Gaps and holes

by John Quiggin on April 6, 2016

Press coverage massive leak of papers from hitherto unheard of (by me, at any rate) Panama law firm Mossack Fonseca has, unsurprisingly, focused on the world leaders, celebrities and fixers whose financial affairs have been revealed in an unflattering light. As regards the financial system as a whole, the New York Times draws a fairly typical conclusion

Above all, the Panama Papers reveal an industry that flourishes in the gaps and holes of international finance.

Really? This description suggests that those involved are obscure minor players in the system, of the sort who might be expected to deal with dodgy law firms in tax havens. The real business of global finance is undertaking by upstanding financial institutions with transparent practices.

But writing this down is enough to see that it is silly. As usual in such cases, we find familiar names: HSBC, UBS, Credit Suisse,and RBS and so on. And of course this is just one firm in one tax haven. The absence of major American banks reflects, in large measure, the fact that they prefer tax havens other than Panama, where there is a high degree of US state countrol.

Again as usual, the line is that this is all in the past, and that the banks have cleaned up their act. But the criminal charges keep on coming. This is scarcely surprising when no major bank has been shut down, even for the most egregious wrongdoing, and where only a handful of bank employees have faced jail time over frauds that total well into the hundreds of billions.

As I’ve argued in the past, activities like tax avoidance/evasion and regulatory arbitrage aren’t peripheral flaws in a financial system primarily concerned with the efficient global allocation of capital. They are the core business, without which the profits of the global financial sector would be a tiny fraction of the $1 trillion or so now reaped annually. The burden of supporting this financial sector is a major factor in the secular stagnation now evident in most developed economies.[^1]

The financial globalization that began in the 1970s has not produced an efficient global financial market with a few gaps and holes. The gaps and holes are the market.

[^1]:Since it’s bound to be raised, the costs of financial globalisation to the developed world can’t be offset by considering rapid growth in China and India. These countries have, until recently, maintained tightly regulated financial systems, and have had plenty of criticism for it. Of course, that has resulted in plenty of corruption and misallocation of capital, but the sector simply hasn’t been enough to produce a large drag on growth. That’s clearly changed, in China at least, so it will be interesting to watch the consequences.

Leiter has an interesting post on why undergraduate women give up on philosophy. A senior female philosopher diagnosed the problem, and started with the following comment:

My assessment of the undergrad women in philosophy thing: undergrad women get sick of being talked over and strawmanned by their peers in and out of the classroom, and get sick of classes where the male students endlessly hold forth about their own thoughts.

Leiter adds:

I will say that over two decades of teaching, it has seemed to me that the students who speak out of proportion to what they have to say are overwhelmingly male.

My experience is exactly the same as Leiter’s. And I’ve heard from countless female students that they just got tired of being ignored, both by prof and male students, and also tired of trying to get a word in among the ramblings of boys who think that they are really smart. Even in classes taught by women. And in classes, I’m embarrassed to say, taught by me. To make things worse I think that such behavior can be a very good strategy for learning – it gets you the professor’s attention, and the professor will correct you or argue with you, even if they are extremely irritated, and you can learn a lot from that.

Leiter goes on that “Maintaining control of the classroom, and creating a welcoming environment for all student contributions, can probably go some distance to rectifying this–but that, of course, supposes levels of pedagogical talent and sensitivity that many philosophy faculty probably lack.”

I almost completely agree with this, but would substitute the word ‘skill’ for ‘talent’. I’d say that if you really feel you lack the talent to manage the classroom in this way, so do not think it is worth investing in learning how to do it, I advise that you avoid teaching in mixed male/female classrooms, or find a job that doesn’t involve teaching. But I think most of us have the talent, we just lack the skill because as a profession, at least at R1s, we are spectacularly complacent about developing our pedagogical talents into skills. We focus considerable effort on developing our talent as researchers, consuming the research of others, discussing their research, our research, and other people’s research in a community of learner/researchers, putting our research out for comments from friends and, ultimately, for review and publication. We ought to become pretty good at it. But as a recent paper by David Conception and colleagues shows, we receive hardly any training in instruction, and once we become teachers we might try very hard, but we invest very little in the kinds of processes that would enable us to learn from experts, as opposed to improving through trial-and-error. It is like trying to become a good violin player without anyone ever listening to you, and without ever listening to anyone who plays it well. Possible, I suppose, but hardly a recipe for success.

So, from my own trial and error (combined with some watching of experts, and employing coaches to observe me) here are some things that I have learned how to do which seem to me to make the classroom one in which women participate at a similar rate to men and seem to reduce the problem of particular male students dominating the room.

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