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Another Conference, many Consensuses!
Another conference, many competent economists participate, much learning distributed, no consensus except that it is "not working". Not only is that not scientific, but, if an honest, perceptive response is needed as to whether the economy is working or not, ask the next economically-untrained person encountered. As for voxeu.org -
Financial regulation: Not yet an efficient outcome
Angus Armstrong, E Philip Davis 22 April 2016
Editors’ note: This column summarises the views presented at the National Institute of Economic and Social Research (NIESR) conference on “Financial Regulation” held at the Bank of England, London, on 18 March 2016. The column includes several videos recorded at the event.
Since the Global Crisis, a number of regulatory policies, which seem unending and are so represented in the legislation that resulted, have been discussed, proposed and sometimes implemented to address shortcomings in the regulatory framework. The question addressed at the NIESR conference (presentation slides for which are available here) is whether we have reached an efficient outcome. For most of the speakers, the answer was a resounding “no”.
By definition, a consensus is an agreement; and, although the economists gathered at the NIESR covnention to a man may have acknowledged that credit growth is excessive, or banking reserves need to be raised, or that regulations to restrict risk creating moral hazard is called for, each proponent had the gratifying experience of expressing personal views, yet the conference appears to have disbanded with no concise statement as to what one, two or three items should be attended to in any priority.
That is the problem not only in Economics, but in Banking, finance, and regulating the two. As a consequence, we'll continue to generate lengthy studies, and reach no agreement on an effective path to tame volatitlity and the excessive fluctuations that are counter-productive to the life-goals of the great majority of struggling souls. We'll continue to suffer loss while our confusion presents opportunity for those interested in no less than promoting confusion which enables stealing off with the community treasures. It's impossible to prevent that when no single over-arching conviction expresses the social benefits of containing those risk-disposed (but not at their own expense), socially-insensate foragers for wealth.
As a result, we'll go on feeding - or allowing them to feed - their voracious appetites.
Objective or not – and the truth is: more subjectivity is all those hunters mean to acknowledge - bankers believe they are on top of the situation and have the situation under control; the economists have been rooting around through options for centuries branching off in several directions at once, according to the data they’ve accumulated – which can be formidable in girth – and the sentiment they detect in their personal contacts.
The "learned" display their wide visions and abilty to deal with several concepts at once, and in doing so allow the essence of their job to dissipate, lacking any carefully defined direction - and the social misfits are free to do as they please in the uncommitted atmosphere that results.
The copyrighted voxeu article quoted above, complete with videos of noted and true economic experts in banking and finance from a March 18,2016 conference in London, gives a cross-sectional view which is quite uniform in opinions as to the need for guidance, yet, each participant has a differing concept of what should command the attention of the analysts and regulators - or why. This, if anything, can be confusing to the politicians with the responsibility of putting correctional rules into place - that is, if they were honestly searching for guidance.
We need some effectively standard methodology to constrict the range of discussion and proposals into as few a number of diversions as possible which would promote maximum effect – as, say limiting comments to credit growth, housing markets and reserves, or detecting turning points in the boom/bust cycles - concentrating on them for effective controls, and allowing chief regulators to then expand on that small but effective base for maximum benefit.
Nothing so concise results from our conferences. Personal satisfaction in expressing opinions may rank high, but those extra embellishments which are unique and expected among any variety of personalities, tend to add to the complexities and confound the essentials. As vital as understanding of micro-and macro-, or credit and markets, or bail-in or bail-out are, meaningful messages need to be shorter and less detailed. Economics never has confined itself to effective communication.
How then can you influence popular opinion or direct the legislators and regulators on what is important?
As it stands, the articles are too long; the messages, too steeped in variety, to the point where they emerge near-garbled when viewed as a collection even though each in its own context is perfectly phrased and comprehensible. How then can we expect the public and legislators whose personal languages derive from a variety of backgrounds to concentrate on essentials when the learned do not?
Legislators will never be presuaded to generate concentrated, comprehensible rules or effective laws while dealing with the divergent choices offered to them by "experts". They're already pre-disposed to show their own wide-ranging "comprehension" (not always accurate in any of the trades involved – economic, banking or financial) of the situation in combination with personal political beliefs in what is effective in promoting agendas and what is not. So much so, that it is oftern interpreted as a subterfuge to avoid doing anything, which in turn does nothing to enhance the image of legislators. Testimony by experts usually results in supplying selective intellectual ammunition to bolster the positions of the legisltive troops on the front line to serve their individual purposes. . . The "He said. . ." "No! She said. . ." type of exchanges that lead no where.
Economics, to be effective, must get down to business hammering out agreed to conclusions and drop the academic, frustrating, pseudo-scientific conceits (popular meaning). They appear to not believe their status would be enhanced if some good resulted from their efforts. (Could that be another example of the "job security syndrome"? Don't tell them everything all at once or we're lost?) If the academics don't see the advantage, perhaps we need to break-off a variety of corps of economists dedicated to working solely on issues in the public's interest. We believe we have that in those economists working in private sector banks and government, but they carry the wrong attitude with them into the new workplace and are surprisingly ineffective for all the learning they bring to the scene.