Never Let a Serious Crisis Go to Waste
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6 Byrne, The Occupy Handbook.
7 “Occupiers should not worry about liberal institutions or advocacy organizations hijacking their movement right now. What they should worry about is how they characterize what they are inspiring. For example, the ‘Take Back the American Dream’ campaign is more likely to achieve its agenda because there are people out in the streets demonstrating and creating the climate for people to care about this project. It will likely receive more attention from media and politicians because there is a social movement inspiring discussion about the American economy. There doesn’t need to be a choice between supporting the campaign or an occupation but what people do need to be conscientious of is the fact that conferences, summits, advocacy campaigns, petitions and Internet activism have all been tried and hasn’t had a measurable impact in the past ten years. What hasn’t been tried is the kind of resistance on display in Liberty Park” (http://dissenter.firedoglake.com/2011/10/03/occupy-wall-street-doesnt-need-to-issue-any-demands-yet/). See also Kunkel, “Forgive Us Our Debts,” on the anarchist-inspired concept of “direct action,” which openly conflates means and ends.
8 Greenberg, “What Future for Occupy Wall Street?” p. 47.
9 “[Jackie DiSalvo] hoped that OWS would run candidates in 2012, as the Tea Party did in 2010. But again, she admitted, ‘OWS would never endorse them’” (Greenberg, “What Future for Occupy Wall Street?” p. 47).
10 These observations frequently arise in descriptions of the Tea Party from the left, such as Frank, Pity the Billionaire, and DiMaggio, The Rise of the Tea Party, but they never make the next analytical step to realize this is a signal characteristic of neoliberal political mobilization. The best short introduction to astroturfing in its relation to the Tea Party is the film, Taki Oldham’s (Astro)Turf Wars.
11 The historical connection of Amway to the NTC is discussed by Maureen Tkacik at www.daskrap.com/2012/8/mont-pèlerin-society-john-birch-society-society-pages%E2%80%A6.
12 DiMaggio, The Rise of the Tea Party, pp. 212, 76.
13 Johnson, “Predators and Professors.”
14 At the website www.change.org.
15 This was made clear in a 2012 interview with Dimon: “But when I ask if this episode has made him regret being such an outspoken defender of the banking industry, he looks at me point blank. ‘I’m an outspoken defender of the truth,’ he corrects me. ‘Everyone is afraid of retaliation and retribution. We recently had an event with a hundred small bankers here, and 85 percent of them said they can’t challenge the regulation because of the potential retribution. That’s a terrible thing. Okay? This is not the Soviet Union. This is the United States of America. That’s what I remember. Guess what,’ he says, almost shouting now. ‘It’s a free. Fucking. Country’” (Pressler, “122 Minutes with Jamie Dimon”).
16 I am thinking here specifically of Oreskes and Conway, Merchants of Doubt; Proctor, Golden Holocaust; and Walker and Cooper, “Genealogies of Resistance.”
17 As Congressman Paul Ryan said in his speech accepting the vice presidential candidacy in August 2012, “Our rights come from Nature and God, not from the government.”
18 Friedrich Hayek’s own repudiation of his midlife attempt to hang all the problems of the world on “scientism” in favor of an embrace of his own idiosyncratic understanding of cybernetics and evolutionary theory is a case in point. See Mirowski, “Naturalizing the Market.”
19 Walker and Cooper, “Genealogies of Resistance,” p. 150. Melinda Cooper in particular has been exploring the neoliberal appropriation of nature to construct its modern politics (Life as Surplus).
20 See Aarons, Market Versus Nature, pp. 62–63.
21 “The Intellectuals and Socialism” (1949), reprinted in Hayek, Studies in Philosophy, Politics.
22 Coase, “The Problem of Social Cost.”
23 See Lohmann (all); Friends of the Earth, The EU Emissions Trading System; and Jung, “The EU’s Emissions Trading System Isn’t Working.”
24 This occurred, for instance, in the cap and trade bill which passed the U.S. House in 2009, before it was killed in the Senate. The bill as passed gave away 83 percent of permits for free, with an excess subsidy to the worst polluters of $134 billion (Goodell, “As the World Burns”).
25 “The first carbon trading trial phase in 2005–2007 was an abject failure. At 2298 million tons of CO2, the 2007 cap was actually 8.3% higher than verified 2005 greenhouse gas emissions. Businesses were therefore free to increase emissions—or set emission permits aside for the next EU-ETS phases. Anxious to avoid having to make short-term investments in emissions reductions, industry lobbying against higher, effective targets has been extremely effective. In the current 2008–2012 phase, the average CO2 cap is 2% lower than 2005 emissions. But in seventeen out of twenty member states—including France, Poland and the UK—2012 caps are still higher than measured emissions in 2005. Overall, twenty-one out of twenty -seven member states sought 2012 emissions caps that were higher than 2005 emissions (with the richest EU member state, Luxembourg, pushing for a 52% increase). There are now so many unused permits that most industries covered by the Emissions Trading System (responsible for almost 50% of EU emissions) can legally avoid making any cuts before at least 2016. What’s more, there is no obligation to reduce emissions in Europe. Through the United Nations’ Clean Development Mechanism, EU-ETS sector businesses may invest in projects outside Europe. Known as offsetting, this avoids domestic cuts, frequently even fails to reduce emissions in developing countries, and may also cause significant social and environmental problems” (Friends of the Earth, The EU Emissions Trading System).
26 According to UBS Investment Research, the ETS system has cost $287 billion till 2011 with “almost zero impact” on overall emissions in the European Union, and the money could have resulted in over 40 percent reduction if used in a targeted way, e.g., to upgrade power plants (Maher, “Europe’s $287 Billion Carbon Waste”).
27 Specter, “The Climate Fixers.”
28 This is covered in Cressy, “Geoengineering Experiment Cancelled Amid Patent Row,” with some background information provided by Specter, “The Climate Fixers.” One might regard this incident as another illustration of the themes adumbrated in Mirowski, ScienceMart.
29 This was nicely captured in a cartoon that came out around the time of the Occupy movement. A stereotyped banker is looking out the window at a protester with a sign, “The Sky Is Falling!” The banker spins around and shouts, “Buy the Sky!”
30 Recall Klein’s attack on Inside Job discussed in chapter 1; or see Andrew Haldane’s speech at Jackson Hole in August 2012, “The Dog and the Frisbee.”
31 The best description of such programs (as P-PIP and Term Asset-Backed Securities Loan Facility) and their dodgy nature can be found in Barofsky, Bailout; but see also the various Special Inspector General for TARP reports at www.sigtarp.gov and U.S. Government Accountability Office, Opportunities Exist to Strengthen Policies and Processes.
32 This is the interpretation of Ferguson and Johnson, “Too Big to Bail,” for instance. It was later denied in Paulson, On the Brink.
33 Ferguson and Johnson, “Too Big to Bail: Part II,” p. 16.
34 Barofsky, Bailout, pp. 129–31.
35 Perry Mehrling (The New Lombard Street) has been one of the few to highlight these recent alterations in functions, only to praise them as an obvious extension of Bagehot’s principle of central banks acting as lenders of last resort. He might be less pleased to regard them as one integral component of the neoliberal policy response.
36 Engelen et al., An Alternative Report on UK Banking Reform, p. 112.
37 Friedman and Schwartz, A Monetary History of the United States.
38 It goes without saying that I am not the first to notice the perverse genius of this strategy. See, for instance, Chang, “The Revival—and the Retreat—of the State?”
39 See MacKenzie and Demos, “Credit Default Swap Trading Drops.” This estimate may be limited in its geo
graphic range, and is probably too low.
40 Miller, “Financial Innovation.”
41 Some examples of the “social studies of finance” are MacKenzie, An Engine, Not a Camera; MacKenzie et al., Do Economists Make Markets?; and Preda and Knorr-Cetina, Handbook of the Sociology of Finance. The critique of the role of science studies in helping reify this interpretation of financial innovation can be found in Engelen et al., “Reconceptualizing Financial Innovation.”
42 I refer here to a paper by Donald MacKenzie (“The Credit Crisis as a Problem in the Sociology of Knowledge”), who argues that a shift in cultures of evaluation within the ratings agencies, from older corporate collateralized debt obligations to the newer CDOs composed of mortgage-backed securities, accounted for a number of “slips” when it came to evaluation of the dangers posed by the latter. Of course, MacKenzie realized that the narrative of “technological error” seems on its face implausible (pp. 1830–32); but by focusing so intently upon the narrowly confined world of the low-level analysts and traders, he misses most of the action surveyed in this volume.
43 Shiller, Finance and the Good Society, p. 13.
44 In Norris, “The Crisis Is Over, but Where’s the Fix?”
45 See Litan, “In Defense of Much, but Not All, Financial Innovation” and The Derivatives Dealer’s Club and Derivates Markets Reform; Litan and Wallison, Competitive Equity; Eichengreen, “The Crisis in Financial Innovation”; Shiller, “Radical Financial Innovation,” “In Defense of Financial Innovation,” and Finance and the Good Society.
46 Shiller, “Radical Financial Innovation” and “In Defense of Financial Innovation.”
47 Shiller, Interview on Finance and the Good Society.
48 Ibid.
49 Ibid.
50 The fact that Shiller has a conflict of interest in promoting the Case-Shiller index and his other financial contraptions is revealed by the mission statement of his company, at www.macromarkets.com/index.shtml. He also is part-owner of Case Shiller Weiss, Inc. Some may object that Shiller is not a card-carrying member of the Neoliberal Thought Collective. While true, many other comparable proponents of financial innovation are, such as Robert Litan, research director of the Kauffmann Foundation, and co-author of Litan and Wallison, Competitive Equity. I use Shiller’s quotes in the text because he has been such a high-profile commentator on the crisis.
Index
A
Acemoglu, Daron
Adbusters
Admati, Anat
AEA (American Economics Association),
AEI (American Enterprise Institute)
“After the Crash of 2008” (Prasch), The Age of Uncertainty (PBS series)
Agnotology, defined
Agriculture, Department of
AIG Financial Products
Akerlof, George
Allais, Maurice
AlphaSimplex
American Economic Review
American Economics Association (AEA)
American Enterprise Institute (AEI)
American Finance Association
American Institute of Certified Public Accountants
American Majority
Americans for Prosperity
Ameriquest
Angelides, Phil
Anglo Irish Bank
Animal Spirits (Akerlof and Shiller)
Annapolis Center
AOL
Armey, Dick
Arnsperger, Christian
Aron, Raymond
Arrow–Debreu theory
Arrow, Kenneth
Artaud, Antonin, The Theatre and Its Double,
Atlanta Federal Reserve Bank
Atlas Economic Research Foundation
Atlas Shrugged (Ayn Rand)
Audacity of Intervention
Auerbach, Robert
Austrian School of economics
Austrian-inflected Hayekian legal theory
Austro-libertarianism
Ausubel, Lawrence
B
Bailey, Martin
Baker, Dean
Bank concentration in US
Bank of America
Bank of New York Mellon
Bank of Sweden
Bank of Sweden Nobel Prize
Barclays
Barnett, Clive
Barro, Robert
Basel III
Bayesian Nash equilibrium
Bear Stearns
Beck, Glenn
Becker, Gary
The Beginning of History (De Angelis)
Behrent, Michael
Benjamin, Walter
Benson, Bruce
Berliner Zeitung
Bernal, J. D.
Bernanke, Ben
on asset purchase program
Brunnermeier on
as Chairman of Federal Reserve Bank Board
on CRA
on economic crisis
as economic influence
on EMH
on Friedman
on Great Moderation
on Great Recession
“hold-to-maturity” prices
Kestenbaum on
on Lehman failure
Mirowski on
on mortgage market
on “Panic of 2007” paper
pronounced absolution upon orthodox economics profession
shadow banking
on TARP
testimony before FCIC
Bernard, Andrew
Bernstein, Jared
Bertelsmann AG
Besley, Tim
Bhagwati, Jagdish
Big Lie
The Big Short (Lewis)
The Birth of Biopolitics (Foucault)
Black Rock
Black-Scholes option pricing
Blackstone Group
Blackwater (Scahill)
Blanchard, Olivier
Blinder, Alan
Bloomberg, Michael
Bockman, Johanna, Markets in the Name of Socialism
Body Alteration
Boettke, Peter
Bookstaber, Richard
Bootle, Roger
Born, Brooksley
Boskin, Michael
Bradley Foundation
“Break the Glass: Bank Recapitalization Plan” (Swagel)
Brenner, Robert
Bretton Woods
Bristol University
British Academy
British National Health Service
British Royal Society
Brookings Institution
Brooks, David
Brown, Gordon
Brown, Wendy
Brunnermeier, Markus
Buchanan, James
Buiter, Willem
Bulow, Jeremy
Bush, George
Business Week
Buycott
C
Calabria, Mark
Caldwell, Bruce
Calomiris, Charles
Calvo, Guillermo
Cambridge University
Cameron, David
Campbell, John
Capitalism and Freedom (Friedman)
Carbon emission permits
Cassano, Joseph
Cassidy, John
Cato Institute
CDS (Credit Default Swap)
Center for Audit Quality
Center for Market Processes at GMU
Center for the Dissemination of Economic Information
CETUSA (Council for Educational Travel in the USA)
CFPB (Consumer Financial Protection Bureau)
Change.org
Chari, V. V.
Charles G. Koch Charitable Foundation
Check ’n’ Go
Chicago Law School
Chicago Mercantile Exchange
Chicago School,
China
Christian Scientists
Citigroup
Clarida, Richard
Clark, Greg
Class denial
Clemson
Clinton, Bill
Coase, Ronald
Coase Theorem
Cochrane, John
CoCo bonds
Coffee
Colander, David
Colbert, Stephen
The Colbert Report (TV show)
Cold War
Columbia University
Comitato Addiopizzo
Commodities Corporation
Commons, John
Community Reinvestment Act (1977)
Competitive Enterprise Institute
Complexity
Conflicts of interest in economics
Congress
Congressional Budget Office
Constant, Benjamin
The Constitution of Liberty (Hayek)
Consumer, Credit and Neoliberalism (Payne)
Consumer Financial Protection Bureau (CFPB)
Cooper, Melinda
Corporate Warriors (Singer)
Council for Educational Travel in the USA (CETUSA)
Council of Economic Advisors
Council of Trent
Council on Foreign Relations
Countrywide
Cowen, Tyler
Cox, Christopher
Craigslist
Cramton, Peter,
“Credit Scores,”
Credit Suisse
Crisis as intellectual disarray
Crooked Timber (blog)
Crouch, Colin
Cuomo, Andrew
Curtis, Adam
D
“Dahlem report,”
Daly, Herman
Dark Pools (Patterson)
Darwinism
Davidson, Paul
Davidson, Peter
Davies, Will
Davis, Jared
D.C. Federal Reserve Bank
De Angelis, Massimo
De Grauwe, Paul, “The Scientific Foundation of DSGE Models,” n95
de Long, Brad
D. E. Shaw
de Soto, Hernando
Dean, Mitchell
Debt: The First000 Years (Graeber)
Delphic Oracle
DeMartino, George
Democracy
Derivatives
Democratic Party
Department of Agriculture
Department of Labor
Dewey, John
Dexia
Diamond, Douglas
Diamond-Dybvig model
Dimon, Jamie
Director, Aaron
Dodd–Frank Act