a couple of comments on the deLong/Eichengreen introduction to the re-issued book by Kindleberger:
Kindleberger was great. But these authors are a bit too glib: they slide from talking about a benevolent hegemon to simply a hegemon. The G.W. Bush administration proved the distinction, by trying to impose US-centric, non-benevolent, hegemony. Also, there’s a solution to the hegemony problem that the authors and Kindleberger miss. Instead of having one agency or country (the ECB, Germany, or an outsider such as the US or China) dominate, the Eurozone could have a democratically-run United States of Europe as hegemon, complete with the fiscal union and lender of last resort facility that many recommend for Europe. Of course, the bankers and financiers who created the Eurozone didn’t want that kind of union, since it would undermine their power (and went against their instinctive ideology). Instead, they went for the idea that unity of financial markets would solve all problems, with a Bundesbank-style ECB and a German/French alliance in charge. Also, economists are generally biased against democracy (and in favor of markets). The bankers and their economists dug their own grave (though most of them are still personally profiting). >> when Martin Wolf, dean of the British financial journalists, challenged then >> former-US Treasury Secretary Lawrence Summers in 2011 to deny that >> economists had proven themselves useless in the 2008-9 financial crisis, >> Summers’s response was that, to the contrary, there was a useful economics. >> But what was useful for understanding financial crises was to be found not >> in the academic mainstream of mathematical models festooned with Greek >> symbols and complex abstract relationships but in the work of the pioneering >> 19th century financial journalist Walter Bagehot, the 20th-century bubble >> theorist Hyman Minsky, and "perhaps more still in Kindleberger" (Wolf and >> Summers 2011).<< Of course, Summers didn’t think that Bagehot et al were relevant before 2008. He’s probably forgotten them by now. As the Smartest Economist in the World™, he doesn’t have to be consistent. -- Jim Devine / "As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality." -- Albert Einstein _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
