I've been reading several places where the guys over at RedState think that the Liberals have the effective on-line infrastructure and for some reason the Conservatives don't. Atrios reported it again today. So I thought I'd offer my explanation.
The right wing is inherently authoritarian. Their media exists to get the message out to the faithful That what their kind of political ideology is. So they tell the readers what to believe and provide vignettes to support those beliefs. It's clearly a top down model. (In fact it is very much like a significant part of organized religion.) If someone questions the message, then their questions are to be suppressed as dissident and rebellious. It really doesn't matter if others see facts that don't match the pronouncements from the authority. Both TV and talk radio are well suited to this model. You can say whatever you want, and if someone questions it, then they are either screened out before getting on the are or they are easily cut off before going very far, after which they are ridiculed by the host. The ridicule enforces the appropriate socially expected behavior of people who want to belong to that group. This is especially effective in groups that also portray their members as an embattled minority constantly under attack. Such individuals do not have another group to join other than the oppressors, who they expect will reject them.
The left wing consists of people who want to know "Why?" But then they go beyond that and search for exceptions, generally to poke holes in what is being said. The intent is to improve the explanation given.
In short, the conservatives have a model in which "The Answers" are broadcast and in which questioning is repressed. The liberals have a model in which an identified situation or problem is identified and tentative solutions are thrown out for discussion. Then if the original message is not adequate, it is expected to be improved on - assuming it was not just wrong in the first place. The conservatives see all the various questions and objections as being dissident, rebellious and disrespectful of the authority.
When conservatives attempt to question a message or idea on a liberal blog, they resort to the ideology which they know to be true. If it runs counter to well-discussed liberal ideas which have been proven in both discussion and in tests against reality to be true, then the conservatives catch a lot of flack for what they present. They generally view this as being rejected. If someone attempts to offer explanations of why the conservative dogma does not work, if the individual will analyze the explanation and respond to it in a analytical manner and identify where the flaws are in their own ideas as well as those presented, then they can fit in on liberal blogs and such. But if as is most usual, they simply respond by repeating conservative dogma with no effort compare and contrast realistically, then they actually will be rejected. The term for that is usually "troll."
The liberal blogosphere is set up to encourage debate and to reject time-wasters who are there simply to sell their dogma. For people who are looking for workable solutions to novel problems, the ideas and debate are necessary. The trolls are time wasters.
My previous post about the reaction to the 2005 presentation by Economist Raghuram Rajan is a case in point. He was rather roundly rejected for not being sufficiently deferential to the economic genius to whom the meeting at the Kansas City Fed’s Jackson Hole symposium was dedicated - Alan Greenspan. The economy was chugging along and growing reasonably well and Wall Street was making a mint because of the brilliant leadership of the free market guru Allan Greenspan. There was no room for dissent to the prevailing wisdom.
Yeah, right. And here were are now in the Recession that officially started in December 2007, and Alan Greenspan has admitted that his views on the self-correcting nature of the unrestricted and unregulated financial markets were wrong.
So what brought the economic party to a screeching halt? And more important, what do we do about it now? It's clear from the chaotic decisions made by Henry Paulson, Sec. of Treasury, and the less chaotic but no better informed decisions of Federal Reserve Chairman Ben Bernanke, no one really knows right now. One thing is clear, though. The answers to those questions will not be first filtered through the free market fundamentalist ideology and work. Those ideologically pure "answers" are largely what caused the current mess.
What I haven't seen on the right wing is any effort to actually dig into the problem and to propose solutions that might work. At best they offer prepackaged ideologically approved "solutions" with no convincing reasoning behind them. The liberal blogosphere doesn't have the answer yet, either, but they are getting to explanations of what caused the problem. From that workable (not perfect) solutions will ultimately be developed.
This is just one example. The top down authoritarian Internet media will give canned ideological responses and attack anyone who does not conform to the ideology. The liberal groups are searching for explanations and solutions and are open to things that are new because the current economic situation is quite unusually and according to the orthodox and free market fundamentalist ideas simply could not happen.
Is it any wonder that the left wing blogosphere is a lot more lively and active than the propaganda strewn right wing blogosphere? It offers puzzles with the possibility of real solutions that can be applied in real situations, not just frequently repeated canned and unquestioned conservative dogma, attacks on liberals and whining about how victimized conservatives are.
5 comments:
Prof. Benjamin Shalom Bernanke Exposed
"The debate about the ultimate causes of the prolonged Japanese slump has been heated. There are questions, for example, about whether the Japanese economic model, constrained as it is by the inherent conservatism of a society that places so much value on consensus, is well-equipped
to deal with the increasing pace of technological, social, and economic change we see in the world today.
The problems of the Japanese banking system, for example, can be interpreted as arising in part from the collision of a traditional, relationship-based financial system with the forces of globalization, deregulation, and technological innovation (Hoshi and Kashyap, forthcoming). Indeed, it seems fairly safe to say that, in the long run, Japan’s economic success will depend largely on whether the country can achieve a structural transformation that increases its economic flexibility and openness to change, without sacrificing its traditional strengths.
In the short-to-medium run, however, macroeconomic policy has played, and will continue to play, a major role in Japan’s macroeconomic (mis) fortunes. My focus in this essay will be on monetary policy in particular. Although it is not essential to the arguments I want to make—-which concern what monetary policy should do now, not what it has done in the past—-I tend to agree with the conventional wisdom that attributes much of Japan’s current dilemma to exceptionally poor monetary policy-making over the past fifteen years (see Bernanke and Gertler, 1999, for a formal econometric analysis).
Among the more important monetary-policy mistakes were 1) the failure to tighten policy during 1987-89, despite evidence of growing inflationary pressures, a failure that contributed to the development of the “bubble economy”; 2) the apparent attempt to “prick” the stock market bubble in 1989-91, which helped to induce an asset-price crash; and 3) the failure to ease adequately during the 1991-94 period, as asset prices, the banking system, and the economy declined precipitously
Bernanke and Gertler (1999) argue that if the Japanese monetary policy after 1985 had focused on stabilizing aggregate demand and inflation, rather than being distracted by the exchange rate or asset prices, the results would have been much better. Bank of Japan officials would not necessarily deny that monetary policy has some culpability for the current situation. But they would also argue that now, at least, the Bank of Japan is doing all it can to promote economic recovery.
For example, in his vigorous defense of current Bank of Japan (BOJ) policies, Okina (1999, p. 1) applauds the “BOJ’s historically unprecedented accommodative monetary policy”. He refers, of course, to the fact that the BOJ has for some time now pursued a policy of setting the call rate, its instrument rate, virtually at zero, its practical floor. Having pushed monetary ease to 2 Posen (1998) discusses the somewhat spotty record of Japanese fiscal policy; see especially his Chapter 2.its seeming limit, what more could the BOJ do? Isn’t Japan stuck in what Keynes called a “liquidity trap”?
I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan. Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively. However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed.
My objective here is not to score academic debating points. Rather it is to try in a straightforward way to make the case that, far from being powerless, the Bank of Japan could achieve a great deal if it were willing to abandon its excessive caution and its defensive response to criticism."
Prof. Benjamin Shalom Bernanke
Japanese Monetary Policy: A Case of Self-Induced Paralysis?
For presentation at the ASSA meetings, Boston MA, January 9, 2000.
A Credit Free, Free Market Economy will correct all of those dysfunctions.
The alternative would be, on the long run, to wait for the physical destruction (through war or rust) of most of our productive assets. It will be at a cost none of us can afford to pay.
A Specific Application of Employment, Interest and Money
Press release of my open letter to Chairman Ben S. Bernanke:
Sorry, Chairman Ben S. Bernanke, But Quantitative Easing Won't Work.
Yours Sincerely,
MC Shalom P. Hamou
Chief Economist & Master Conductor
1776 - Annuit Cœptis.
Interesting. The above comment is certainly off topic from the post. But I'll leave it.
I did google 1776 - Annuit Cœptis. The phone numbers are apparently in Israel.
The organization lauds Alan Greenspan as "The greatest economist in the world." I have real questions regarding anyone who would consider Greenspan the greatest economist in the world. I really don't think that you can just write off his ideological faith that the markets will always provide the best price and that banks would self-regulate in their own self-interest as minor flaws in his ideas that he has admitted to. He had better evidence of what was happening to the American economy and the housing markets than almost anyone else in the world for years and ignored it because of his Randian free market ideology. He was one of the major reasons the world has entered the current Recession.
Anyway, here are the results of my google search.
What we are saying about Alan Greenspan is that he did what was humanly possible to save Capitalism and he had a great understanding of financial Market.
As we have been waiting for this crisis to unfold since 1994 we have seen that his actions were making the crisis going further.
However our research say the crisis can't be avoided. He shouldn't have risen the short-term yields but I guess he couldn't stand still in front of the coming Liquidity Trap.
First, thank you for returning and responding to my response to your earlier comment. I really appreciate that.
My argument is that Greenspan's decision making appears at least as much political and ideological as as it does economic. I think that his ideological blinders led to the severity and timing of the current Recession. They cannot be dismissed as minor flaws in a great economist because they have so severely effected his economic decision making.
I watched the Southeast Asia crisis unfold and applauded his actions there to loosen the interest rates to use the US economy as an economic engine to avoid a greater world crisis, and looking back, I am not surprised that the same action created the conditions for the dot com bubble. He had to use interest rates to prevent inflation then, so he increased them. But look at the timing when he reversed that? He reached the highest interest rate right before the 2000 election.
It is well known that the state of the economy in the year before the election has a large influence on whether the party in power is kept in or replaced. That might have been economic coincidence, though. But look when he started lowering interest rates. He waited until after the election, then lowered them radically, setting conditions for creation of the housing bubble.
Granted he may also have created a mild economic recovery from the recession he set off killing the dot com bubble. But it was created primarily by creating the housing bubble. His refusal to publicly recognize the housing bubble long after it was clear to others (ideological belief that markets are always self-correcting?) contributed to the growth of bubble itself. Then because he was ideologically opposed to regulations, he refused to use the Feds power to regulate the wild-west process of selling mortgages. He didn't even investigate and report on the effects while it was happening, on the ideologically-based assumption that the banks themselves would act in their one long-term self interest.
Similarly he never bothered to act to control the wild-west financial instruments being sold as mortgages. He also ignored the corruption and fraud involved in selling so many of those. This was an ideologically based decision on the assumption that the banks involved would look out for their own long-term interest. Mortgage brokers (with little financial training) were steering customers in to inappropriate ARMs and worse because the commissions were so much higher. Very few of those brokers are still in business. They can't be expected to think long term. And the banks issuing the mortgages simply assumed that the housing prices would keep rising. They accepted those bad mortgages because they were immediately reselling them for the commissions.
Nor did Greenspan apparently concern himself with the bundling and selling process operated by the Wall Street banks. He didn't even know where the money was going or how much of it there was. As an institution, the Federal Reserve has a system-wide banking oversight responsibility. It cannot perform its function if no one is at least collecting and aggregating the information. The first step in keeping the system going would have been to collect and publish that data, but the nature of institutions like hedge funds prevented that.
How can banks be trusted to buy and sell bundled mortgages when they ignore the incompetence and even criminality that went into creating them? Simple. They sold off the risk using derivatives. But the underlying product was systematically flawed. This was a problem that should have been identified and dealt with by the manager of the system. That should have been the Federal Reserve. He failed o do that. (Ideologically-based decision? I think so.)
Apparently he did recognize the housing bubble at last, and began to raise the short-term interest rate to cut off the "exuberance." But when did he start?
Here's the political decision making again. He reached the lowest interest rate in 2003. He started to increase it by 1/4 % per month in June 2004. That timing appears to me to have been (after his actions in 2000) intended to reelect the Republican administration. His regularly monthly increases did not start until November 2004. I guess it wasn't urgent before the election.
By the time he started raising the interest rate again it was too late for a soft-landing. Since the lag times for the effects of an increase in the interest rate are so long, the Fed could not have known if the increase was too much, nor is it clear that a different pattern of increase would have helped much.
I'm inclined to believe that he did many of the right things when lowering and raising the interest rate, but the political nature of his shifts in course seem quite obvious. His timing certainly could have been better. But his failure to gain some control over the process of mortgage lending and selling the bundled products is a big failure. (One he may share with the free market fundamentalists who ran Congress.)
While the theories behind the various derivatives has been pretty well-worked out, the practical use of them and the effect of their wide spread use on the overall banking system clearly has not been. To allow the banks to freely design and sell such products and rapidly expand the markets for them without greater understanding of their potential effect on the banking system is one of Greenspan's failures, again one I would attribute more to his Randian-Libertarian philosophy than to his ignorance.
I don't blame Greenspan for the Recession, although of all the single individuals in a position to do something about it, he stands out as central. I do blame him for his politically partisan decision making, and I especially blame his Libertarian blinders for letting the Recession get as bad as it is going to be. I cannot agree that those things are minor imperfections in the economic actions he has directed for nearly two decades.
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Since you probably don't regularly read my blog, my economics education consists of a BS in Economics, an MBA in management, and I am ABD in a Ph.D. in Strategic Management which I finally abandoned in 1995. Along the way I have taken a lot of Economics, Finance and Accounting graduate courses. Along the way I once taught an Intermediate Economics course and at another time, Introduction to Finance. Both successfully I hope. I am currently retired and have the time to follow what appear to be some of the most important issues in America and the world. But I cannot pass myself off as more than an amateur who is very interested in economics and finance who also publishes his opinions on the Internet.
As your post is long I will answer argument after argument:
"My argument is that Greenspan's decision making appears at least as much political and ideological as as it does economic. I think that his ideological blinders led to the severity and timing of the current Recession. They cannot be dismissed as minor flaws in a great economist because they have so severely effected his economic decision making."
First Alan Greenspan, if I am well informed didn't invent capitalism.
He was, as I explain in my "Specific Application of Employment, Interest and Money" trying to avoid the Liquidity Trap that was coming as was evident by watching the behavior of long-term interest rates (Remember the Conundrum?).
He is the first and only economist apart from us that recognized the major importance of long-term interest rates and asset price in the behavior of macro economy.
His sole mistake was to jack up short-term interest rates from 1% to 4.5%. But what did you expect that he stand still?
The major factor in determining the price of a long-term assets (like a home) is long-term interest rates.
Those have been going down in a secular way till... 1981!!!
Now what we say is that the sub prime mess was a perfect storm because of the gross mismanagement by Bernanke:
He has been indecisive waiting till September 2007 to start lowering rates he did it in such a way that it did increase the volatility of interest rate and increased the long-term rate of the Liquidity trap.
We have a graph that shows the effect on volatility of the decrease of short-term rate by Greenspan and by Bernanke it is mind boggling.
My conclusion is that the Liquidity Trap couldn't be avoided.
The sub prime mess came from hiking interest rates not lowering them.
Bernanke mismanagement and pusillanimity made a middle size crash a major catastrophe.
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