Monday, March 21, 2011

Is Elizabeth Warren the "Keeper of the Secret"? Part I

One of the hallmarks of a politicized society is that people caught up in the mix tend to believe that there is a "keeper of the secret" just over the horizon -- if only we can get this person into office. Lest one think I exaggerate, remember that during the fall of 2008, Barack Obama rode into office on a wave of the worst kind of, frankly, idolatry, as children's choirs literally were singing "Obama's gonna save us" and worse.

(I hope that the Statlers and Walldorfs of this blog will admit that Obama DID run as a Messiah, and his campaign did little to dispel that notion that The Chosen One was going to fix everything. Hmmm. How well is THAT working out today?)

Paul Krugman today has a new "Keeper of the Secret," Elizabeth Warren. Yes, Elizabeth Warren is "gonna save us" if only she can do the job that Dodd-Frank (or, as I like to call it, "FrankenDodd") has declared she will do.

Before addressing some of the specifics of Krugman's column, let me point out that people (like Krugman) who believe that we can have successful centralized government planning of the economy also tend to believe that there is a Special Person, the "Keeper of the Secret" who actually can make socialism or Socialism Lite work without the whole apparatus crashing and burning. Obama was the latest Knight in the White House, and we are told that if only -- if only -- Bobby or Teddy or even John, Jr., Kennedy could have occupied 1600 Pennsylvania Avenue, that today we would be living in a socialist heaven.

Now to Elizabeth Warren and Krugman's latest screed about how the Mean and Evil Republicans are picking on Messiah Lite. First, and most important, the position of "director" of FrankenDodd's "consumer protection agency" is supposed to be appointed by the president but approved by...Congress. So, the same people who screamed bloody murder when George W. Bush appointed people to various positions in the government and did an end run around Congress now are screaming bloody murder because Congress doesn't bow down and worship the person Obama appointed in an end run around Congress.

Sorry, people, if you want to have a politicized society, then you have to understand that in politics, truth and fairness simply don't matter. Krugman embraced that principle long ago and now he is enraged when others do the same thing.

Do you remember when the New York Times and people of Krugman's political ilk were going after Charles W. Pickering, calling him a racist and a Klan sympathizer? Yes, this is the same Charles Pickering who testified in 1966 against Sam Bowers, who at the time had a legal license to murder anyone he saw fit (including Goodman, Schwerner and Chaney in 1964). Bowers had the support of Mississippi's political establishment during that time, so going against him literally meant Pickering's life was in danger.

Furthermore, the Mississippi chapter of the NAACP -- the African-Americans who best knew him -- supported his nomination to be a federal appeals court judge, but the people allied with Paul Krugman successfully filibustered his nomination. The great Left-Libertarian Nat Hentoff -- not someone who might be mistaken for a Klan supporter -- called the whole thing reprehensible and excoriated the NYT and Senate Democrats for their outright lies.

I include this because Krugman seems to be of the belief that only Republicans engage in character assassination for political purposes. In fact, Krugman is a willing participant in character assassination -- when it suits his political goals -- so when he claims that only the other side does it is not something I find credible.

In Part II of this post, I will deal with the specifics of Warren and her role in FrankenDodd. Granted, I am sure that Krugman would say that the only reason I am questioning his column is because I want the Banksters to get away with financial crimes and I want people to go bankrupt. After all, only evil people can disagree with Paul Krugman.


Anonymous said...

Yes, we should never appoint anyone in charge of anything because of the hubris of assuming that we can control anything. Ridiculous and a hyperbolic misstatement of liberal views of the state.

Its like me saying that libertarians and Austrian "school" economists want us to go back to the stone age or some sort of Hobbesian state of nature. Well, maybe that is what your ignorance or twisting of centuries of economic, political, and social thought actually means.

State=BAD!!!! State=Socialism and "enlightened" elites wanting to control your thoughts and actions.

Nonsense. The state, institutions, and people with authority and making decisions are part of human history and part of any serious economic theory (Douglass North for e.g.). I always like how libertarian rants about the slippery slope to socialism or road to serfdom always ignore this ingenious little invention - democracy.

Bob Roddis said...

I think our very own LK suffers from the most metastasized version of this "magic bureaucrat" disease. Despite obvious and well understood Hayekian limitations on individual human knowledge, the "magic bureaucrat" is an omniscient deity able to manage and stimulate that mysterious magical spinning baby toy that is "the economy".

Anonymous said...

Got it all out of your system now, Anonymous? Why don't you check back in when you have a sober thought rather than an incoherent rant against freedom, m'kay?

Mike M said...

There is raging hypocrisy in politics? I’m shocked, shocked to find that there is hypocrisy in politics.
If you have no proper philosophical premise to operate from, a complex world can be very difficult to navigate in.

Bob Roddis said...

The idea that libertarianism wants to go back to a Hobbesian world is nonsense. Libertarians have an appreciation for people as natural thieves, liars and genocidal maniacs. That is the purpose of the impenetrable white line of the non-aggression principle. The major libertarian insight is that the worst of the thieves, liars and genocidal maniacs will tend to be appointed as the "magic bureaucrat" who, of course, can "get things done" without the niceties of due process or morality (the FED??).

Prateek Sanjay said...

Elizabeth Warren, a mere law professor, is unqualified to handle matters of financial markets.

She has not worked in any financial institution. She does not know what goes on every day from the trader's desk. She has not even worked as a financial journalist or even a financial academic.

Her only past experience is in teaching law, grading student's papers, giving law lectures, and publishing articles on law. And if I have to be a little nasty, a Harvard law professor sounds like an ivory tower academic, unsuited for handling the big game in the big jungle. I am sure she is a highly intelligent woman, but what does she have to do with finance?

Would it hurt if the US Consumer Financial Protection Bureau at least had somebody with basic minimum experience? Reminds of C. B. Bhave here in India - a petty civil servant who caused huge losses to mutual funds by ordering them to remove two-part tarriffs.

Mike Cheel said...

The thing that really kills me about these government lovers is that they do not seem to understand not only libertarianism but the realities of the very people they seem to defend.

Libertarians do not oppose having some sort of government. Quite the opposite they believe it has a place in society. What they don't believe in is the extent to which it manifests itself. They believe in personal accountability and personal freedom (which walks hand in hand with that same accountability). They understand that stealing money from people (in the form of taxes) is not charity. They understand that not every outcome is going to be good but much more so in a free market than in a government monopoly.

Seriously folks, take a gander at the people in power. Do you really think they have your best interests at heart?

Anonymous said...

@Mule Rider - actually there was a thought our critique of this blog post. If you want to engage in it feel free. It was probably over your head.

@Bob Roddis - would you then agree that the suggesting that appointing anyone to anything in government based on credentials is not a slippery slope to socialism? Hayekian "principles" were hyperbolic when they were originally stated. The mysterious sovietesque bureaucrat is far distant from a public servant in a liberal democratic state - a fact that always eluded Hayek's mind.

Anonymous said...

Every time I have heard Elizabeth Warren open her mouth it merely demonstrates that she has no idea how markets work. She has probably never even heard of Austrian Economics or even praxeology. She is just another government hack moron from harvard (a favorite of the incestuous ruling class) who runs around calling people greedy and unfair (and she always does so after the fact) in order to promote her own agenda and her own career.

Anonymous said...

Anonymous / Ignoramus at March 21, 2011 11:31 AM & March 21, 2011 2:09 PM --- Elizabeth Warren, regardless of her qualification and intelligence, will be ineffective at BEST, as most government regulatory agencies are (SEC, CFTC, FRB, etc, etc) and will waste taxpayer money. At WORST her agency will compound problems by failing to consider unintended consequences of ill-conceived and arbitrary regulations. Speaking for myself - not any particular school or area of study - the government cannot create wealth or anything else of substance. The Government can only protect wealth (military, police, and courts to protect from coercion and theft in the marketplace). The market will regulate itself and if it fails to do so then people will not participate until another marketplace evolves --- but making people pay for such a bureaucracy that they may not need or want is itself coercion and theft. Imagine that --- coercion and theft, brought to you by your own deity: the government created bureaucracy.

Anonymous said...

Summary – I have no ready criticism for the content of Krugman’s editorial so I’ll argue that he and his ilk are bad people, capable of idolatry and character assassination.

If Krugman is a ‘party shill’ disguised as an academic economist, how are you different?

William L. Anderson said...

I'm not a party shill, nor a political partisan.

Anonymous said...

Really! Your whole blog is dedicated to one person! And you deleted my comment about perfect competition and its assumptions and my critique of Hayek and his ignorance of the fact that a democratic social state is not a slippery slope to a bureaucratic socialist state.

Anonymous said...

Let's respond once more to the other anonymous who called me ignorant.

First, it is amazing that when a government regulatory agency fails it is a judgment against the whole idea of government regulation. But then, business and corporate America seem to fail quite frequently. Where is Circuit City again?

Second, it is always this narrow list of regulatory agencies listed. What about the FAA? NTSB? FMC? NLRB? The list goes on an on. Or are the excessive safety requirements for pilots and aircraft making tickets too expensive for you? Maybe planes should just regulate themselves, and the more crashes there are more people will only select those airlines with safer records. Of course, we would need information about who was safer and choice. Oh, and there would have to be crashes first. Ridiculous.

Anonymous said...

@Anon. I'm interested in your "critique" of Hayek, shame it was deleted. Care to repost?

It better not include some repeat of the tired argument of Scandinavia, since they really aren't social democracies, and in fact are more economically liberalized in many areas than the US currently is.

Bala said...

Anonymous 6:52,

How about refuting this? Regulation is the act of coercing the owner of a property to act in a manner he would not do on his own even though he violates the rights of no one in acting as he would have of his own volition. Regulation per se is therefore a criminal enterprise.

Incidentally, the judgement that regulation is a failure is not passed when an agency fails. Rather, it is passed right at the time of the conception of a regulation.

Do people have a "right to safety"? Just asking because you seem to love the NTSB.

William L. Anderson said...

First, and most important, I have not deleted any comments, including yours. I don't do that unless a comment is libelous, and yours did not fall into that category.

So, if you are going to make false accusations against me, then perhaps you need to post comments on another blog where that behavior is tolerated.

Second, there are problems with Blogger in which comments get deleted (sometimes temporarily, and sometimes permanently) and the person running the blog has nothing to do with it.

Look, given the personal insults that get thrown at me, do you really think I would delete your comments because I did not like them? If I am going to have a blog taking on Paul Krugman, then I have to be ready to accept the personal criticism that comes with the territory.

So, no, I have not deleted your comments.

Bob Roddis said...

1. The mysterious comment deletion problem has been back this past week. It tends to hit longer comments and comments with many links. But I had a short comment disappear today. I re-posted and it stayed.

Last week, I reposted something 5 times before giving up on it. It would appear for about a minute and then disappear.

2. The statists haven't the faintest clue about the basis of Austrian analysis but get hysterically vicious about it. Very odd.

Will said...

I've read a few of Warren's academic papers, and its seems to me that most of her "regulations" boil down to enforcing contracts- which Austrian's should be all.

For instance, open accounting standards. When companies use accounting tricks to hide assets/liabilities off their balance sheets they are committing contract fraud when they sell stocks or bonds whose value is based on that accounting.

Austrian's should also be all for a set of standardized contracts for derivatives that mark to market regularly to avoid fraud (i.e. a derivatives exchange). AIG spent years entering into long positions in housing that it didn't have the assets to back- which I also view as contract fraud.

I doubt Warren will be able to get much done- Wall Street is too tied into government. But I fail to see how Warren is for state planning. It seems to me she is for contract enforcement.

Bala said...

"For instance, open accounting standards. When companies use accounting tricks to hide assets/liabilities off their balance sheets they are committing contract fraud when they sell stocks or bonds whose value is based on that accounting."

Why don't you leave it to companies and investors to decide what kind of accounting standards to follow? Why pre-judge as criminal a person who has not but may commit a criminal act? That's what regulation is essentially about.

ekeyra said...

Hmmm the difference between government failures and private enterprise failures. Circuit city did not provide its customers with what they wanted or failed to do so in an efficient enough manner to continue doing business. They are no longer in business and their resources distribituted to other more successful businesses. When the minerals management service failed utterly in their oversight of gulf shore oil drilling, the woman in charge stepped down and they simply changed their name. When the sec failed to catch bernie madoff in spite of mountains of evidence staring them in the face did anyone even blink or call for someone's job. Thats to say nothing of the sec's monumental backlog of regulatory failings leading to the housing market bubble and its inevitable collapse. When the military, intelligence, and national security apparatus failed on 9/11 they faced no angry constituents wondering why their heads were up their asses. No the entire nation held them up as heros for ... im not sure, some misguided notion that they would prevent this from happening again when they had just shown the world how capable they were of a such preparedness. In short business fail and they go away. Government agencies fail and they get bigger budgets and more regulatory authority.

Is it just me or has dissenting opinion on this blog suffered a lobotomy? AP, while being wrong in fantastical ways at least provided ideas to be discussed rather than the observation that prof anderson went to auburn and never won a nobel prize.

"State=Socialism and "enlightened" elites wanting to control your thoughts and actions. "

... exactly. Because the government convinces people to behave in certain ways through overly convincing persuasion and not the threat of violence.

Mike Cheel said...


"The mysterious comment deletion problem has been back this past week. It tends to hit longer comments and comments with many links. But I had a short comment disappear today. I re-posted and it stayed."

I don't think the issue has to do with the length of the comments because as you have noted both sizes disappear. One thing I am now in the habit of doing is refreshing the actual blog page (not this comment page) to see if the number of comments has incremented. This comment page lies!

Bob Roddis said...

Just in time for our neo-totalitarian commenters who can't seem to "get" the concept of a free society: a review of "Seeing Like a State" by James C. Scott.

When I first read James C. Scott's Seeing Like a State, I was studying at a far-left Canadian university, and in one of its furthest-left graduate programs. I, like many of my instructors and peers, assumed that the proper goal of scholarly research was to help the state help its subjects — with everything from raising crops to raising children. I looked forward to a career as a wise academic providing the state with all the knowledge it needs to improve its subjects' condition. But my statist assumptions came to an end when I read, as Scott's subtitle puts it, How Certain Schemes to Improve the Human Condition Have Failed.

Bob Roddis said...

Following the example of the British and their Mosler-approved hut tax:

“In 19th- and 20th-century Tanzania, most farmers made their living on widely dispersed homesteads, with each family deciding autonomously what to grow where and when. Thus, individual farms adapted day-to-day in their own ecological and social environments. For the government, the cost of sending inspectors to find out what each farm was producing would have been astronomical.

These methods of farming were the object of constant criticism by Julius Nyerere, the Tanzanian president from 1961 to 1985: Independent farming is backward and inefficient. Modern agriculture should be centralized, organized, and communal. From his privileged vantage point, Nyerere could see that the whole population would be much better off if they were "villagized."

So, for the betterment of the people, between 1970 and 1976, Tanzanian government soldiers and bureaucrats forcibly relocated more than ten million farmers (by Nyerere's count) into thousands of artificial "villages." Most new villagers were simply piled into trucks with whatever possessions or livestock they could carry, driven many miles from their old homes, and then unloaded at the site where the village was supposed to be — often just a stretch of road "marked off with a few surveyor's stakes."[1]

Beyond the direct effects of this dislocation, villagization resulted in massive crop failures, destruction of farmland, losses of livestock, widespread hunger, and cholera epidemics. Unsurprisingly, many people simply fled back to their old homes as soon as they could escape.”