No comment: an apology

It does raise the general issue of how much lobbying is going on in the quotes that various analysts seem happy to supply to the meeja.

Daniel, who would you recommend to us to read about the current crisis? I usually read Doug Henwood, but he doesn’t have anything out that I know of on the proposed $700 billion bailout, and he hasn’t updated his RSS feed from his radio show in a while. Anybody else in mind?

Interesting. What about a public policy/greater good argument– shouldn’t the people who actually know about what’s going on in the market have a say or an influence on what’s going on now in the public sphere? Note that I respect the reasons you’ve given and I’m not trying to persuade you to do something you regard as unethical– just curious about your thoughts on the question.

I second what Modesto Kid says — not just honest and well-phrased, but enlightening (but only about those things you intend to be enlightening about). I don’t think an apology is necessary actually, but the post is appreciated anyway.

All understandable.

A couple of months from now can you give us scoop? History is always more interesting than current events anyway.

at least give us a brief heads-up before joining the flight of the global elite to the secret space-station orbiting on the dark side of the moon…?

And be accused of pumping if Virgin Group should go public again?

I hope this doesn’t affect John Emerson’s crush on you.

Prince Albert.

I already wrote Dsquared’s refusal for him on the other thread. And all I said was that Dsquared is less nasty, brutish, and short than you’d expect from a Welshman.

I suppose this means more blogging about Zambia.

This is such a shame. Considering how dsquared feels, IIRC, about people writing about things outside their realm of expertise (eg Eric Raymond), its kind of funny that he can’t blog about his day job just when it gets particularly interesting.

Good sources of financial commentary for the unversed reader:

Krugman (http://krugman.blogs.nytimes.com/), Brad DeLong (http://delong.typepad.com/), Mark Thoma (http://economistsview.typepad.com/), Nouriel Roubini’s site (http://www.rgemonitor.com/)

I’d recommend Calculated Risk for those looking for up-to-date information on goings-on. Second the thought of looking at Krugman’s NYT blog.

Jonathan 09.22.08 at 7:53 pm

” Has anyone come across any arguments that insufficient executive compensation (not just overtaxation) is responsible for the current crisis?”

I haven’t, but that’s because I don’t read the WSJ editorial page.

If we act like ignorant peasants, it’s because that’s what we are. Basically, the general public is fucked to the extent that the important knowledge is on the market. At most you get what you pay for.

If you watch TV you pay nothing and get less than that. If you read the Times, you pay — what, a dollar? — and get a little something. But you’re still at the mercy of someone who can afford the pros.

Most of us basically just are going to sit and watch and hope the roof doesn’t fall in on us personally, and we can do that withiut Dsquared’s help.

Speaking as a currently former financial risk management consultant, sidelined whilst the playing field is relandscaped, the best out there is Yves Smith:
http://www.nakedcapitalism.com/
The blogroll there is also the most select.

(No I don’t blog on it myself, for many of D^2 reasons, as well as others.)

The comment number did shift. My comment was originally #20. I think what happens is that some innocuous messages get caught in the spam queue, and when they get approved, they throw off the numbers. I’ve seen it happen before here at CT.

it’s possible to arrange your life so that you get paid for analysis that you give out more or less freely, working for academia or for a nonprofit or for the media

yeah, but those jobs all involve equally serious ethical compromises; I certainly wouldn’t trust myself if I worked for a thinktank. The only way I would be able to be totally candid about financial markets is if I became incredibly rich and was live off an independent income like Nicholas Taleb, and I am happy to confirm that this is indeed my goal, albeit currently somewhat a remote one.

Rich, you’re conflating nonfungible kinds of practice. The alternatives (that is to say red herrings) you suggest work off disparate information bases using a different mix of analytical tools.

(Which is, to say, I entertain d^2’s normal mode of writing, and was hoping it would show up on this topic as well. Oh well.)

(IAND2)
Bad credit was extended in the first place because, if the property market is rising, it doesn’t really matter whether or not a mortgage will be paid in full – the bank makes money on the repayments that do come in, and when the home-owner stops paying, they still have an asset worth more than the outstanding mortgage.
When the property market starts to fall, if a borrower stops making repayments, the remaining asset is worth less than the remaining debt, so the banks are open to being stuck with losses.
As I understand it, the Paulson plan is for the government to buy all these mortgages, taking on whatever losses that entails. That wouldn’t have any effect on the rate of repossessions. One of the ideas being floated around is to allow homeowners to go to the courts to renegotiate their mortgages or repayment schedules or something, which is an attempt to reduce repossessions.

This is such a shame. Considering how dsquared feels, IIRC, about people writing about things outside their realm of expertise (eg Eric Raymond), its kind of funny that he can’t blog about his day job just when it gets particularly interesting.

This is a general problem with professionals, though; there are usually both potential conflicts of interest and a danger of revealing confidential information when they talk about the things they know most about. An exception is that academics are unusually free to gab about their subject of expertise, but even they can’t talk about something that might cause them to get scooped on a work in progress. It does put a limit on how informed free public chatter can be.

This is a general problem with professionals, though (…) It does put a limit on how informed free public chatter can be.

I’m not saying that there aren’t potential conflicts of interest etc. especially when it comes to law and finance, but I know a lot of professionals who are very outspoken about what goes on in their field of expertise. They tend to use disclaimers like
the views and opinions expressed herein do not necessarily state or reflect those of my employer.

@47: but he’s paid for his views, by people who want his views, not “his employer’s”. That’s rather the point.

Rarely have I seen such a sensible and self-evident OP quibbled about so pathetically…. And yet no one has managed to come out with “He’s a witch, burn him”, which, given the press coverage of the last few days, would seem like a consensus view in some parts. Failure of imagination all round, I say.

Lex, I was responding to Matt’s comment, not the main post.

Turned me into a toad, he did.

Dateline: London, 2028: Loking back from te persepctive of 20 years on the Great Crash of 2008 and the ensuing Great Depresssion II, we can see that theee was one menemt when everything might have been changed; one man with the wisdom, strength and knowledge to save the world from catastrophe, who nevertheless decliend to act. You know him now as the fabulously wealthy Duke of Llanfairpwllgwyngyllgogerychwyrndrobwllllantysiliogogogoch, whose stock market clients came to rule us all in the aftermath of general financial collapse. Back in ’08, however, he was still merely Daniel Davies, and he explained his reasons for not sharing his wisdom with the world in this post on the obscure blog Crooked Timber . . .

whose stock market clients came to rule us

Don’t miss this once in a lifetime unique opportunity to become one of them. CALL NOW. Only $69.99.

Rather than just say that you’ve chosen a high-paying job in which you serve rich clients, not the public

I do actually say this, in points 4 and 6 above. And I don’t really accept this characterisation of my job unless it’s meant in the same utterly harmless sense in which the coat-check girl at the Ritz also serves rich clients rather than the general public. I do write for this blog and contribute free content in the spirit of the Internet, and I do genuinely regret that I’m in a position where I’ve got a conflict of interest between my job and this blog, but I don’t see how anyone can realistically believe I’ve got any implied duty to the general public to write essays about the credit crunch. I’m also unlikely to start apologising for having (at the moment of writing this post) a job as a stockbroker, because it’s an entirely necessary and socially worthwhile job, albeit one that’s not generally well understood.

I mean agm, not nnyhav.

Perhaps a more historical direction would change the thoughts of some towards serial abdications.

http://www.globalresearch.ca/index.php?context=va&aid=10316

“I do genuinely regret that I’m in a position where I’ve got a conflict of interest between my job and this blog”

Perhaps some terminology would make this more clear. Your post isn’t an “apology”. An apology is where you regret having done something wrong. This post is a list of reasons or rationalizations for why what you’re doing is perfectly OK, although you regret that you aren’t at liberty to do something else.

Now, when I pointed out that in fact you are at liberty to do something else, over the long term — i.e. by getting another job — you came up with more reasons or rationalizations why this wouldn’t really make the situation any better.

Why all these reasons or rationalizations? Well, I suspect that it comes down to: “I don’t see how anyone can realistically believe I’ve got any implied duty to the general public to write essays about the credit crunch”. You earlier phrased this by asking whether the public had a right to receive your work for free, and I said no. Now you’re asking if anyone can believe that you have a duty to use your knowledge for the benefit of society, and I have to say yes.

Every person with your education and skills faces the same choice. The ones who choose to serve the public do so at some personal cost. The rest offer regrets-not-apologies, and upcoming lectures about how stockbrokers serve society by doing their jobs (just as everyone serves society by doing their job, in some sense).

Being a police is an entirely necessary and socially useful job. Being a soldier, a scientist, a doctor etc, as well. Even bodyguards.
There is though a little who when where aspect.
Police shooting down striking workers, soldiers massacring innocent peasants, scientists experimenting on unwitting human beings, Mengele was a doctor, crime lords have bodyguards.
The system in which your ethical striving reaps its nice rewards is corrupt, possibly beyond redemption, and that corruption is doing immense harm to innocent people.

An apology is where you regret having done something wrong

Not necessarily at all. You might very well find yourself in a situation in which, through no fault of your own, you caused offence or inconvenience to other people, in which case (I hope, at least) that you’d apologise. Nobody thinks that the mere act of apology constitutes an admission of culpability, except a minority of solicitors for car insurance firms.

The system in which your ethical striving reaps its nice rewards is corrupt, possibly beyond redemption

Counterpoint: no it isn’t.

Police shooting down striking workers, soldiers massacring innocent peasants, scientists experimenting on unwitting human beings, Mengele was a doctor, crime lords have bodyguards.

I am beginning to agree with you that your experience of the Bush years may have robbed you of some of your sense of perspective, Rich. Striking workers have a right not to be shot, innocent peasants have a right not to be massacred, unwitting human beings have a right not to be experimented on, but the general reading public doesn’t have a right to read essays written by me.

If anyone was hoping to read a lot of coverage of the US election polls, I’m not going to be writing that either, by the way – in this case, it’s because the subject bores me to tears rather than anything else, but if someone was looking forward to that, then I also apologise, though I similarly do not recognise any duty to give a fuck and will not be arranging my life for the convenience of people who think I ought to.

Actually just to clarify:

Now you’re asking if anyone can believe that you have a duty to use your knowledge for the benefit of society, and I have to say yes.

Nope, disagree totally. I might choose to drink the rest of my life away and never think about this bloody market again, starting tomorrow, and it would be no bloody business of society’s (until I ran out of money and needed to start claiming benefits, and I think I would even go as far as to argue the stronger case that they would have very limited rights to tell me what to do even then). This is a pretty fundamental tenet of political liberalism; we’ve got a duty to obey the law and pay taxes and beyond that, it’s up to us.

“I am beginning to agree with you that your experience of the Bush years may have robbed you of some of your sense of perspective, Rich. ”

I don’t think it’s my perspective at fault there, since you’re actually replying at that point to Roy.

At for the rest, I see that we agree. You think that you have no duty to do anything but obey the law and pay your bills. I agree that you appear to be the kind of person who believes that they have no duty to society other than to pay their bills and obey the law. But no, by the way, that isn’t really a tenet of political liberalism at all — liberalism has progressed since the 19th century. I mean, I wouldn’t force you to do not drink the rest of your life away, not serve the upper class as a stockbroker, etc., and so perhaps it’s a tenet of liberalism in that sense, but it doesn’t mean that you don’t have duties that you’re neglecting.

73: sorry about that, yes, confused “Rich” with “Roy”. I think we’ve pretty much reached a point of reflective equilibrium here.

In principle I don’t see why you couldn’t borrow a pair of Manolo Blahniks from your sister and sell them on eBay, buying a pair back when she demanded their return.

All right, we’ll leave moral philosophy aside. But as to whether the economy needs stockbrokers, I think that it depends on what, exactly, those stockbrokers are doing. For simply buying and selling, they appear to be classic middlemen that a computer could replace. For advice, I’ve seen studies that say that money managers always end up managing your money worse, on the average, than just buying an index fund.

So really I think that the hat check person at the Ritz is probably more useful to society, since stockbrokers appear to actively cost society money. But, whatever.

Hank Ketcham originated the “Dennis the Menace” comic, with its nastiness toward smart girls, and its snarkily facile boyish one-upmanship.
Christopher Ketcham wrote the piece the quote in #74 is from.
My apologies to him for the error and any resultant confusion.

d2 did usefully explain the role of stockbrokers above in #64. They match a companies need for stable capital with an investors need to be able to put money in and take money out at their convenience. That sounds fine. However, I suspect that the proportion of the population that would chose to speculate with whatever capital they have, as compared with the proportion whose primary concern is a mortgage and pension so that they can live a relatively stable and comfortable life but are effective forced to participate in the market (count me for one) is small. That is, I’m asserting that it is a minority of wealthy people who require the second role of a stockbroker. In that sense, I can’t help but believe that stockbrokers are instruments of the rich and privileged, whose “socially beneficial role” is largely restricted to a small part of society.

Now for a question about short-selling. Oliver Kamm today wrote this: “… short-selling is a simple idea. It means, first (and usually) borrowing a share that you do not own, from an existing holder of the stock, who receives a fee for lending it out. You then sell the share in the hope that the price will fall and that you will be able to buy it at a lower price before you have to return it. Once you have adjusted for the cost of the transaction, the difference between those prices is your profit.” The question – what kind of a damn fool would buy something from a hedgefund manager?

You wrote: “In order to reconcile firms’ desire for long-dated and stable capital with savers’ desire for liquid instruments, you need to have a stock market, with intermediaries who have the job of matching buyers with sellers.”

That’s the part that I would think could be done perfectly well by a computer. We may need a stock market, but we don’t need stockbrokers for that.

“In turn, those intermediaries are going to want to employ people who are experts in a) the valuation of those claims, and b) in the current owernship structure of the market for claims on particular firms, in order to protect themselves against risk of loss. ”

Those experts have done a spectacularly bad job at valuing claims, as evidence our current crisis. More to the point, they always seem to do a bad job of valuing claims, to the point that active money management when studied by academic economists always seems to cost more to pay the managers than the person getting the advice gets in benefit.

Which isn’t to say that stockbrokers are socially worthless, quite. They appear to serve a few significant functions:

1. Legitimation. Hiring expensive experts preserves the mystique of money.

2. Insurance. Who knows, maybe someday you’ll need a human being for advice. It only costs a relatively small amount; the rich can afford it.

3. Insider trading. The real way to make money in the market is to have access to information, i.e. gossip, that other people don’t have yet.

Dsquared: That’s not sufficient. What a complex dynamic economy like ours needs is special footwear intermediaries known as “shoe banks” that enable shorting. Plus, I don’t have a sister.

“Suppose the alternative is a state-run banking system […]”

Note that I wasn’t even arguing against a stock market.

Humorously enough, I do stock research of a sort as well. Part of my work involves helping to figure out corporate pollution records for socially responsible investors, using funding sources that allow sharing of that information with anyone who wants it.

That’s the part that I would think could be done perfectly well by a computer.

well why don’t you invent a computer that can do it, get rich, and set up a thinktank which I will apply for a job at? Computers more or less did take over a lot of the jobs done by foreign exchange traders and plenty of money brokers, and algorithmic trading has been a big development in equities trading over the last ten years. But so far it’s been impossible to get rid of the human element in equities, not least because it’s not possible to get rid of the human element in managing companies. It might happen in the future, but it hasn’t yet and I think you might be underestimating the difficulty.

Sure, it would be less efficient than the current system in lots of ways (harder for start-ups to get funded, etc.) but how much inefficiency would be worth eliminating the risk of crises like the current one? How do we know we’re on the right side of that tradeoff?

If we say that the dot com/tech bubble would have been impossible without equity markets, and that the current crisis was caused by them (neither of which I believe, but the two are at least consistent with each other), then we’re on the wrong side of that tradeoff if this crisis leaves us worse off than we were in 1999. Even then actually I think I’d argue that there isn’t a Laffer curve here and that it might be the case that we just needed a slightly different regulatory environment. There has been quite a bit of literature on this and IIRC, functioning equity markets are quite an important stage in development.

I announce the launch of Crooked Timber Hedge Fund LLP. Can readers deposit monehs forthwith. Can we buy your reports now?

Can we buy your reports now?

Eh, I wonder if these reports are ‘on one hand/on the other hand’ kinda thing. Yeah, you can do this, or that, or the other, but be aware of the great risks involved no matter what you do.

Nah, this is not how one gets rich; give us some good insider info, mister.

If we say that the dot com/tech bubble would have been impossible without equity markets, and that the current crisis was caused by them (neither of which I believe, but the two are at least consistent with each other), then we’re on the wrong side of that tradeoff if this crisis leaves us worse off than we were in 1999.

Wow. So without the stock market, there would have been no growth over the past years. Zero. The stock market is responsible for *all* economic growth. That’s a, um, bold claim. Probably without stockbrokers we would all have died of Ebola by now, too.

Even then actually I think I’d argue that there isn’t a Laffer curve here and that it might be the case that we just needed a slightly different regulatory environment. There has been quite a bit of literature on this and IIRC, functioning equity markets are quite an important stage in development.

Indeed there has. And a major strand of it, starting with gerschenkron, has concluded tht while stock markets were a suitable form of intermediation for early industrializaers like the US and UK, later industrializers have needed increasingly centralized, relationship-based forms of intermediation — big banks and the state. It’s unquestionably true that in the episodes of highest sustained growth in the 20th century, stock markets played little or no role. E.g. Japan’s post-war boom, when the vast majority of household savings werre channeled throught he postal system, and investment was financed overwhelmingly through alrge banks. Stockbrokers didn’t figure.

Anyway, the main point is just that intermediation is possible without stockbrokers, so arguments for the former aren’t encessarily argumetns for the altter. And in particular, around the world today there are financial systems with larger and smaller roles for stockmarkets. And the most market-based ones are in the most trouble today. So your “without stockbrokers, we’d all be living in caves” approach doesn’t fly.

By the way, I personally agree with your 71, and don’t care what you do for a living. But if you are going to defend it, you shouldn’t do so in bad faith or in a way that insults our intelligence. Just say “f*ck off” and be done with it.

Just to add to daniel’s irritated final sentence: what is it that we leftists want?: a world in which all stockbrokers a right-wing arseholes? Or a world in which there are articulate left-wing stockbrokers who can comment intelligently on the economy and the financial system during normal times and, if there ever were some left wing movement (some hope) could usefully contribute to whatever a left wing government wanted to do. I’d sooner have one left wing stockbroker than 50 left wing philosophy professors (to name my own profession again).

I meant simply that there is an anglo-saxon growth premium which can’t be assumed out of existence, and that stock markets certainly look like they might be part of the reason for that premium. Bringing in the dot com bubble was simply meant to point out how daft it is to blame the current real estate crisis on stock markets (they have them in bank-centred systems too you know, ask the nearest Japanese person).

I can’t believe this thread is 100 comments long. Daniel made a simple statement of intent, supported it (apparently unwisely) with a number of reasons related to client confidentiality and professional standards, and everybody starts jumping up and down as if he’d suggested voting for John McCain. Get a life, people.

Bloody hell, you mean he’s voting for John McCain too? Traitor.

And they might respond that it was precisely the move away from bank-centered finance in Japan in the early 1980s, due to financial liberalization and other changes that made it easier for big firms to raise capital in the market, that produced the bubble there

Well at that point, I would certainly give up discussing the matter with them, as it would be clear that neither of us was ever going to persuade the other, and so I think I shall now.

Harry, chris – it’s actually substantially worse than that; I think my next planned post is basically going to be in support of a vote for Nader.

Kate: I will certainly try to work a black pudding reference in there somewhere.

“Suppose the alternative is a state-run banking system that accepts deposits with low but guaranteed returns and lends to households and businesses according to some set of legally established criteria covering collateral, documentation of income, etc. Sure, it would be less efficient than the current system in lots of ways (harder for start-ups to get funded, etc.) but how much inefficiency would be worth eliminating the risk of crises like the current one?”

There is no reason whatsoever to believe that such a system would eliminate or even substantially reduce the risk of crises like the current one.

You’re going to refer to black pudding in a post arguing for a vote for Nader? It gets better and better.

Ah well, I guess the inherent superiority of stock-markets over bank-based financial systems is one of those things that must simply be taken on faith.

and vice versa, apparently, even to the point of coming up with gerrymandered “no true Scotsman” cases to get round the real world examples.

I’m intentionally not thinking very much about the big-picture stuff at the moment, for fear of gaining a perspective that will cost me money

Would that more ‘left wing philosophy professors’ could be as honest as that!

Doesn’t have to black. I feel white pudding is entirely overlooked.

No need to worry, Chris, you can always invoke Rudi Dutschke and tell yourself and others that you’re on the “long march through the institutions” and you’re sorted.

@118: “Most of us, who choose to work in the better institutions, when we can, are directing our educative efforts not at the great unwashed, but at the children of the rich and powerful…”

So, how is that working out? What’s your success rate at converting overprivileged entitlement-gits into thoughtful soul-searchers? High enough to justify your salary, you feel?

So is the stock market just a convenience for rentiers, or is there another economic justification?

Since the economic system is built around rentiers, this does rather matter.

Hey, I’ve had an idea. We could base mortgage finance on mutually-owned banking institutions providing “Savings” and “Loans”. What would we call these things? I’m sure they would never require a bailout.

We could base mortgage finance on mutually-owned banking institutions providing “Savings” and “Loans”. What would we call these things? I’m sure they would never require a bailout.

“The power to tax is the power to destroy.”
John Marshall, Daniel Webster, etc.

But isn’t it also true that the power to regulate is the power to destroy?

So the US government can bring any economic entity to the brink of destruction, and then require a bailout. If they choose to. With the possible exception of the illegal drug industry, which is largely untaxed and unregulated.

Legalise drugs now.

“people giving Daniel a hard time might want to think about their own career choices”

I did think about my career choice, back when I was picking out a career. I followed my own advice. Telling people that they have that choice too, and should be making it, now counts as sanctimony according to Daniel.

I’ve noticed that there’s nothing easier than posturing against sanctimony. Anyone can say stuff like “if I’m going to drink my life away, it’s my own choice!” and enjoy the feeling that they are better than those sanctimonious people. But at the end, they’re still actually drinking their lives away.

How about a simpler explanation? Daniel’s professed attitude is a neo-liberal one, as befits his chosen occupation. As a left-liberal, I don’t feel particularly sympathetic to it, nor to his non-apology apology. He doesn’t have to be a right-wing git in order to still be in service to the same ideals that are about to cost my kids their share of $700 billion.

Hi. I’m Diana Christensen, a racist lackey of the imperialist ruling circles.
I’m Laureen Hobbs, a badass commie nigger.
Sounds like the basis of a firm friendship.

Rich,

I’m not opposed to sanctimony (or whatever it is when it is not being described in a disapproving way). If you have some moral authority here, that’s good (but it doesn’t prove your point). I don’t, so I want to be clear about that; and I think that many people think they have moral authority when they don’t — I know I hear other people who are college professors whose jobs depend on their role in facilitating the maintenance of a ruling elite being sanctimonious about stockbrokers, and I think they don’t have a leg to stand on. When I thought about what career to choose (rather later than I might have) the one which matched those of my talents that I knew about to maximal benefit to others was closed to me, and instead I chose one which I enjoyed, thought would do little harm, and would allow me space to have a family and do something to advance various social goods in ways that have nothing to do with my work. As it turns out, my job has allowed me to do some real good (more, I suspect, than the career I judged to be more promising, but was closed to me, though certainly not more than other careers), but that has been mostly a matter of luck and accident, and not something I anticipated when choosing it.

I agree with you that advantaged people have (much) more stringent obligations than obeying the law and paying their taxes — I disagreed with Daniel about this further up the thread — and that career choice is one of the things they should attend to. (My suspicion, though, along the lines that Liam Murphy argues, is that for people who have the kind of talents that Daniel has, the right thing to do in our current social environment in which fundamental social change is very unlikely, is to make a great deal of money and give a great deal of it away to people who are much less well off; we just have no idea whether Daniel does that of course, you can ask if you like, but it is generally impolite to grill people about how much they give to charity, and anyway many people who give a lot to charity are reluctant to say so because they were well brought up). Daniel is not apologizing for his choice of profession; but he is apologizing for not writing abut the crisis, and giving what seem fair reasons for not doing so. I haven’t heard a good reason why he should apologize for his choice of profession. Some professions are almost certainly out-of-bounds for someone who is committed to a view of social justice that is anything like mine (which is a fairly stringently egalitarian one) but his is not one of them (I don’t think he establishes that with his argument, but I agree with him). There are ways of living a life that are also out-of bounds regardless of one’s profession; and neither you nor I have any idea whether Daniel lives his life in those ways. So the original accusation of bad faith (which I think you made, but if I go back up the thread to check I fear losing what I’ve written) seems off-base to me.

Harry, I made a very specific accusation of existential bad faith, and it wasn’t “he has bad faith because he’s a stockbroker”. He was coming up with flimsy-sounding reasons why being a stockbroker wasn’t his choice, or at least why any other course would be equivalent.

That’s what makes his apology not an apology. He’s presented it as the sort of apology you give for inadvertently bumping into someone. “Oops, sorry I bumped into you — but 1) that guy over there jostled me, 2) there was a curb right here, 3) I really had no choice, it was out of my control, 4) but as a good person I will apologize to you anyways.” But this chain of events starts with his choice of profession. If his choice of profession makes him not speak out during a public crisis about what he knows most about, there’s something wrong with it, and he made a bad choice.

” (My suspicion, though, along the lines that Liam Murphy argues, is that for people who have the kind of talents that Daniel has, the right thing to do in our current social environment in which fundamental social change is very unlikely […]”

You’re burying the important point in your parenthetical. No, I don’t think that is true. He’s clearly able to write entertainingly when he wants to, as well as do analysis. I listed a number of high-status, high-paying careers in which he could use his talents, so I’m not saying that he should be a martyr.

“I hear other people who are college professors whose jobs depend on their role in facilitating the maintenance of a ruling elite ”

I don’t think that’s the point. It is impossible to be a knowledge worker of some sort and not have, as one part of your work, the maintenance of society, and therefore the maintenance of the elite of that society. For that matter, it’s true of any work. But the question is whether you’re only working for the upper class, or whether you’re working for everyone.

But he only knows most about it because its his profession. One of my earlier points was that if, for example, a social democratic party ever won power in Britain, I for one would want there to be people with insider knowledge of how these things work who would work with them enthusiastically

Well, in the case of professors in elite universities it is just about only the upper class that we serve (even me: almost all our students come from the top 20% of income earning households, and most from the top 10%). And stockbrokers: well, I don’t know who Daniel’s clients are, and presume that he can’t divulge it. Some work for large investors, including pension funds etc, and can argue reasonably that they are working, directly, for people other than the upper class. Even if not, and I did agree with this part of Daniel’s argument, the job he does produces public goods (and, yes, public bads, but that is true of many jobs, and the question of which dominates at any given time is empirical and contingent). Again, same as my job: many of our students go onto do things which produce wider benefits than just for themselves, and the education they get here probably contributes a little bit to their ability to do that well.

I didn’t mean to bury the important point. I can’t find your list; my point though was that its wrong to look at the career choice alone; you have to look at the whole life and the way the career plays into that, and accusations in the absence of that are unfounded. And, I’ll add, without I hope posturing against sanctimony, it is unseemly to direct them against Daniel online just because he’s available, when there are so many people about whom you have ample evidence that their lives as a whole are indeed corrupt against whom I’d be surprised if you make these accusations in person.

“And, I’ll add, without I hope posturing against sanctimony […]”

You’re willing to give Daniel credit for possibly giving away a lot of his money to charity in his life offline — but you’re unwilling to ask him — yet you’re not willing to give me credit for possibly confronting people face to face? Yeah, I think that you are posturing against sanctimony, really. Not sanctimony exactly, but the idea that it’s really possible to make the choices that it’s more comfortable to avoid.

“But he only knows most about it because its his profession”

I held Krugman up as an example. Does he only know about the economy because … wait a minute. That argument doesn’t hold up, does it? I know a whole lot about pollution databases. I’d know just as much, probably, if I had chosen to work for industry as an environmental compliance specialist. But then I couldn’t talk about it.

As for cooperation with a social democratic party, you’re ignoring the fact that Daniel’s stated ideology isn’t social democratic. Once again, you don’t have to be a right-winger, precisely, to be a neoliberal. If a social democratic party does take over, those people will cooperate enthusiastically anyways; they generally have their eye on the main chance.

“Even if not, and I did agree with this part of Daniel’s argument, the job he does produces public goods ”

That wasn’t his argument, really. What his argument came down to was

“However, in the economic system in which I actually live, people want hamburgers, Hollywood rom-coms and reasonably liquid equity markets, and therefore there is a perfectly legitimate economic role for the men and women who provide them”

People want whores, too. Maybe there’s a good argument that there is a perfectly legitimate economic role for the men and women who provide sex on demand. But if the whores can only be afforded by the upper class, is that really a public good?

“Nobody would give a stuff about those records, and there would be no such thing as “socially responsible investors”, if there were not a liquid market for tradeable claims on the ownership of corporations. ”

It’s a good thing that I never argued against a stock market, then.

I’m a little confused by the apparent belief that if we just stuck to traditional banking, everything would have been fine in the face of the housing bubble (or the more ridiculous claim that there would have been no housing bubble in such a case).

The US has had 2 major traditional bank crises already, and the S&L crisis to boot. And before you blame the demon deregulation, you should note that the regulations were changed under Carter because the regulations in place were actually killing the banks in question (5% fixed mortgage for income when inflation is 10-15% equals dead bank).

Get humble

Get … no, too easy. Also not going to happen, like all the other moral exhortations. No I don’t. What you had was a “reasonable expectation” – ie, you thought I would and it was reasonable of you to think that, which is why I apologised. Actually your expectation was factually wrong as I had never intended to, but you weren’t to know that before I’d told you.

This reasonable expectation on your part, though, was all you had. You don’t have the right to a blog post from me, that would be mental. Rich’s view is even more mental – he thinks that I have an obligation to rearrange my whole life and career in order to be able to make blog posts about financial subjects (despite the fact, of course, that if I didn’t do the job I do, I wouldn’t know anything like as much about the subject). Or even stronger, that everyone should avoid careers like mine (even though he himself earns his living in a way which would not be possible if nobody did jobs like mine), just in case they might find themselves in a spot where they had a conflict of interest that stopped them writing blog posts.

Get over yourselves, for Pete’s sake. This is madness. I have a genuine conflict of interest, outlined above, which is (and I think this is accepted by everyone, even Rich) a good reason for not writing about the crisis. I’m sorry that this disappointed everyone, but it came about as a result of a decision (to start a career as a stockbroker 15 years ago, and to do it well rather than badly) which was clearly mine to take. I won’t write anything about schools in the London borough of Camden either, by the way; are you guys going to tell me I shouldn’t have had kids?

All the rest is just various sorts of people trying to convince me that stockbroking is an intrinsically bad profession to belong to. Which a) it isn’t, and b) do you think I have never considered this or something? It doesn’t really surprise me that someone might want to argue that because a hypothetical bank-based system of financial intermediation might possibly have tolerable results, I am therefore specially morally compromised because of the job I do – people bullshit all the time. What does surprise me is that they then expect me to be polite and take them seriously in return. Bollocks to that.

“Get humble”. Why not spend the rest of the day lecturing random strangers on exactly how far they have fallen short of the standard of service you expected of them, then buttonhole them on the poor quality of their “non-apology apology”. See what it does for your reputation for humility. Then go and fuck yourself, obviously.

Why not spend the rest of the day lecturing random strangers …

But we’re not strangers! We’re both part of the big, warm, happy, communicatively-ethical CT family …

OK, I’ll argue that. I’m most familiar with NYSE. It was founded as a monopoly, by the brokers and for the brokers. Why should we have that?

Why not have an exchange that doesn’t specifically include brokers? Let anybody buy and sell, provided they’ve identified themselves and their money is deposited in the system.

You could still have brokers performing whatever duties people want to pay them for.

It would be more like a horse track. You go to the window and place your bets. You can pay as much attention to the race track touts as you want to, but you don’t have to give them your money so they can go to the window for you. (Though you can if you want to.)