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The Power of Market Fundamentalism — Fred Block, Margaret R. Somers | Harvard University Press
"What is it about free-market ideas that give them tenacious staying power in the face of such manifest failures as persistent unemployment, widening inequality, and the severe financial crises that have stressed Western economies over the past forty years? Fred Block and Margaret Somers extend the work of the great political economist Karl Polanyi to explain why these ideas have revived from disrepute in the wake of the Great Depression and World War II, to become the dominant economic ideology of our time. Polanyi contends that the free market championed by market liberals never actually existed. While markets are essential to enable individual choice, they cannot be self-regulating because they require ongoing state action. Furthermore, they cannot by themselves provide such necessities of social existence as education, health care, social and personal security, and the right to earn a livelihood. When these public goods are subjected to market principles, social life is threatened and major crises ensue. Despite these theoretical flaws, market principles are powerfully seductive because they promise to diminish the role of politics in civic and social life. Because politics entails coercion and unsatisfying compromises among groups with deep conflicts, the wish to narrow its scope is understandable. But like Marx’s theory that communism will lead to a “withering away of the State,” the ideology that free markets can replace government is just as utopian and dangerous."
book  publisher  economics  free-markets  markets  markets-uber-alles  critique 
september 2016 by tsuomela
Preventing Economists' Capture by Luigi Zingales :: SSRN
"The very same forces that induce economists to conclude that regulators are captured should lead us to conclude that the economic profession is captured as well. As evidence of this capture, I show that papers whose conclusions are pro-management are more likely to be published in economic journals and more likely to be cited. I also show that business schools’ faculty write papers that are more pro management. I highlight possible remedies to reduce the extent of this capture: from a reform of the publication process, to an enhanced data disclosure, from a stronger theoretical foundation to a mechanism of peer pressure. Ultimately, the most important remedy, however, is awareness, an awareness most economists still do not have."
economics  capture  ideology  markets  capitalism  academic 
september 2014 by tsuomela
Scribe Publications | What About Me?
"According to current thinking, anyone who fails to succeed must have something wrong with them. The pressure to achieve and be happy is taking a heavy toll, resulting in a warped view of the self, disorientation, and despair. People are lonelier than ever before. Today’s pay-for-performance mentality is turning institutions such as schools, universities, and hospitals into businesses, while individuals are being made to think of themselves as one-person enterprises. Love is increasingly hard to find, and we struggle to lead meaningful lives. In What about Me?, Paul Verhaeghe’s main concern is how social change has led to this psychic crisis and altered the way we think about ourselves. He investigates the effects of thirty years’ acceptance of neo-liberalism, free-market forces, and privatisation, and the resulting relationship between our engineered society and individual identity. It turns out that who we are is, as always, determined by the context in which we live."
book  publisher  markets  capitalism  success 
august 2014 by tsuomela
The Internet’s Unholy Marriage to Capitalism :: Monthly Review
"This economic context points to the paradox of the Internet as it has developed in a capitalist society. The Internet has been subjected, to a significant extent, to the capital accumulation process, which has a clear logic of its own, inimical to much of the democratic potential of digital communication, and that will be ever more so, going forward. What seemed to be an increasingly open public sphere, removed from the world of commodity exchange, seems to be morphing into a private sphere of increasingly closed, proprietary, even monopolistic markets."
economics  internet  capitalism  markets  markets-uber-alles 
february 2013 by tsuomela
When It Comes to Security, We're Back to Feudalism | Wired Opinion |
"In this new world of computing, we give up a certain amount of control, and in exchange we trust that our lords will both treat us well and protect us from harm. Not only will our software be continually updated with the newest and coolest functionality, but we trust it will happen without our being overtaxed by fees and required upgrades. We trust that our data and devices won’t be exposed to hackers, criminals, and malware. We trust that governments won’t be allowed to illegally spy on us."
computers  security  markets  audience  trust  business  feudalism 
december 2012 by tsuomela
Contingent valuation - Wikipedia, the free encyclopedia
"Contingent valuation is a survey-based economic technique for the valuation of non-market resources, such as environmental preservation or the impact of contamination. While these resources do give people utility, certain aspects of them do not have a market price as they are not directly sold – for example, people receive benefit from a beautiful view of a mountain, but it would be tough to value using price-based models. Contingent valuation surveys are one technique which is used to measure these aspects. Contingent valuation is often referred to as a stated preference model, in contrast to a price-based revealed preference model. Both models are utility-based. Typically the survey asks how much money people would be willing to pay (or willing to accept) to maintain the existence of (or be compensated for the loss of) an environmental feature, such as biodiversity."
reference  surveys  method  preferences  utility  economics  public-goods  markets 
october 2012 by tsuomela
Podolny, J.M.: Status Signals: A Sociological Study of Market Competition.
" Why are elite jewelers reluctant to sell turquoise, despite strong demand? Why did leading investment bankers shun junk bonds for years, despite potential profits? Status Signals is the first major sociological examination of how concerns about status affect market competition. Starting from the basic premise that status pervades the ties producers form in the marketplace, Joel Podolny shows how anxieties about status influence whom a producer does (or does not) accept as a partner, the price a producer can charge, the ease with which a producer enters a market, how the producer's inventions are received, and, ultimately, the market segments the producer can (and should) enter. To achieve desired status, firms must offer more than strong past performance and product quality--they must also send out and manage social and cultural signals. Through detailed analyses of market competition across a broad array of industries--including investment banking, wine, semiconductors, shipping, and venture capital--Podolny demonstrates the pervasive impact of status. Along the way, he shows how corporate strategists, tempted by the profits of a market that would negatively affect their status, consider not only whether to enter the market but also whether they can alter the public's perception of the market. Podolny also examines the different ways in which a firm can have status. Wal-Mart, for example, has low status among the rich as a place to shop, but high status among the rich as a place to invest. Status Signals provides a systematic understanding of market dynamics that have--until now--not been fully appreciated."
book  publisher  sociology  markets 
october 2012 by tsuomela
Greed and Debt: The True Story of Mitt Romney and Bain Capital | Politics News | Rolling Stone
"Romney, on the other hand, is a perfect representative of one side of the ominous cultural divide that will define the next generation, not just here in America but all over the world. Forget about the Southern strategy, blue versus red, swing states and swing voters – all of those political clichés are quaint relics of a less threatening era that is now part of our past, or soon will be. The next conflict defining us all is much more unnerving.

That conflict will be between people who live somewhere, and people who live nowhere. It will be between people who consider themselves citizens of actual countries, to which they have patriotic allegiance, and people to whom nations are meaningless, who live in a stateless global archipelago of privilege – a collection of private schools, tax havens and gated residential communities with little or no connection to the outside world."
politics  financial-engineering  wall-street  markets  debt  leverage  glocalism 
september 2012 by tsuomela
Kent Greenfield for Democracy Journal: The Stakeholder Strategy
"Changing corporations, not the Constitution, is the key to a fairer post-Citizens United world."
politics  citizen  corporation  law  reform  power  organizations  markets 
august 2012 by tsuomela
What made the creationist footprints in the Giant's Causeway visitor centre? | Andrew Brown | Comment is free |
This is in some ways the cruellest insult to the creationists: it tells them that theirs is just another story, and not, as they need it to be, the truth. But the market doesn't recognise truth, only prices.
creationism  intelligent-design  truth  science  public  markets  standards 
july 2012 by tsuomela
More on DRM and ebooks - Charlie's Diary
"After I recommended that the major publishers drop mandatory DRM from their ebook products, I realized that my essay had elided a bunch of steps in my thinking, and needed to reconsider some points. Then I realized that it's not a simple, straightforward argument to make. Consequently, I ended up writing another essay, although I've tried to summarize my conclusions below. "
publishing  business  business-model  drm  digital  e-books  markets  consumer  genre  fiction 
april 2012 by tsuomela
Book Review: What Money Can't Buy -
"Proponents of market morality claim that it imposes no belief system, but that's just a smoke screen. Choosing to place utility maximization at the core of your belief system is no different from choosing any other guiding ideological precept. Every problem has an incentive-based solution
book  review  economics  morality  philosophy  markets  triumphalism 
april 2012 by tsuomela
Jedediah Purdy for Democracy Journal: The Roberts Court v. America
How the Roberts Supreme Court is using the First Amendment to craft a radical, free-market jurisprudence.
law  supreme-court  regulation  government  federal  markets  capitalism  constitution  markets-uber-alles  free-markets  free-speech  first-amendment 
april 2012 by tsuomela
Hard Truths and a Heavy Heart for the Humanities « Ph.D. Octopus
"If we are going to be serious about helping the academic humanities survive into the 21st century, we need to make the dissertation (a little) less rigorous, but make graduate schools harder to get into, by cutting the number of slots, even of entire departments. That way, only the very best students (ideally) will pursue PhDs, but those who do will likely finish and may actually have tenure-track jobs awaiting them. The most committed and most talented students will get a greater proportion of the financial and faculty support universities can provide. Fewer students will be around to teach, but since there will be fewer programs, they will congregate around top faculty, creating very high level intellectual communities. Yes, it’s elitist and “meritocratic,” insofar as any of this is meritocratic and not purely subjective (another debate altogether). But I can’t think of any other good solution."
academia  humanities  phd  education  jobs  markets  work 
april 2012 by tsuomela
Stumbling and Mumbling: (Non) performativity in economics
"I could, of course, put this more crudely. Economics is performative when it serves the interest of the powerful, and not performative when it doesn’t. In this sense, the problem is not with economics, but with a class structure that causes the “real world” to be a corrupted and perverted form of a market economy."
economics  performativity  power  markets  ideology  class  risk 
february 2012 by tsuomela
Ultrafast Trades Trigger Black Swan Events Every Day, Say Econophysicists - Technology Review
The US financial markets have suffered over 18,000 extreme price changes caused by ultrafast trading, according to a new study of market data between 2006 and 2011
technology  finance  markets  algorithms  technology-effects  economics  econophysics  complexity 
february 2012 by tsuomela
Cartels Are an Emergent Phenomenon, Say Complexity Theorists - Technology Review
Under certain market conditions, cartels arise naturally without collusion. This raises important questions over how the behavior should be controlled.
economics  monopoly  emergence  complexity  markets 
january 2012 by tsuomela
Stumbling and Mumbling: In defence of short-termism
"What’s more, short-termism can protect us from two cognitive biases.
One is overconfidence. Given that the long-term future is unknowable, investment in long-term projects is often founded upon overconfidence about one’s predictions
long-term  short-term  time  decision-making  politics  markets 
october 2011 by tsuomela
Contrary Brin: Libertarians and Conservatives must choose: Competitive Enterprise or Idolatry of Property
"Hence, at last, the supreme irony. Those who claim most-fervent dedication to the guiding principle of our Enlightenment: competition, reciprocal accountability and enterprise -- our neighbors who call themselves conservative or libertarian -- have been talked into conflating that principle with something entirely different. Idolatry of private wealth, sacred and limitless. A dogmatic-religious devotion that reaches its culmination in the hypnotic cantos of Ayn Rand."
conservatism  libertarianism  markets  economics  politics  democracy  science  competition  ideology  wealth  power  money 
september 2011 by tsuomela
The End of Loser Liberalism: Making Markets Progressive
"Progressives need a fundamentally new approach to politics. They have been losing not just because conservatives have so much more money and power, but also because they have accepted the conservatives’ framing of political debates. They have accepted a framing where conservatives want market outcomes whereas liberals want the government to intervene to bring about outcomes that they consider fair.

This is not true. Conservatives rely on the government all the time, most importantly in structuring the market in ways that ensure that income flows upwards. The framing that conservatives like the market while liberals like the government puts liberals in the position of seeming to want to tax the winners to help the losers. "
politics  economics  framing  power  markets  government  conservative  progressive 
september 2011 by tsuomela
Ugo Mattei on the Commons, Market and State | David Bollier
"The real problem is that the State and Market are locked in a symbiotic alliance to the detriment of the commons. This unholy alliance so tenacious because it is embedded in our very phenomenological understanding of life, writes Mattei. We perceive the world as a mechanistic system in which subject and object are separate and distinct, and we supposedly have individual autonomy to do what we wish to act upon the world. As subjects, we tend to pracel out and commodify the world into units that are isolated from the larger whole
commons  state  market  politics  economics  ideology  reductionism  phenomenology  perception  markets 
july 2011 by tsuomela
Diane Ravitch, the Anti-Michelle-Rhee - Washington City Paper
Profile of Diane Ravitch who has changed her mind on education reform from market/business solutions to public education, pro-teachers union.
education  reform  markets  fashion  fads  business 
june 2011 by tsuomela
Special report: What triggered oil's greatest rout | Reuters
"Oil just doesn't fall by 10 percent in the course of a normal day, though. In commodities markets, oil is king, and its daily contract turnover, typically around $200 billion, is usually able to absorb even large inflows or outflows of investment.

The rare moves of $10 a barrel usually are set off by dramatic events -- the outbreak of the first Gulf War in 1991, or the collapse in 2008 of Lehman Bros bank, which both led to recessions.

Of course, there was major news last week. But the daring Pakistan raid that killed Osama bin Laden had done little to shift the balance of oil markets on Monday.

In interviews with more than two dozen fund managers, bankers and traders, no clear cause emerged for the plunge in price. Market players were unable to identify any single bank or fund orchestrating a massive sale to liquidate positions, not even an errant trade that triggered panic selling, as seen in the equities flash crash last May."
economics  markets  computer  financial-engineering  interview  business  trends 
may 2011 by tsuomela
What's Natural? Peter Temin in Conversation with The Straddler
"In my opinion, macroeconomics has lost its way. The kind of models that many people use—general equilibrium models—start from assumptions of perfect competition, omniscient consumers, and various like things which give rise to an efficient economy. As far as I know, there has never been an economy that actually looked like that—it’s an intellectual construct. But many people claim that the outcomes of that economy are natural outcomes. When you say “natural,” you already have an emotionally laden term. Deviations from the “natural”—say, like, minimum wage laws, or unions, or governments that give food stamps, or earned income tax credits—are interferences with the natural order and are therefore “unnatural.""
economics  history  explanation  markets  ideology  naturalism  philosophy  macroeconomic  unnatural 
may 2011 by tsuomela
Reclaiming the Politics of Freedom | The Nation
"From Emerson and Douglass to Reagan and Goldwater, freedom has been the keyword of American politics. Every successful movement—abolition, feminism, civil rights, the New Deal—has claimed it. A freewheeling mix of elements—the willful assertion and reinvention of the self, the breaking of traditional bonds and constraints, the toppling of old orders and creation of new forms—freedom in the American vein combines what political theorists call negative liberty (the absence of external interference) and positive liberty (the ability to act). Where theorists dwell on these distinctions as incommensurable values, statesmen and activists unite them in a vision of emancipation that identifies freedom with the act of knocking down or hurtling past barriers."
politics  american  rhetoric  freedom  markets  conservatism  liberalism 
april 2011 by tsuomela
markets as… «
"OK, this is admittedly very, very loose — but here are some different characterizations of markets, sort of a rough and naive meta-taxonomy of markets:"
markets  metaphor  list  ideas 
april 2011 by tsuomela
Has finance gone too far? | vox - Research-based policy analysis and commentary from leading economists
"Our results show that the marginal effect of financial development on output growth becomes negative when credit to the private sector surpasses 110% of GDP. This result is surprisingly consistent across different types of estimators (simple regressions and semi-parametric estimations) and data (country-level and industry-level). The threshold at which we find that financial development starts having a negative effect on growth is similar to the threshold at which Easterly et al. 2000 find that financial development starts increasing volatility."
economics  econometrics  finance  financial-engineering  wall-street  markets 
april 2011 by tsuomela
Job Market Signaling
"1. Introduction, 355. — 2. Hiring as investment under uncertainty, 356. — 3. Applicant signaling, 358. — 4. Informational feedback and the definition of equilibrium, 359. — 5. Properties of informational equilibria: an example, 361. — 6. The informational impact of indices, 368. — Conclusions, 374. "
economics  work  labor  signals  jobs  markets 
march 2011 by tsuomela
Overcoming Bias : Gambling Save Science?
Academics are trustees of one of our greatest resources – the accumulated abstract knowledge of our ancestors. Academics appear to spend most of their time trying to add to that knowledge, and such effort is mostly empirical – seeking new interesting data. Alas, for the purpose of intellectual progress, most of that effort is wasted. And one of the main wastes is academics being too gullible about their and allies’ findings, and too skeptical about rivals’ findings.
academia  academic  bias  confirmation-bias  gullibility  skepticism  prediction  markets 
december 2010 by tsuomela
Open Left:: The pedagogy of the oppressors: The Cold War university & the roots of our current crisis
"On further reflection, however, I believe I have a clearer view of what's going on here.  Yes, conservative hegemonic warfare plays an important unacknowledged role.  But it has been successful in part because of the nature of the so-called "liberal establishment" which defined itself  in the context of the Cold War."
...Mario Savio, free speech at Berkeley, Clark Kerr and the uses of the university, administrator overreach, decline and fall of liberal education
education  conservatism  markets  ideology  cold-war  economics  meritocracy  academia  decline  liberal  liberal-arts  corporatism 
december 2010 by tsuomela
Innovation Isn’t a Matter of Left or Right -
Steven Johnson responds to the question: "Are you a communist?"

In my research, I analyzed 300 of the most influential innovations in science, commerce and technology — from the discovery of vacuums to the vacuum tube to the vacuum cleaner — and put the innovators of each breakthrough into one of four quadrants. First, there is the classic solo entrepreneur, protecting innovations in order to benefit from them financially; then the amateur individual, exploring and inventing for the love of it. Then there are the private corporations collaborating on ideas while simultaneously competing with one another. And then there is what I call the “fourth quadrant”: the space of collaborative, nonproprietary innovation, exemplified in recent years by the Internet and the Web, two groundbreaking innovations not owned by anyone.
...the fourth quadrant turns out to have generated more world-changing ideas than the competitive sphere of the marketplace.
innovation  creativity  politics  ideology  markets  collaboration  property  intellectual-property  communism 
november 2010 by tsuomela
The Market Confidence Bugaboo - Project Syndicate
Similarly, it would be nice if markets would clarify what they mean by “confidence” so that we would all know what we are really dealing with.

Of course, “markets” are unlikely to do any such thing. This is not just because markets comprise a multitude of investors and speculators who are unlikely ever to get together to publish a “party program,” but more fundamentally because markets have little clue themselves.
markets  free-markets  confidence  economics  ideology 
july 2010 by tsuomela
Evolution and Economics as Different Paradigms XI: Market Fundamentalism : Evolution for Everyone
The term "market fundamentalism" was popularized by George Soros in his 1998 book The Crisis of Global Capitalism and has led a lively existence ever since. It's a great epithet, but what does it really mean to call a set of beliefs fundamentalist? Can the claim be proven? And what's wrong with subscribing to fundamentalist beliefs?
markets  evolution  fundamentalism  philosophy  linguistics  language  altruism  language-analysis 
april 2010 by tsuomela
Findings - Researchers in the Market for Fair-Minded People -
In explaining attitudes toward fairness, Dr. Henrich and his colleagues found that the strongest predictor was the community’s level of “market integration,” which was measured by the percentage of the diet that was purchased. The people who got all or most of their food by hunting, fishing, foraging or growing it themselves were less inclined to share a prize equally.

Grocery shopping may seem an unlikely form of moral education, but the researchers argue in Science that the development of “market norms” promotes general levels of “trust, fairness and cooperation” with strangers.
fairness  morality  culture  ethics  psychology  evolution  cooperation  science  markets  anthropology  cross-culture 
april 2010 by tsuomela
Culture of Enterprise - Home
Influencing current and future world leaders through books, articles, and scholarship that promote a greater appreciation of the cultural foundations of free and humane markets.
markets  capitalism  economics  morality  ethics  philosophy  culture  enterprise  business 
january 2010 by tsuomela
The Whuffie Bank - Reputation is Wealth
In a world where reputation is wealth, only those who do good and well unto others are the richest.
online  culture  reputation  reputation-management  whuffie  markets 
december 2009 by tsuomela
The dread word “competition”… « Check Your Premises
Competition, therefore, is not the crux of the problem. The crux of the problem is profit-seeking and power-seeking. Without these elements, competition ensures that the workers act in the direction of general welfare (the so-called “invisible hand”). But when they are not removed, they ensure that competition steers economic activity towards those avenues which bring the most money and power in, regardless of them being peaceful or coercive, honest or dishonest. And the bigger the economic agents, or the bigger the outside sources of money and power, the less incentive they have to be peaceful and honest.
competition  capitalism  philosophy  ethics  behavior  markets  free-markets 
december 2009 by tsuomela
Rick Bookstaber: Does Financial Innovation promote Economic Growth?
Do innovative products promote growth by increasing market efficiency?

If we were in an Arrow-Debreu world, the answer would be yes, since these products will help span that space of the states of nature. But the incentives behind innovation move in the other direction. The objective in the design and marketing of innovative products is not market efficiency, but profitability for the banks. And market efficiency is the bane of profitability.
economics  wall-street  markets  innovation  growth  information-asymmetry  banking  financial-engineering 
november 2009 by tsuomela
Professionalization in the academy | Harvard Magazine Nov-Dec 2009
[The Marketplace of Ideas by Louis Menand] In this work, Menand examines general education, the state of the humanities, the tensions between disciplinary and interdisciplinary work, and, in chapter four, “Why Do Professors All Think Alike?” The following excerpts, from the third and fourth chapters and his conclusion, probe the professionalization of a research-oriented professoriate and the practice and consequences of contemporary doctoral education, and the resulting implications for liberal-arts colleges, universities, and the wider society.
academia  culture  markets  humanities  crisis  future  professionalization  credential 
october 2009 by tsuomela
Capitalism After the Crisis
We thus stand at a crossroads for American capitalism. One path would channel popular rage into political support for some genuinely pro-market reforms, even if they do not serve the interests of large financial firms. By appealing to the best of the populist tradition, we can introduce limits to the power of the financial industry — or any business, for that matter — and restore those fundamental principles that give an ethical dimension to capitalism: freedom, meritocracy, a direct link between reward and effort, and a sense of responsibility that ensures that those who reap the gains also bear the losses. This would mean abandoning the notion that any firm is too big to fail, and putting rules in place that keep large financial firms from manipulating government connections to the detriment of markets. It would mean adopting a pro-market, rather than pro-business, approach to the economy.
capitalism  recession  ideology  business  markets  free-markets  finance  regulation  america  government  economics  politics  pro-market  pro-business 
october 2009 by tsuomela
Rick Bookstaber: Why Do Bankers Make So Much Money?
Why Do Bankers Make So Much Money?
A tenet of economics is that in competitive markets there are no economic rents. That is, people get fairly paid for their efforts, their capital input, and for bearing risk. They are not paid any more than is necessary as an incentive for production. In trying to understand the reason for the huge pay scale within the finance industry, we can either try to justify the pay level as being a fair one in terms of the competitive market place, or ask in what ways the financial industry deviates from the competitive economic model in order to allow economic rents.
talent  banking  money  income  free-markets  markets  competition  work  labor 
october 2009 by tsuomela — A broken market
Upshot: If you're thinking about collecting contemporary art, don't. You might be OK if you limit yourself to multiples – just remember that prints on paper have to be kept away from daylight. In general, however, the art market is a high-stakes game played among sophisticated insiders, and you weren't invited.
art  markets  collecting 
october 2009 by tsuomela
Interfluidity :: Vanilla afterthoughts
Governments and markets are dissimilar in the form and causes of their mistakes, and the badness of their errors is not uniformly rankable.
regulation  economics  banking  government  markets  free-markets 
october 2009 by tsuomela
Leiter Reports: A Philosophy Blog: Alex Rosenberg on Cochrane and Economics
The first thing a philosopher notes about this notion is that since most people have false beliefs, especially about the future, an efficient market doesn’t internalize knowledge, but only beliefs. If they are mostly false, then the market isn’t efficient at internalizing (correct) information, it’s efficient at internalizing mostly false beliefs. If false beliefs are normally distributed around the truth, then they’ll cancel out and the proof of a probabilistic version of the efficient markets theorem will go through—market prices reflect the truth most of the time. Too bad false beliefs don’t always take on this tractable distribution. Even worse, when enough people notice the skewed distribution of false beliefs, they can make rents, as the markets crash. This is what Cochrane seems to think can't happen. How many times will it have to happen for the Chicago School to give up the efficient markets hypothesis?
economics  free-markets  markets  efficiency  efficient-markets-hypothesis  chicago-school  neoclassical  philosophy  capitalism  recession  ideology  rational-markets 
september 2009 by tsuomela
Economic View - ‘Too Big to Fail’ Is Dangerous, in Finance and Health Care -
by Tyler Cowen. A good argument against too much political influence in banking and health care being bad for both.
politics  economics  favoritism  corporatism  markets  discipline  free-markets  libertarian 
september 2009 by tsuomela
The Limits of Arbitrage « The Baseline Scenario
...arbitrageurs, the very smart and talented traders at hedge funds who will take prices that are out of line and bring them back into line, making a good fee and making prices reflect all available information, the very building block necessary for EMH to work, can’t do their job if they are time or credit constrained. Specifically, if they are highly leveraged, and prices move against their position before they return to their fundamental value – if the market stays irrational longer than they can remain solvent – they’ll collapse before they can do their jo
finance  arbitrage  money  wall-street  banking  financial-engineering  limits  efficiency  markets  free-markets  debt  leverage 
august 2009 by tsuomela
Book Review - 'The Myth of the Rational Market,' by Justin Fox
THE MYTH OF THE RATIONAL MARKET A History of Risk, Reward, and Delusion on Wall Street.By Justin Fox
THE SAGES Warren Buffett, George Soros, Paul Volcker, and the Maelstrom of Markets By Charles R. Morris
book  review  finance  market-failure  markets  efficiency  mythology  ideology  free-markets 
august 2009 by tsuomela
Why markets can’t cure healthcare - Paul Krugman Blog -
One of the most influential economic papers of the postwar era was Kenneth Arrow’s Uncertainty and the welfare economics of health care, which demonstrated — decisively, I and many others believe — that health care can’t be marketed like bread or TVs. Let me offer my own version of Arrow’s argument.
markets  economics  health  medicine  insurance  policy  government  incentives 
july 2009 by tsuomela
Jonathan Wolff: Greed is good (sometimes)
But suppose you are buying meat that won't be supplied for 20 years? Still want to rely on the greed of the butcher? Thought not. By the time you have found out if he is cheating you, it will be too late to switch supplier. When there is a substantial time lag between purchase and consumption, as there is for pensions, savings schemes and sub-prime debt, the market loses its magic and the purchaser is vulnerable.
market-failure  markets  free-markets  time  failure  capitalism 
july 2009 by tsuomela
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