The Surprising Way to Stop Bankers From Robbing the American People

Pernicious cultural norms inside American banks and regulatory agencies crowd out basic ethics. This post originally appeared on the blog for the Institute for New Economic Thinking. Does morality have a place in the realm of banking and regulation? That it feels awkward to even raise the issue is convenient for bankers who engage in reckless and harmful activities every day without fear of punishment. Ed Kane, professor of finance at Boston College, believes it’s vital to discuss moral questions, in plain English, without abstractions. Following his own advice, he is blunt in characterizing some of the behavior in the banking industry in recent years: “Theft is a forced taking of other people’s resources,” he says. “That’s what’s going on here.” Kane urges a deep inquiry into our culture to understand why bankers so commonly get away with crimes in the United States. In 2007, just before the housing […] Read More

Big Banks Claim Reform Will Hurt the Economy. Here’s Why That’s Bullsh*t.

If we don’t fix this house of cards, it will fall on us again. Anat Admati, who teaches finance and economics at the Stanford Graduate School of Business, is co-author of The Bankers’ New Clothes, a classic account of the problem of Too Big to Fail banks. On May 6th she will address the “Finance and Society” conference sponsored by the Institute for New Economic Thinking, featuring influential women who have challenged the status quo, like Federal Reserve Chair Janet Yellen, IMF Managing Director Christine LaGarde, and Senator Elizabeth Warren. Admati will join Brooksley Born, former chair of Chair of the Commodities Futures Trading Commission, to discuss how effective financial regulation can make the system work better for society. Seven years after financial hell broke loose, Admati warns that we are far from fixing a bloated and dangerous financial system —and that the system can’t fix itself. Why should you care? This […] Read More

2015: What Thomas Piketty and Larry Summers Don’t Tell You About Income Inequality

So-called reasonable proposals on how to fix inequality are really a bunch of hot air. In a  paper for the Institute for New Economic Thinking’s Working Group on the  Political Economy of Distribution,  economist Lance Taylor and his colleagues examine income inequality using new tools and models that give us a more nuanced — and frightening —picture than we’ve had before. Their simulation models show how so-called reasonable modifications like modest tax increases on the wealthy and boosting low wages are not going to be enough to stem the disproportionate tide of income rushing toward the rich. Taylor’s research challenges the approaches of American policymakers, the assumptions of traditional economists and some of the conclusions drawn by Thomas Piketty and Larry Summers. Bottom line: We’re not yet talking about the kinds of major changes needed to keep us from becoming a Downton Abbey society. Lynn Parramore: In America, the […] Read More

How Economists With Bad Ideas Wreck Your Life, America’s Economy, and the World

Author Jeff Madrick discusses what bad ideas cost us, and how to defeat them. Many of us have long known in our guts that something about mainstream economics doesn’t add up. As a new, must-read book proves, we were right. For decades, dubious, false and nonsensical ideas have dominated public discourse and decision-making, from the irrational belief in the efficiency of markets to a willful blindness about the inequalities of wealth and economic opportunity in a system that has been rigged for the benefit of the few. Author Jeff Madrick has just come out with his latest challenge to the pernicious ideas that have captured the minds and clouded the judgment of huge numbers of orthodox economists and the legions who follow their advice: Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World. In this brisk and accessible volume, which should be on Econ 101 syllabi, Madrick outlines […] Read More

The Economics Of Marriage

The marriage rate in the United States has fallen to the lowest level ever recorded.  So why is this happening?  Well, the truth is that there are a lot of reasons why so many young people are choosing not to get married today.  One big reason is money.  Young adults in the U.S. are really struggling to find good jobs, and many are hesitant to take a big step like marriage without achieving a certain level of financial security first.  And as you will see below, many young adults (especially women) do not even want to date someone that is not employed.  In this harsh economic environment, money makes a big difference in the world of romance.  Another big reason for the decline of marriage in America is a seismic shift in cultural attitudes.  Americans (especially young people) do not place the same kind of importance on marriage and […] Read More