1. NPR hack apologizes for Wall Street

    azspot:

    NPR hack apologizes for Wall Street

    But Davidson’s defense brief is incredibly wrong. I’d say “dishonest,” but I suspect he really doesn’t know better. He’s just picking this stuff out of the air. His points, in turn. Without Wall Street…

    …the poor would stay poor. Without credit cards, poor people would have no money to buy stuff. Thanks to Wall Street, now they do—a contrast with benighted other countries, where they don’t. He seems to forget that the borrowers have to pay the money back, and at often usurious interest rates. Borrowing money at 18% or more is a poor substitute for a decent job and a civilized welfare state. Besides, the poor are not as well endowed with credit cards as Davidson seems to think—only 28% of the poorest fifth of the population carries a balance on its credit cards. That’s about half the share of the middle- and upper-middle income brackets. (See: FRB: 2009P, especially the Excel file.)

    …there would be no middle class. Davidson once again seems to think that borrowed money is the same as income. There’s no doubt that easy credit over the last 30 years has made class warfare from above more palatable, economically and politically. But neither admirable nor sustainable. Also, Davidson apparently hasn’t read up on the comparative international mobility stats (e.g.,this). He writes: “One of the most striking facts of life in countries without a modern financial system is the near total absence of upward mobility.” In fact, the U.S. has a middling-to-poor standing on mobility in the international league tables. A country like Germany, where consumer finance is relatively underdeveloped, is more mobile than the U.S. The Nordic social democracies show the most mobility of all. Oh, and student debt, now breaking the trillion dollar mark? Nothing to worry about, says Davidson: it’s “largely changed America for the better.” Actually, the rising price of higher ed is making it harder all the time for the working class to go to college. Watching millions graduate with five figures of debt into a miserable job market doesn’t evoke a better America. College should be free.

    …lots of awesome things would never happen. Wall Street, because it loves risk and innovation, is responsible for all sorts of wondrous novelties, like lifesaving drugs and artisanal goat cheeses. In fact, financiers long been shy about funding risky ventures. Henry Ford couldn’t get a dime out of them when he was revolutionizing auto production. Financiers weren’t at all interested in computers from the late 1940s through the mid-1960s—the Pentagon and Census Bureau funded the industry in its early stages. Ditto the Internet, which was initially a project of the military. Basic pharmaceutical research is funded by the National Institutes of Health. Wall Street is more interested in things that have been proven. And I doubt that Goldman Sachs has much to do with funding artisanal cheese production, though its employees probably buy a lot of the stuff.

    And how does Wall Street do all this? By matching investors and borrowers, of course. In fact, most corporate investment is funded internally, through profits. Very little comes from the stock market. Venture capitalists are crucial to funding startup firms, for sure, but VC is actually a relative speck on the financial landscape. Trading in existing assets, the bulk of what Wall Street does, has almost nothing to do with real activity.

    Oh boy. As much fun as Planet Money is, the neoliberal apologetics embedded in a lot of their unspoken assumptions and gleeful marginalism are getting more and more irritating; this NY Times piece by Adam Davidson is just outright propaganda for some fairly contestable economic ideas.

    2. 4 months ago  Notes (24)
      1. trexcommentary reblogged this from azspot
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      3. citizenalien reblogged this from azspot and added:
        Oh boy. As much fun as Planet Money is, the neoliberal apologetics embedded in a lot of their unspoken assumptions and...
      4. alsson reblogged this from azspot and added:
        This guy wants a “civilized welfare state.” The very phrase is absurd. He’s dreaming socialist dreams, mistaking hope...
      5. brcdncn reblogged this from azspot
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      8. azspot posted this