I wanted to liveblog from the INET conference in Berlin, but I was too zoned on all the ambient stimulus and nutrient rushes from the endless flow of food that I couldn’t pull it off. So now, a few days late, here are some random notes:
That wasn’t really Jörg Asmussen of the ECB on day 1. It was actually a standup comedian who had perfectly mastered central bankspeak in order to exaggerate and make fun of it. Funny how I was the only one in the audience who seemed to know what was going on.
Axel Leijonhufvud pulled something on day 1 I’ve never seen before at an academic conference: he flashed the title slide from his PowerPoint, then said “This is not my paper.” After this, another title slide and another disclaimer. I wish he had gone on in this mode. Ages ago, when I was a freshman in college, I went to a poetry reading by Charles Olsen. He began by opening a large briefcase, saying, “There’s a poem here I would like to read to you.” Then he spent a few minutes leafing through it—no luck. So he pulled out a different poem. “This is not the one I want, but give me a few minutes for it anyway.” Then back to the briefcase for several more futile minutes. Then another wrong poem. Then more briefcase. Of course, he never found what he was looking for. I’ve always wondered whether this was chaos or schtick.
Anyway, AL wants bankers to be paid in equity, and he wants liability to be limited not at zero but at some negative value, whatever it takes to evoke behavior that is acceptably prudent.
Norbert Walter took one look at the hostile crowd massed under the (invisible) banner of Keynes and decided not to engage in any discussion.
Fossil fuel imports are as relevant for the Eurozone as they are for the US, maybe more so. Without the current account overhang of these imports, the periphery might be able to make it. (But that assumes the euro wouldn’t rise in a sort of reverse Dutch effect, cutting into exports.)
Wolfgang Munchau said something I hadn’t thought of that sounds right. I asked him about my pet theory regarding why some of the Landesbanken got into big trouble, despite their historic focus on financing the Mittelstand rather than newfangled financial instruments, which is pressure from Brussels. They were facing a lot of heat and had to demonstrate a market rate of return (i.e. no subsidies), and the poor trusting souls managing their portfolios just bought a bunch of toxic AAA’s with no questions asked. Yes, said Wolfgang, this is part of the story, but the bigger part is that, with the ballooning of the German current account surplus in the early and middle parts of the decade, the Landesbanken found themselves with an excess of deposits. After they had made all the reasonable loans they could find to their Mittelstand borrowers, they had gobs more to dispose of. Then the stories converge: poor trusting souls, etc.
Katharina Pistor gave what looked like an interesting presentation on financial markets based on a hierarchical vision of their structure. Looked, alas, because the acoustics were terrible, and she has a quiet voice, so I could only guess at her content. Her talk is up in video; you should check it out.
John Kay’s talk was memorable. He is of the opinion that the hyperprofitability of finance in the runup to the crisis (and since, I would imagine) is illusory. There were no such superprofits. It was/is accounting fraud on a cosmic scale. What do readers think of this?
I garbled a question from the floor about the democratic deficit in Europe–-didn’t ask it the way I wanted—but it didn’t matter. Really, all I had to do was use the two d words. They had been missing from the vocabulary and it was starting to rankle.
On the other hand, I had the pleasure of hearing a speaker refer to a cost-benefit study I had done about a decade ago on an entirely unrelated topic (child labor), a truly odd coincidence.
Armin Falk gave the sort of talk that makes me schizophrenic. He summarized a lot of studies that show that fairness in labor relations is a win-win. Yes, but how to explain unfairness? Are lots of firms just making mistakes, or do they know something that academic economists don’t?
Jim Heckman gave his now well-known plea for big investments in early childhood education. Elsewhere, I’ve written that the criterion of equal opportunity requires specifying a moment of equality. In the language of the footrace metaphor, if the criterion of fairness is a fair starting point for everyone, you have to designate that point. I think for Heckman it may be around age three, on pragmatic if not philosophical grounds. (The later you make it, the more individual choice you have to override.) Me, I’m in favor of fun runs with just enough prizes to get people to stretch out a little. Meanwhile, Heckman praised Schooling in Capitalist America, whose coauthor, Herb Gintis, was in attendance. For JH, this is a book about the value of noncognitive skills, which everyone needs to acquire.
I’m leaving out all the reunions and new contacts that are what conferences are really about. You had to have been there....