82. Rockefeller and the system

April 29, 2009 § Leave a comment

Here is some wise text

Tarbell rejected that view.

[John Rockefeller’s] importance lies not so much in the fact that he is the richest individual in the world, with the control of the property that it entails; it lies in the fact that his wealth, and the power springing from it, appeal to the most universal and powerful passion in this country – the passion for money. John D Rockefeller, measured by our national ambition, is the most successful man in the world – the man who has got the most of what men most want … Mr Rockefeller is a hypocrite. This man has for 40 years lent all the power of his great ability to perpetuating and elaborating a system of illegal and unjust discrimination by common carriers. He has done more than any other person to fasten on this country the most serious interference with free individual development which it suffers, an interference which, today, the whole country is struggling vainly to strike off, which it is doubtful will be cured, so deep-seated and so subtle is it, except by revolutionary methods. It does not pay. Our national life is on every side distinctly poorer, uglier, meaner, for the kind of influence he exercises.

Tarbell, missing the point that it was the system that made the man, went on to attack the wrong target: “I never had an animus against Standard Oil’s size and wealth, never objected to their corporate form. I was willing that they should combine and grow as big and rich as they could, but only by legitimate means. But they had never played fair, and that ruined their greatness for me.”
Tarbell was excusing the system and blamed it on the man, a common error made by American liberals. The same attitude perseveres on their reaction to the Enron, WorldCom, Citibank, AIG scandals in recent years, that it was the few apples rather than the barrel that were rotten.
Rockefeller, of course, disagreed: “It was the law of nature, the survival of the fittest, that [the small refiners] could not last against such a competitor. Undoubtedly … some of them were very bitter. But there was no band of greedy men plundering them. An able, intelligent, far-seeing organization simply outstripped men in the casual, haphazard way of doing business. That was inevitable.”
Yet the purpose of civilization is to improve on the laws of nature. The fault was in the system, not the persons who excelled in the barbaric game. These robber barons had a common vision of the need to create a centrally controlled order out of decentralized democratic chaos. Above all, they recognized clearly that in a society where wealth was denominated in money, the way to achieve great wealth was to control the nature of money. What they did was to stage what amounted to an autocratic coup d’etat on the United States’ monetary regime. On this most antisocial coup d’etat Tarbell said nothing.

from http://www.henryckliu.com/page70.html


81. The Universities in Trouble

April 29, 2009 § Leave a comment

Amazing to me how peole fail to disaggregate numbers. In this case, apportioning university costs across undergradtaues fails to recognize that the faculty are paid by research grants and very little of what a university does is directly related to undergraduate costs. At 50k per year four undergrads could hire a nobel laureeate to really teach them, say four hours a day!

Since most American colleges have an endowment less than 1 percent the size of Harvard’s, most do not have Harvard’s problem. But they have other problems. The sources of income on which they depend—tuition revenue (at private colleges) and state appropriations (at public colleges), as well as annual alumni contributions (at both)—are under pressure too. Everyone knows about the competitive frenzy to get into a few highly ranked colleges, but in fact most of the 1,500 private colleges in the United States do not attract significantly more applicants than they can enroll. On the contrary, they struggle to meet enrollment targets, especially now that families in economic distress are turning to public institutions, which tend to be cheaper.[2]

via The Universities in Trouble – The New York Review of Books.

80. What Good Is Modern Finance?

April 28, 2009 § Leave a comment


What Good Is Modern Finance?

Modern finance exists to (i) channel purchasing power from households with savings to businesses with investment projects, (ii) improve corporate governance, and (iii) diversify risks. It has been a bust as far as (ii) and (iii) are concerned. And do we really need more than stocks and bonds if we are to do (i)? The argument that derivatives markets need to remain open is an argument that they help in (iii). And that is not a slam dunk.

via Grasping Reality with Both Hands: What Good Is Modern Finance?.

79. Pierre Bourdieu, Tim Geithner, and Cultural Capital

April 28, 2009 § Leave a comment

This shows a new opening inthe financial discussions, brining in culture and tradition. From Baseline..

I don’t know Tim Geithner. But I have no reason to believe he is corrupt. Instead, the simplest explanation of the Times article is that he has internalized a worldview in which Wall Street is the central pillar of the American economy, the health of the economy depends on the health of a few major Wall Street banks, the importance of those banks justifies virtually any measures to protect them in their current form, large taxpayer subsidies to banks (and to bankers) are a necessary cost of those measures – and anyone who doesn’t understand these principles is a simple populist who just doesn’t understand the way the world really works.

Returning to my initial theme, he got the cultural education that rich people get, except instead of just going to the Metropolitan Museum of Art and the Museum of Modern Art, he was educated in the culture of Wall Street. Just like an education in art history is a marker of class distinction that is used to perpetuate class distinction, an education in modern finance is a marker of distinction that sets off those who understand the true importance of Wall Street for the American economy. As long the powerful people in Washington, including the regulators who oversee the financial industry, share that worldview, Wall Street’s power and ability to make money will be secure.

via Pierre Bourdieu, Tim Geithner, and Cultural Capital « The Baseline Scenario.

78. The Green House of the Future

April 28, 2009 § Leave a comment

This is quite good, including Pdf files on each house.

President Obama signaled the country in his speech after the North Carolina win last May that he intended to take actions to widen participation of people in the busi- ness economy. He recalled that for his own father-in-law involvement in his job was central to his life.

The Green House of the Future – WSJ.com.

77. Banks without owners are dangerous

April 28, 2009 § Leave a comment

This whole post is worth reading.

The present situation, in which the government has assumed defacto ownership, through a combination of equity injections, bond guarantees, and asset purchases and guarantees, but refuses to take control, is extremely dangerous.

via Economists View: Paul Krugman: Money for Nothing.

76. Dinner With David Bradley, an A-List Affair – washingtonpost.com

April 27, 2009 § Leave a comment

The need for conversation..

For more than a year, David Bradley, the Atlantic’s soft-spoken owner, has hosted these off-the-record dinners at a specially built table in his glass-enclosed office overlooking the Potomac. And the guests, from Treasury Secretary Tim Geithner to Fed Chairman Ben Bernanke to Jordan’s King Abdullah II, are as A-list as they come.

“It’s just a joy for me,” Bradley says. “These are reflective, considered conversations, which is hard to do when you’re going after headlines for the next day’s publication.” While the guests seem quite open, says the businessman who bought the Atlantic a decade ago, he is new enough to journalism “that I can’t tell the difference between genuine candor and deeply rehearsed candor.”

via Howard Kurtz – Media Notes by Howard Kurtz: Dinner With David Bradley, an A-List Affair – washingtonpost.com.

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