But instead we take advice from people who've never even started their own business on how to govern the whole country? — Gitonga
you have nothing to worry about. — Alejandro
But against those who warned, most were convinced that banks knew what they were doing. They believed that the financial wizards had found new and clever ways of managing risks. Indeed, some claimed to have so dispersed them through an array of novel financial instruments that they had virtually removed them. It is difficult to recall a greater example of wishful thinking combined with hubris. There was a firm belief, too, that financial markets had changed. And politicians of all types were charmed by the market. These views were abetted by financial and economic models that were good at predicting the short-term and small risks, but few were equipped to say what would happen when things went wrong as they have. People trusted the banks whose boards and senior executives were packed with globally recruited talent and their non-executive directors included those with proven track records in public life. Nobody wanted to believe that their judgement could be faulty or that they were unable competently to scrutinise the risks in the organisations that they managed. A generation of bankers and financiers deceived themselves and those who thought that they were the pace-making engineers of advanced economies...
So in summary, Your Majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.
Economists are full of shit
Which actually they don't run.Instead of the economy being run by economists — Gitonga
Entrepreneurs are far more in charge of the economy than economists. Although the majority are likely from middle class background with good education (the school dropout billionaires are few).we should ask entrepreneurs how to run the economy especially those from poor backgrounds because they'd know what needs the most priority in terms of how to succeed financially. — Gitonga
You confuse the economy here with government policies. Government economic policy is the small pond where economists cackle to each other. Even the economists in central banks aren't the ones calling the shots behind closed doors. Reality check: the economy isn't run by the government in Western countries. China is the example of basically fascism where the government puts down just where the economy will go, but not the West.But instead we take advice from people who've never even started their own business on how to govern the whole country? — Gitonga
summary there should be no "economist" that hasn't first started their own business that isn't a consultancy. — Gitonga
Economies are insanely complicated, so we must take many variables for granted and creat core ideas, such as that individuals are always maximizing, which in turn may even be wrong. — Alejandro
Everything we eat turns to shit. — Frank Apisa
You never think that the river will flood past the mark, even if had flooded past many other marks. That is how we think, sadly — Alejandro
Everyone then who hears these words of mine and does them will be like a wise man who built his house on the rock. 25 And the rain fell, and the floods came, and the winds blew and beat on that house, but it did not fall, because it had been founded on the rock. 26 And everyone who hears these words of mine and does not do them will be like a foolish man who built his house on the sand. 27 And the rain fell, and the floods came, and the winds blew and beat against that house, and it fell, and great was the fall of it.
in a free private enterprise exchange economy, government’s primary role is to preserve the rules of the game by enforcing contracts, preventing coercion, and keeping markets free.
(Milton Friedman)However, there are some items where it is not feasible for everybody to do his own thing.
There are some cases in which you must have uniformity, some cases in which the answer
must be the same for all the people. The most obvious example is in the case of national
defense. There is no way in which some people in a country can be engaged in an
international war and other people in a country can be not engaged in that war. The decision
whether the country is at war is a yes or no decision that must be the same answer for all.
Education is today largely paid for and almost entirely administered by governmental bodies or non-profit institutions. This situation has developed gradually and is now taken so much for granted that little explicit attention is any longer directed to the reasons for the special treatment of education even in countries that are predominantly free enterprise in organization and philosophy.
What’s interesting is that while the article jettisons one legal reality—the corporation—as a mere legal fiction, it rests its entire argument on another legal reality—the law of agency—as the foundation for the conclusions. The article thus picks and chooses which parts of legal reality are mere “legal fictions” to be ignored and which parts are “rock-solid foundations” for public policy. The choice depends on the predetermined conclusion that is sought to be proved.
A corporate executive who devotes any money for any general social interest would, the article argues, “be spending someone else's money… Insofar as his actions in accord with his ‘social responsibility’ reduce returns to stockholders, he is spending their money.”
How did the corporation’s money somehow become the shareholder’s money? Simple. That is the article’s starting assumption. By assuming away the existence of the corporation as a mere “legal fiction”, hey presto! the corporation’s money magically becomes the stockholders' money.
On the grounds of consequences, can the corporate executive in fact discharge his alleged "social responsibilities"? On the one hand, suppose he could get away with spending the stockholders' or customers' or employees' money. How is he to know how to spend it? He is told that he must contribute to fighting inflation. How is he to know what action of his will contribute to that end? He is presumably an expert in running his company--in producing a product or selling it or financing it. But nothing about his selection makes him an expert on inflation. Will his holding down the price of his product reduce inflationary pressure? Or, by leaving more spending power in the hands of his customers, simply divert it elsewhere? Or, by forcing him to produce less because of the lower price, will it simply contribute to shortages? Even if he could answer these questions, how much cost is he justified in imposing on his stockholders, customers and employees for this social purpose? What is his appropriate share and what is the appropriate share of others?
The argument is that businessmen may do more than just maximise profit. The counterargument, that they cannot fix inflation, does not follow. — Banno
More like the non sequitur criticism hurled at Friedman/economics: "You mean that economic theory assumes businessmen doing business? What about the greater good for the society and what about the environment??? When you don't have those in the most basic economic model it is disgusting!!! Shame on you."Your counter appears to be the non sequitur that businessmen should not try to fix the world.
Sure. Start small. — Banno
You don't appear to be addressing the actual critique. Meh. — Banno
Which amounts to: we don't know what to do, so we should do nothing. — Banno
This kind of nonsense is usually directed at the wage earner and the labor unions: to do "their share" in fighting inflation. Perhaps the flimsy argument can be hurled at companies and corporations too. Inflation, just to remind us, is basically a monetary phenomenon resulting of government spending and the printing of money. — ssu
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