Skip to comments.MLA “Solves” Financial Crisis
Posted on 02/03/2014 7:06:32 AM PST by Academiadotorg
Usually when a group gets mission creep, its because theyve accomplished their original mission. Yet and still, English professors at the Modern Language Association (MLA) think they can solve Americas financial crisis even while illiteracy is rampant in the United States.
How many errors in the financial crisis could be solved with freshman comp logic? Matthew E. A. Seybold asked a crowd at a panel at this years MLA convention in Chicago. Seybold teaches at the University of Alabama at Tuscaloosa.
Business and economics courses are mired in Marx and not Marx, Seybold averred. Then Seybold went on to quote John Maynard Keynes and George Soros.
Here are a few fun facts on Keynes, courtesy of Dan Mitchell of the Cato Institute: Indeed, its very important to draw a distinction between Keynes, who was wrong on a couple of things, and todays Keynesians, who are wrong about almost everything. Keynes, for instance, was an early proponent of the Laffer Curve, writing that, Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget.
Keynes also seemed to understand the importance of limiting the size of government. He wrote that, 25 percent taxation is about the limit of what is easily borne. Its not clear whether he was referring to marginal tax rates or the tax burden as a share of economic output, but in either case it obviously implies an upper limit to the size of government (especially since he did not believe in permanent deficits).
Nevertheless, given Seybolds pairing of Keynes with Soros, it looks as if the English prof is more admiring of the couple of things the economist got wrong. Seybold admiringly quotes the Soros claim, from his 1987 book The Alchemy of Finance, that he made a fortune because he assumed that the markets are always wrong.
The billionaires sense of right and wrong are a matter of some dispute. Here, Soros signed a consent decree in United States District Court, in a Securities and Exchange Commission case involving stock manipulation, and was fined $75,000 by the Commodity Futures Trading Commission for holding positions in excess of speculative limits, Cliff Kincaid of Accuracy in Media reported in 2004. Stories about Soros rarely, if ever, mention any of his legal problems.
Despite his vision of an open society, he operates an unregulated hedge fund, open only to the super-rich, and is currently fighting a proposal from the Bush-appointed chairman of the Securities and Exchange Commission to regulate and monitor these offshore entities.
Modern Keynesians also tend to ignore the second half of his thoughts on government fiscal policy. They love the first half, namely that government spending should increase and that the government should run deficits during downturns in the business cycle. They ignore completely the other half of this, namely that the government should reduce spending and run surpluses during good economic times to pay for the deficit spending incurred during downturns. Somehow, nobody ever mentions this part of Keynes’ acutal ideas.
Acutally, in theory, I could get on board with ACTUAL Keynsian policies, but only in theory, not reality. If we had a government competent to spend wisely to stimulate the economy during downturns, and if we had a government with the integrity to actually do the right thing and reduce spending and run surpluses during good times, then the Keynsian prescription might not be so bad. Of course, I don’t think there’s EVER been a government that had both of those qualities (or even either one).
Dan Mitchell points this out as well. He, Dan, really is one of the best budget guys around.
The billionaires sense of right and wrong are a matter of some dispute. Here, Soros signed a consent decree in United States District Court, in a Securities and Exchange Commission case involving stock manipulation, and was fined $75,000 by the Commodity Futures Trading Commission for holding positions in excess of speculative limits,
Sloppy thinking here, probably deliberate. Soros talks of a market being "right" or "wrong" in the sense that prices reflect fundamentals rather than short-term BS, political machinations, etc. I can't even believe that the writer pretends that it's the same as legal vs illegal.