. A government that comes to power
promising "an irreversible shift" in the distribution of income and wealth,
and appoints Tony Benn as Secretary of State for Industry at a time when he
is making an unprecedented, concerted effort to incorporate Marx into the
pantheon of legitimate Labour Party intellectual sources ... well, you can
imagine the alarm, and the subsequent efforts expended to ensure that the
government's every effort would be thwarted. Coupled with the obvious lack
of enthusiasm on the part of some key Cabinet Ministers, and most obviously
Wilson and Callaghan themselves, having William Simon, Edwin Yeo and Arthur
Burns ride into town with guns blazing was a significant intervention of
itself, and, I say, decisive.
Incidentally, it's more decisive than you might think given their determined
efforts to close a possible credit facility on offer from Helmut Schmidt.
According to Mark Harmon's account,
"During the weeks before the loan negotiations began, the Prime Minister
actively sought help from the Germans and the Americans on sterling
balances, having raised the issue with Chancellor Schmidt and President Ford
when the British loan application was announced. Schmidt visited Britain on
the weekend of 9-10 October for talks; Callaghan told Minister for Energy
Tony Benn that his plan with Schmidt was to have 'a long, comprehensive
financial talk ... Schmidt has got $32 billion in reserves. They could fund
the entire sterling balances' (Benn 1989: 624). According to Callaghan
(1987: 431), Schmidt had been to the United States and found both President
Ford and US Secretary of State Henry Kissinger 'sympathetic' to Britain's
problems, but Secretary of the Treasury William Simon and Governor of the
Federal Reserve System Arthur Burns were 'unhelpful'. When Callaghan asked
Schmidt about German assistance in stabilizing the sterling balances,
Schmidt in reply 'unfolded the picture of the German currency reserves. They
were largely held in dollars and financed the American deficit ... If
Germany were to recall part of her dollar reserves, this, together with
similar assistance from the United States and one or two other countries,
would make it possible to devise a plan that would offset the instability of
the sterling overseas balances and bring much-needed relief. He promised to
follow up this idea with the Americans' (see also Fay and Young 1978, 2: 33;
Bernstein 1983: 450-1).
"It was apparent, however, that there was disagreement among the
German authorities about whether Germany would or should assist the British
with sterling balances. Simultaneous to the Callaghan-Schmidt talks, an
unnamed German monetary official commented in the press upon the need for
'internal discipline' rather than 'large borrowings' (Sunday Times, 10
October 1976, 'Thumbs down,' p. 53). As an anonymous official in the British
Cabinet Office recounts, what Schmidt 'had said expansively over dinner, his
officials resisted right from the start. But Callaghan kept trying. [German
Finance Ministry official] Pöhl was against it. Under the German
constitution, it's not Schmidt's money, it belongs to the Bundesbank, and
that was Pöhl's line' (Bernstein 1983: 451, 438, fn 65; see also Burk and
Cairncross 1992: 66). American officials were adamantly opposed to any
international funding arrangement for sterling balances in advance of the
completion of the IMF negotiations (Bernstein 1983: 442-3, 449). When
Under-Secretary for Monetary Affairs Edwin Yeo visited London in late
September, 'Yeo threatened that Britain would not get the IMF loan at all if
Callaghan continued to try to have a safety net for sterling. 'It's very
dangerous ground,' said Yeo. 'If you sign up with the IMF and take
appropriate action, the balances will look after themselves' (Fay and Young
1978, 2: 33; see also Lever 1989)...
"US Under-Secretary for Monetary Affairs Edwin Yeo became concerned
by suggestions of equivocation in the German position on sterling balances
and flew to Germany in late October to meet with Schmidt. 'He found, to his
relief, that he was preaching to the converted. Schmidt's own advisers had
been insisting that Germany must not undermine the IMF, no matter how keep
the Chancellor was to help Callaghan.' After Yeo's visit, 'Schmidt remained
worried and sympathetic, but he was not willing to act unilaterally to help
the British' (Fay and Young 1978, 2: 34; Bernstein 1983: 451-2). Callaghan
(1987: 432), however, contradicts this account. On 5 November he had a 'long
telephone conversation' with Schmidt.
"'From this emerged an unexpected offer that was to be of tremendous
reassurance during the difficult weeks that followed ... Without any request
or prompting from me, Helmut Schmidt said he felt Germany must be ready to
act when required, in order to make the British government feel a little
more secure. Therefore, on a personal basis, he undertook that if ever an
acute danger of necessity should arise, Britain could draw upon Germany
within twenty-four hours, and the German government would make whatever
improvised arrangements were necessary ... Since he had asked me to regard
this assurance as a personal one, I told only the Chancellor and then
arranged for the Secretary of the Cabinet, Sir John Hunt, to pay a private
visit to Bonn in order that both sides should be clear about what would be
done if we ever needed his proffered assistance.'"
--Harmon 1994, pp.169-70, 172.
For a useful summary of the US Treasury team position:
"The Government was regarded by the international financial community with
distrust and skepticism. As US Federal Reserve Chairman Arthur Burns has
commented, 'I had my doubts whether the British could correct thei faults in
their economic management on their own. You must remember I am a neanderthal
conservative, and naturally suspicious of a Labour Government. I thought it
was a profligate government' (Fay and Young 1978, 1: 33). In the final
months of 1976, Burns and others who regarded the Government with suspicion
and doubt were able to have thir preferences for economic retrenchment in
the UK realized through the IMF."
--Harmon 1994, p. 192.
=====
You don't enforce the minimal--minimal!--requirements of politeness
required for any functioning discourse community that wants to be
anything more than an echo chamber for its dominant tendency. That
leaves me with a problem. How do you suggest that I deal with it?
=====
Let's make a deal: you rein in your propensity for provocation and I'll keep
my suspicions about your motives in check.
Michael K.
