Is this site attributing the Nobels?
It sure looks like it: I approve strongly of three Nobels in a row. Amazing. On Friday, the Nobel was attributed to a French writer who worries a lot about Nazism, Modiano. Then there was the anti-sexist, anti-Islamist Peace Prize to Malala.
Today professor Tirole, a French economist at the public university in Toulouse, got the Nobel in economics. Mr. Tirole pondered the best regulations so that large, powerful firms in industries such as banking and communications would act in society’s interest. that’s one of my familiar themes, and I go much further.
It’s the first Nobel in economy in 10 years who is not a citizen of the USA. Are we in an increasingly terrible socio-economic situation just from that monopoly? Tirole is the most American of French economists: a “polytechnicien”, he got an economy PhD from MIT.
He is depicted as “liberal” (right wing pro-capitalist in French parlance), because he believes in share holders’ rights, and that corporations should just worry about profits. As an extreme left wing progressive nut, I, paradoxically, agree with both points.
However how do I reconcile this with what I call “governmentalism”? Well, they go hand in hand.
According to governmentalism, the main actor in economics is the government. That’s pretty much obvious and was even true on Caribbean islands ruled by pirates: pirates, too, had government, and it ruled their economy (and that’s true to this day, except the pirates use finance instead of swords).
Much of what passes today for the free market is little more than global monopolies, organized crime and deregulated madness.
Jean Tirole, defending the real owners, the shareholders, has done important work exposing executive overcompensation, what I call the CEO class, and over-greedy corporate hegemony.
Here is the introduction of Roland Bénabou and Jean Tirole’s “working” paper on the “Bonus Culture: Competitive Pay, Screening, and Multitasking”. (Executive overcompensation, etc.):
“Recent years have seen a literal explosion of pay, both in levels and in di¤erentials, at the top echelons of many occupations. Large bonuses and salaries are needed, it is typically said, to retain “talent” and “top performers” in finance, corporations, medicine, academia, as well as to incentivize them to perform to the best of their high abilities. Paradoxically, this trend has been accompanied by mounting revelations of poor actual performance, severe moral hazard and even outright fraud in those same sectors. Oftentimes these behaviors impose negative spillovers on the rest of society (e.g., bank bailouts), but even when not, the firms involved themselves ultimately suffer: large trading losses, declines in stock value, loss of reputation and consumer goodwill, regulatory fines and legal liabilities, or even bankruptcy.
This paper proposes a resolution of the puzzle, by showing how competition for the most productive workers can interact with the incentive structure inside firms to undermine work ethics–the extent to which agents “do the right thing” beyond what their material self-interest commands. More generally, the underlying idea is that highly competitive labor markets make it difficult for employers to strike the proper balance between the benefits and costs of high-powered incentives. The result is a “bonus culture” that takes over the workplace, generating distorted decisions and significant efficiency losses, particularly in the long run. To make this point we develop a model that combines multitasking, screening and imperfect competition, thus making a methodological contribution in the process.”
Philosophically it can be explained and said much more simply: a culture of greed has taken over.
One should even say a MOOD of greed takes over. Considering recent discoveries in ethology and epigenetics, hell itself is the bottom of that abyss.
Indeed. Just like some fishes, according to circumstances, modify their genetics, and females turn into males, and some males even in “super males”, the top officers of today’s society turned into predators predating onto the rest of society.
It was high time that some authorities (and the Nobel committee is a small sort of authority) recognizes something in that direction. The work of reflection is just beginning.
The philosophy of banking has not been mulled enough. Nor that, more generally, of mighty corporations.
Those are gigantic institutions with a para-governmental role. They are big enough to influence governments, society, law enforcement, and the law itself. The immensely rich heads of major corporations are received by heads of states, as if they were other heads of state.
Yet, officially, banks and corporations are not led by the social good, and other higher principles, but by greed. Just greed. When those greedsters are celebrated as if they were statesmen, “philanthropists”, or even philosophers or “geniuses”, greed is recognized as philanthropic, and genial.
The less we regulate those giant corporations, the more powerful they get, and the more they can change the mind of civilization itself, towards greed. For example executives of Google were loud, clear, and acknowledged by the British government itself, to be of great influence in deciding educational programs: they are credited for making coding mandatory at age 5 in all schools.
Are Britons to become all little googlers? Ogling the mighty founders of Google, who travel the world in their personal jumbo jets, while paying no significant taxes, and being received by heads of states on their knees, another proof of their genius?
Yet Google siphons its multi-billion Euros profits in Europe through Ireland, to lower its tax bill, and then send said profits to paradise islands with no taxation whatsoever. In other words, Google seems to be an organized crime corporation, as it avoids paying tax nearly entirely. Mafias, and other crime syndicates can only admire such brazen arrogance, and no doubt envy Google after tax profit margins.
European regulators condemned Google for cheating with its search engine, to bring itself even more profits, and now say that Google is ignoring their pleas. Yet, we are putting the fate of youngsters under Google’s maniacal guidance.
This is just Google, the Do Evil company.
All other mighty corporations are applying similar tricks. GE, the oldest company in the Dow Jones, paid no tax for years. Disneyland France, the number one entertainment center in Europe, claimed giant losses, and had to be rescued by Disney (while forgetting to say said losses were from paying giant fees to Disney itself, probably re-routed through some tax heaven).
The situation with the banking system is even worse. As Marx noticed, banks have a monopoly. He left it at that. Now we need to talk.
A monopoly of what? Banks create most of the money. Thanks to the states.
So here we have people, the bankers, unelected and unsupervised, who do not have to justify themselves, operating in secrecy, who, through credit, give most of the money which exists in the world, to whoever they like. It turns out, they love themselves.
And, officially, all the motivation that this sort of secret government, by corporations, for corporations, has, is greed.
Time to ask them question, observe, study, and regulate them.
Economy does not need any more equation to burnish its reputation as a pseudo-science. Economy needs a thorough rethinking, of a philosophical nature.
Otherwise the employment situation, which Tirole, after getting his prize, just described as “catastrophic” will only get worse.
Employment is, of course, a crucial pillar of democracy: no employment, no democracy. The economy is more now about plutocracy than anything else: Tirole and company have lifted just a little bit of the veil.