Saturday, February 04, 2012

The American Economic Association tackles ethical conflicts - good for AEA

At a recent meeting of the American Economic Association, the AEA began tackling some important ethical issues, according to this article in The Economist.

Economics has internalised the views of rich patrons, according to Luigi Zingales of the University of Chicago. His scathing analysis of journal publications revealed that papers providing justification for high executive pay were 55% more likely to be published than those opposed, and were more heavily cited by others.

A paper presented by Atif Mian of the University of California, Berkeley, Amir Sufi of the University of Chicago and Francesco Trebbi of the University of British Columbia, laid out why good policy is often most difficult to implement in the wake of a financial crisis...a redistribution of wealth from creditors to debtors could potentially benefit both groups by averting a deep downturn. Yet even though debtors are many, such redistributions are few. Effective lobbying by a few, concentrated creditors helps hold back a populist tide: a few powerful banks, for instance, may be better able to influence legislators than millions of homeowners.

Comment: this is very interesting, and lends support to something I am thinking about but have not yet written about, which is that the current situation of extreme and growing inequity is not good for anyone, not even the 1%. For example, what good will extreme wealth do for the 1% when everyone's favorite island nation getaways are under water due to global warming? If we continue on our current path of destroying our precious water supplies through using increasingly dangerous methods of obtaining oil and gas such as hydraulic fracturing or putting pipelines to carry oil sands oil - with leaking inevitable - right through key watersheds as per the first Keystone Pipeline proposal - it is only a matter of time before all of us are drinking poisoned water and eating food supplied by poisoned water - including the 1% and their loved ones*. The only sane way forward, from my perspective, is to remove the divide between the 99% and the 1% and become one, or the 100%, living and working in harmony with each other, and with our environment.

* perhaps the 1% is thinking no problem, they will just buy what little clean water and food there is left and to heck with the rest of us. My response: from whom will you buy this? A company that puts profit before everything, and is subject to no government regulation? (postscript Feb 4 2012).

Thanks to Kyle Thompson for the pointer to the Economist article.