Monday, April 4, 2011

Stiglitz: Foregt About Profit and Loss, Think Commune

I can't see any other way to interpret this remark of Joesph Stiglitz, made following a speech he made at the University of Michigan-Flint:
Our society can only function if we get away from the focus on self-interest. I hope that in whatever job they do there's a sense of social responsibility and sustainability. The problem we're in is because too many people focused on just their own benefit and not the society impact.
As Friedrich Hayek pointed, the unintended consequences of seeking profit will do much more for a society than anything that could be done by a central planner or those "doing good" who have a sense of "social responsibility." Society is simply too complex to be advanced in detail by a single thinking mind or group of minds. When understood in this sense the concept, social responsibility, itself, makes little sense. It is alarming that economists as prominent as Stiglitz don't get this basic fact.

As for his description of the current crisis being the result of "too many people focused on just their own benefit and not the society impact." That is not the shape of the crisis as all. The crisis was created by Federal Reserve money printing and further advanced and distorted by the Federal Reserve through its bailout of the elite of Wall Street. Take away the Federal Reserve and maintain profit and loss under a system of respect for property rights and free markets and nothing even close to the crisis would have occurred.

Simply telling people to turn away from profit and loss and to think on a grand scale about the "social responsibility" of what they are doing relative to every other person on the planet is simply absurd. And even more absurd when the Federal Reserve is madly working away, printing more money.


  1. Shades of James Taggart, Wesley Mouch, and Ellsworth Toohey. Almost makes you sick to your stomach.

  2. Articles such as this one from The Michigan Times should come with warning labels and disclaimers in large bold print.

    From the article:

    During the Open Dialogue Session, Stiglitz answered questions on how the cur­rent deficit could be reversed and how other countries were handling the downturn.

    "The ques­tion of how to reverse a deficit is a question that has been asked for the past 75-80 years," Stiglitz said.

    According to Stiglitz, one of the main ways to reverse this deficit is through increase of government spending in worthwhile programs.

    The answer to deficits and debt is... wait for it... more deficits and debt! But wait, there's more! This debt will be for "worthwhile programs". Which programs are worthwhile, you ask? Why the ones coming from Stiglitz's side of the aisle, of course. How do we know they're worthwhile? Because our social betters came up with them, silly. Profits don't matter. Losses don't matter.

    Another day, another central planner's grand schemes to doom us all to a world of poverty.

  3. Wouldn't those on the religious far right meet Stiglitz's standard of people thinking about others and not only themselves? I am sure this isn't what he's thinking of, but they certainly do think of others. Of course, in Stiglitiz's mind, its really about letting elites like him tell everyone one else what is in their best interest. In my humble opinion, I think that we had enough people murdered in the last century in trying to bring about a socially just society that I'll pass on this one.

    This guy makes Krugman seem intelligent.

  4. To some extent, he is right that the current crisis is the result of "too many people focused on just their own benefit". What's not mentioned, though, is that the people looking out for their own benefit are employed by the government. While entrepreneurs respond to profit and loss as incentives that ultimately benefit society, the incentives presented to those in government work only at the expense of society.
    Don't think for a minute that the people working for the Federal Reserve and their banking cronies were focused on the benefit to society rather than their own incentives.

  5. At James' comment - I agree. Too frequently do I read an article and I flip through Atlas Shrugged and exclaim, "I know that's in here somewhere!"

  6. "Wesley Mouch" !!
    She had a knack for names, didn't she?

  7. I'm sorry, the sociopaths in the government and their cronies in big banks and corporations benefitting from the government trough possess a sense of "social responsibility"? They're not after their self-interest? Once you read Democracy - the God that Failed, it's pretty hard to take this sort of shit seriously. The facade just crumbles. It's like Obama calling it "irresponsible" not to let the government going on spending. No, what is irresponsible is electing a moron like that to steer an entity far more complex than his minuscule brain could ever fathom.

  8. I have to admit, I thought that Stiglitz was one of the bad guys, but I never appreciated how bad he was. I have to admit my ignorance of his ideas and history. I just knew him as just another political hack.

    After reading your post, I decided to look up more information on Stiglitz. Man, what a nightmare this man is. I get the feeling he stopped doing economics sometime in the mid-1980's, after the Swedish Central Bank gave him the prize that the Nobel family wishes they'd stop calling the Nobel prize in economics. I think he was wrong even when he was younger, but I got the impression he still trying to be an economist. As he's gotten older, he's become just a run of the mill illogical politico.

    SInce becoming one of the swamp people, he's pretty much everything he's said is just garbage. Kind of like Krugman.