Economics

Soros to Vanquish Whatever Market Fundamentalists He Can Still Find

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George Soros, a man who in the 1990s probably showered more money on free market economists throughout the countries of post-communist Europe than any living human being, is now launching "a $50 million effort to purge economics of its free-market zeal," according to Newsweek's GQesque Michael Hirsh. The skinny:

Fox News is SO biased!

This week Soros is gathering some of the leading practitioners of the market-skeptic school, who were marginalized during the era of "free-market fundamentalism," among them Nobelists Joseph Stiglitz, George Akerlof, Michael Spence, and Sir James Mirrlees. He's also creating an "Institute for New Economic Thinking" to make research grants, convene symposiums, and establish a journal, all in an effort to take back the economics profession from the champions of free-market zealotry who have dominated it for decades, and to correct the failures of decades of market deregulation. Soros hopes matching funds will bring the total endowment up to $200 million. "Economics has failed not only to predict and explain what happened but has also failed to protect society," says Robert Johnson, a former managing director at Soros Fund Management, who will direct the new institute. "That's what the crisis revealed. The paradigm has failed. There is no guidance."

Why, Joe Stiglitz was so marginalized during those pre-crash wilderness years that he only managed to chair Bill Clinton's Council of Economic Advisers, work as chief economist of the World Bank, and then win the Nobel Prize for economics!

For those of us who have slogged through Soros' lifelong attempts to establish his bonafides as a philosopher, this woe-is-paradigm stuff is more than a bit rich. The Hungarian-born currency bettor has made his fortune pursuing the observation that financial markets are filled with human irrationality. In other words, that there is no one true, predictable paradigm, and that markets are prone to speculative bubbles chasing underlying hysteria. You may note that the same arguments can be heard from many of the so-called "market fundamentalists" Soros so despises, making his core beef more about the "guidance" of wise men than the comparative predictive failures of various economics schools.

But my quarrel here isn't with Soros; it's with Hirsh (and his many cohorts in the bloviosphere), for evidence-free pox-on-market-fundamentalism paragraphs like this:

What kind of razor settings do you use for something like that?

It might be tempting to dismiss all this as a war of words among brainiacs. It's not. The critical issues being discussed in Washington about the future regulation and control of the financial industry—the very nature of Wall Street and the health of the economy—depend on this battle of ideas. What led to wholesale deregulation in the '90s and '00s wasn't just Wall Street lobbying money. It was also that key legislators and policymakers, among them Larry Summers, persuaded themselves that deregulation was sound economics and good policy, and that markets and Wall Street institutions could take care of themselves. Many of those views have been discredited by the crisis. But in the absence of a new paradigm of economics, confusion still reigns in Washington. With no new concept of the proper role of government and regulation in the economy, of the proper balance between the markets and their minders, the old school still dominates.

Needless to say, no deregulation was mentioned in the making of this article. Also, the old school dominates what, exactly? Ultimate frisbee games between the University of Chicago and George Mason? There are many, many financial proposals coming out of Washington and various mainstream opinion organs these days; I'm at a loss to think of a single one that involves the D-word, or in any sense reflects the insights of free-market economics, aside from Ben Bernanke claiming that he's following the (controversial-among-libertarians) Milton Friedman/Anna Schwartz recipe for averting a Great Depression. Which is a contention that Schwartz herself hotly disputes.

Because you just can't get enough

Look, I know (through tedious experience) that it's a tempting intellectual shortcut to say Ayn Rand=Alan Greenspan=deregulation=crash, and that therefore every one of us deluded souls who doesn't hi-five Wall Street bailouts is some kind of fundamentalist ogre, but A) we are, at least according to this Time poll, 55 percent of the country, and more importantly B) it's also tempting to eat an entire chocolate cake by yourself. IF YOU'RE SIX YEARS OLD. If you're not, and especially if you have a job writing publicly about economic policy, it might behoove you to at least attain a distant knowledge of whatever you think you're condemning.

Some suggested reading for that quest: Katherine Mangu-Ward, on whether deregulation was to blame for the financial crisis. Anthony Randazzo, on the myth of financial deregulation. Veronique de Rugy, on the biggest regulator since Richard Nixon (hint: wasn't Bill Clinton). Former Security and Exchange Commissioner Paul Atkins, on the regulations he tried (but failed) to slap on derivatives trading. And to really blow the minds of those who see free market enthusiasts as an undifferentiated blob, here's a Reason roundtable about Greenspan, Bernanke, and the Federal Reserve from 2006, featuring (among others) Milton Friedman and Rep. Ron Paul. Newsflash: They don't all agree.

More on the Soros grant from Reason contributors Veronique de Rugy and John Stossel. Reason's Soros file here.

NEXT: Krugman: A Time For Choosing, Journos

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  1. The Alt-tag on the Soros pic should be “I looted the houses of Jews taken to the camps and I’d do it all again”.

    http://atlasshrugs2000.typepad…..at_so.html

    1. Pamela Geller might be one of the few people more crazy than lonewacko.

      1. I have no idea who Pamela Geller is. Nor do I care. I just grabbed the first version of the 60 Minutes Transcript that I could find. It’s the same transcript wherever one goes but just for you, have at it:

        http://www.google.com/search?g…..ting+Jews+“60+Minutes”+Transcript&btnG=Search&aq=f&oq;=&aqi;=

      2. I’d still bang her.

  2. I beseech you in the bowels of Christ, delete that image from your server.

  3. It should be mentioned at least twice in every Soros thread that’s he’s an unrepentant Nazi.

    There aren’t many of those.

    1. Looter and Nazi are not synonyms.

      Try again

    2. There are even fewer who were, uh, unrepentant Nazis who were Jews persecuted by Nazis? Seriously, can’t we do a little better than this?

      1. Larry David and Woody Allen come close. They are just missing the persicution experience.

  4. Robert Klein needs a shave, or he needs the Miami Vice setting removed from his electric razor.

  5. What? Dude set his electric razor to “Don Johnson”.

  6. Darn you, John T.!

  7. Matt needs to title his posts “Another isolated incident” of journalists not knowing what the fuck they are writing about, while pretending that they do.

    But, there’s only 24 hours in a day and I suspect Matt would tire quickly.

    1. Thanks for conjuring the Lonewacko bot.

      1. Goddamnit! I thought you had to say the name *3* times!

        1. No, that’s for Urkobold when you write taint three times.

  8. For the grown-ups: why are Reason and Soros aligned on various issues, and why does Reason – in their own insignificant way – work to help Soros obtain even more power? Reason supports building a power base for Soros through their support for MassiveImmigration; they aren’t trying to keep him and his helpers from getting even more power than they have.

    P.S. In case anyone replies to this, their responses will almost assuredly be ad homs, thereby conceding my points and showing the childish, anti-intellectual nature of libertarians. Dozens of comments here have shown that the phrase “fascist libertarian” isn’t an oxymoron.

    1. Here’s a tangible example. One way to strike back at Soros would be to strike back at his little helpers, such as those at CAP. Yet, few others are willing to do that, despite the fact that they’re incredibly inept. Take a look at thinkprogress.org; smart third-graders could rip that site apart due to their misleading statements and logical leaps. Yet, few others online are willing (or able) to do that.

      And, here’s an example of me trying to make the Center for American Progress look bad by showing that they aren’t really concerned about those they pretend to care about. Needless to say, I got zero help with that, but if I had that would have reduced Soros’ power a bit.

      And, of course, one of Reason’s contributing editors is now writing for a Soros-funded pseudopaper.

  9. Can we get some sort of “Shut the Fuck Up Lonewacko” widget or macro or something?

    1. We asked when the site was being updated, but sadly, Christmas didn’t come early this year. Sniff.

  10. “Economics has failed not only to predict and explain what happened but has also failed to protect society,” says Robert Johnson, a former managing director at Soros Fund Management, who will direct the new institute. “That’s what the crisis revealed. The paradigm has failed. There is no guidance.”

    No, Keynesian economics failed. There were many Austrian economists sounding the alarm, but of course nobody listened because they’re just crackpot fundamentalists.

    1. I admit I was a bit confused about how Johnson seemed to be referring to “Economics” as some monolithic entity designed to protect society.

      1. Let’s spread the blame a little while we’re at it. Economics isn’t the only one at fault. Physics failed to protect society, too. And don’t get me started on Neuroscience. Did it do a goddamned thing to help society when a bunch of greedy bastards amde stupid decisions? No.

        Fucking academic disciplines. Don;t they know it’s their job to protect society? I’m gonna go get some Eternal Verities and go kick their asses.

  11. From the 2006 link:

    Bryan Caplan: I really like his writing on the Great Depression. Essentially, he has a very Rothbardian take.

    Hw THE FUCK can someone read Bernanke and get a Rothbardian take out of it? Rothbard claimed the Fed did all it could do and Bernanke says the Fed didn’t do enough!

  12. Economics is as accurate at predicting things as climatology, psychology, and astrology are.

  13. Soros will also devote millions of dollars worldwide to med schools that reintroduce classes in phrenology according to Soros spokesman Matthew Lesko.

  14. Can someone please, please tell me exactly what regulations GW Bush repealed, and exactly how their repeal caused the financial crash?

  15. Damn…blocked by the site nanny.

    All I said was…No….

    I was replying to Wicks Cherrycoke’s question.

    1. True, the new server frequently limits what you can post, but on the plus side — Now With Threads!

  16. alhues,

    Half my comments don’t work. I don’t think it’s an intentional site block. It’s a function of them fixing what wasn’t broken and now nothing works as intended. I think the Reason servers are probably in DC and that’s why they suck.

    Copy every post before submitting. Then when it fails, go back and try again. One thing that works for no apparent reason is that if you click each field (name, email, website, the check box, and paste your comment again) it sometimes goes through. Have I mentioned I hate the new site?

    1. I blame your web browser. Or your negative attitude. 😀

  17. So what exactly motivates Soros? Why is he putting so much money into climate activists, far-left liberal organizations, and now into this? That’s always puzzled me, but admittedly I don’t follow him very closely.

    1. Altruism?

    2. Some sort of mental illness.

      1. Seriously though, this keeps me up at night sometimes. What could have possibly caused him to decide to throw so much money at these people? I don’t get it.

        Power? Some sort of massive stake in a future international governance organization that will likely the the outcome of all of these progressive schemes is all that I can come up with.

        1. It’s … a long story.

          Mostly, by my crude reckoning (which hasn’t received new information in a few years), he’s A) trying to make an imperfect world better, out of a mitteleuropean sense of duty (and doing so with special emphasis & effectiveness in Central Europe itself, for which he deserves endless credit); B) trying to elbow his way to both the Policy and Philosophy tables by any means necessary; C) whitewashing various and ever-changing guilts (over surviving, “destabilizing currencies,” just being superduper rich, contributing to “American supremacy,” and more), and D) I forget what D was for.

          He’s a guy who, when he has a philosophical breakthrough, steps on the accelerator, using both charity money and investment. His most recent breakthrough, a half-dozen years or so ago, was that the new American Century that he had helped build (including its global financial markets, Friedman-beating-Marx, and U.S. being global cop), was suddenly a new “bubble” — The Bubble of American Supremacy, as he called his (bad) book. He believes that all his experience in identifying irrationalities and bubbles in financial markets, while involving himself in civil society-building in fragile & developing economies, has uniquely qualified him to make this terrible realization. The first step, therefore, was to cut the hydra off at its head (George W. Bush), but that was only the beginning (and, let’s remember, was an abject failure in 2004, which is when he first really got involved in U.S. domestic politics).

          He has essentially become a deeper-pocketed Naomi Klein, but with the unique twist that he certainly knows better, and certainly has believed differently. It’s a very curious turn, and filled with more nuance than idiot American politics (“he’s a Nazi!”) generally allows.

          1. D) I forget what D was for.

            9 was for the lost god, if that’s any help.

          2. Well, maybe his next guilt will be destabilizing the US eneonomy and the global capitalist system at large, and ushering a new era of institutionalized corruption.

    3. If I was a conspiracy nut I would say that Soros is trying to ensure that the conditions that made him rich already would continue endlessly so that he could continue getting richer and richer.

      After all this is a guy who made fortunes on the collapses of foreign currencies that occurred while the “best and brightest” were regulating Usually accompanied by a chorus of how the collapses happened because of free markets).

      But, in fact, I believe that the answer is that people like Soros are so obviously smart and perceptive that they’ve developed this ability to read market trends with uncanny accuracy that people come to be believe they have some kind of enhanced ability and that this ability at micromanaging their own affairs extends to an ability to make the whole economy run “properly”.

      Some eventually come to belief their own hype and start to expect all of us to start hanging off their every word.

      In saying this, Warren Buffet comes to mind as well. People have actually seriously proposed that he should have some high position in the government.

      But, seriously, what is it about being successful at picking investments suggest that WB would be successful at determining public policy over a whole swath of human activity.

      Admittedly Buffet doesn’t seem nearly as dazzled by his own aura a Soros does but he still sinks into pontificating at times.

  18. Goddammit. I don’t know exactly when or how this began, but I seem to have developed some kind of Pavlovian response to hearing or reading the word “paradigm” in almost any context. It makes me want to smash cinder blocks to pieces with my bare hands.

  19. LOL. These economists were so marginalized they got jobs at the top economics departments in the country like Harvard and Berkeley and a couple even have Noble Prizes. These guys are marginalized like Tom Brady is marginalized in the NFL. If anything, the ardent free market economics, the Austrian economists, are the ones that are marginalized.

    1. Also, the Austrians have a perfectly good explanation for why shit hit the fan, but it’s not the explanation the government nuthuggers want to hear.

    2. Serves them right for speaking Austrian.

      1. G’day, mate!

        1. Throw another shrimp on the barbie!

  20. Looking at that bondage photo with Rand and Greenspan, I have to wonder, what is his safe-word?

    “I do this for me!”
    “A is A!”
    “More!”

    1. Those wouldn’t be safewords for an objectivist.

      I should think screaming “A is A!” at the end of a whip would be part of the act.

  21. Haha that Rand pic is epic. But I wouldn’t put her in the same pic as that piece of slime Greenspan… he’s doomed as it is. maybe she should spank Soros a little though.

  22. Dear H&R Editors:

    Fewer pictures of Rand and more of Jennifer Burns. Please.

    Very truly yours,
    Attorney

  23. He’s purging “economics”. Not economics. The free market fails at all the important stuff every time. Always has. Always will. Why else do tobacco companies need subsidies?

  24. “Economics has failed not only to predict and explain what happened but has also failed to protect society,” says Robert Johnson, a former managing director at Soros Fund Management, who will direct the new institute. “That’s what the crisis revealed. The paradigm has failed. There is no guidance.”

    So the response is to fund “research” with the specific goal of backing a predetermined policy agenda – that’ll improve the quality of macroeconomic predictions!

  25. Who said they need subsidies? They get them because North Carolina sends representatives to Congress.

  26. All in an effort to take back the economics profession from the champions of free-market zealotry who have dominated it for decades, and to correct the failures of decades of market deregulation.

    What weird Bizarro world does this jerk live in?

  27. What Soros doesn’t seem to appreciate is the faux nature of “market deregulation” in the current era. Government has always been loathe to release its grip. The best we have seen is various flavors of “re-regulation,” which attempt to “simulate” or “harness” the market to achieve desired ends in specifically-constrained ways.

    Suppose, for example, that you wanted a wide-open Autobahn, free of speed limits and other restrictions. Following the example of recent approaches to “deregulation,” government would replace the present freeways with Disney’s Autopia roadway scheme, such that cars would have to drive along a rail. They would then call these roads Ameribahns, and ultimately blame the unpopularity and unworkability of the scheme on “deregulation.” Just so, have the financial markets (and other economic sectors) been treated.

    I’m just surprised that Soros, who seems intelligent enough, judging from the book and essays of his that I have read, can’t see through the scam, and indeed helps to perpetuate it by continuing to dignify modulations of ongoing market intervention with the term, “deregulation.”

  28. There’s no new paradigm because the known irrationalities in human judgement are piecemeal. There’s no generalized theory of human irrationality that could be used to make reliable macroeconomic predictions.

    What is needed, really, is a means to predict and pop bubbles as they are developing. But if you could do that, you still wouldn’t need government regulation, because the market would get there first, making money by shorting earlier in the bubble, as soon as a prediction can be made.

  29. If someone doesn’t understand economics, fine and dandy. But if someone is going to write on it, and they claim that somehow “the free market failed,” they are either too lazy to do any research, too stupid to think critically, toeing the party line to keep their position, trying to get hipster DC gals (or guys) in the sack, or just plain evil.

  30. Soros is a crotchety self-hating gazillionaire who has done as much damage as Hitler, simply under cover. He’s creepy!

  31. FWIW, Chicago would be favored over Mason by a narrow margin if they were to meet up on the Ultimate field… which they didn’t this past season…

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