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February 13, 2014


Luis Enrique

in a way, this is a restatement of your blog about Krugman and the nature of economics. Claims about policies are always conditional. Conditions change.


The whole of the banking system and money creation is an idea gone bad. There is no purpose or wider benefit to most banking activity since their primary function is no longer needed due to industrialisation being no more.

Indeed blowing property bubbles and financial speculation mean they are parasites on the real economy.

Chris Purnell

There were land taxes in the 18th C. because land was visible and there wqas general agreement on value. Likewise the infamous window tax. There is no hiding place- off shore accounts etc- for land. So roll on Robert Walpole the high ground is yours.

Elliot Grant

Bonuses can still be useful, provided that they are used properly, to reward exceptional personal performance. The trouble with recent bank practice is that they have been misused, in a way that creates undesirable incentives. Abusus non tollit usum.



[*only teasing - don't hit me!!*}


"Bonuses can still be useful, provided that they are used properly, to reward exceptional personal performance. "

Why? A few years ago I was up for promotion in a genuinely owner managed business. It was made clear to me that the owners did not give a shit about past personal performance. They (rightly) did not care. All they cared about was whether I would make them money in the future. Why reward people for past performance?

Socialism In One Bedroom

"Bonuses can still be useful, provided that they are used properly, to reward exceptional personal performance."

In a socialist society maybe. But when decisions are made for profit this becomes problematic. For example, the head of a utility company will be judged on how much money he makes for the company, this is how exceptional performance will be measured. So screwing the customers and raising prices will be viewed as exceptional performance. This is the kind of exceptional performance the rest of us could do without!

Another example would be where an accountant very successfully defrauds the state of vital revenues to the benefit of his filthy rich client. The client will hail the exceptional performance.

Down with excpetional performance!


«Hierarchical workplace organization makes sense when information is costly and when workers are mere drones. But it might be less (pdf) appropriate when information is freer and when the firm needs creative employees.»

This particular point was made at length and persuasively in the old idea of "Situational leadership" by Hersey and Blanchard.

They made the rarely considered point that there is not single way to dealing with people that always works, and it depends on the type of people and of organization, and boiled down to 4 main types of management style.

«Claims about policies are always conditional. Conditions change.»

The attitude is generally valid: it is not so much that good ideas turn bad, but that for most topics there is no single good idea, but what is a good idea depends on circumstances, on which point of the curve(s) the situation is.

«Burke wasn't wholly wrong when he said that there is wisdom in the ages which we should be loath to reject.»

Burke made a valid point in that old things represent empirical explorations of tradeoff landscape and ignoring that is a waste; in particular as bad consequences often take time to become manifest (there are lots of cumulative "poisons", like smoking).

But Burke was a great hypochrite because political conservativism is not at all about not indulging in adventurism; it about protecting the interests of incumbents (the thesis in "The reactionary mind" that it is about reaction to emancipation seems very weak to me), and political conservatives will resort to new and untried policies if they promise to protect the interests of incumbents, as in "everything must change so that everything will stay the same".


This is similar to Krugman's thoughts on the crisis, that we've entered a through the looking glass world and now thrift destroys wealth working over time earns less.

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