I went along both last night and again this morning to hear Nobel laureate Joseph Stiglitz speak. He is actually Nobel Lauriat one and a half times over, having received the Prize in economics and then having shared it again for his work on the International Panel on Climate Change. Given his IPCC work, you can get a fair idea of where he is coming from.
But what I found most remarkable was the following statement of his:
I don’t have an awful lot of confidence in market prices.
I’m not sure anyone is even allowed to be an economist if they take that view but perhaps I’m not keeping up with the latest trends. I will contextualise this by pointing out that his statement was made off the cuff and in response to a very sensible question about Stiglitz’s concern that we might be running out of natural resources so that we need our national accounting measures to better record resource depletion.
The question he was answering began with a reminder about the same sorts of views having been made by the Club of Rome in the 1970s. He could just as easily have been asked about the prediction that England was about to run out of coal made by the great economist William Stanley Jevons in the 1870s.
I, of course, don’t know what Stiglitz meant when he said that he did not have confidence in market prices. It was, as I say, a statement made off the cuff and without reflection. But this I do know. There is the market and the prices it generates. And there are humans who think they can do a better job than markets in figuring things out about where scarcity exists and where economising is necessary.
If Joseph Stiglitz is one of those humans, he should be writing for the Green-Left Review and not the American Economic Review. It is not an economist’s way of thinking.
He is quite right, the market prices business at $X one moment and $X-Y the next, based on rumours from Rupert and his gang.
rog
29 Jul 10 at 5:27 pm
But who could do it more accurately rog?
If by “rumours” you mean stuff in the press, I doubt that any trader takes notice.
ken n
29 Jul 10 at 5:30 pm
Rog, please advise your alternative for setting prices.
pedro
29 Jul 10 at 5:34 pm
I dont have to offer an alternative, the current system has proven to be not perfect and therefore does not inspire confidence.
rog
29 Jul 10 at 5:39 pm
“I dont have to offer an alternative”. Well that is true, but it makes criticism a bit less valid.
Not that anything is perfect, but what exactly is the problem with fluctuating prices? That’s the benefit of market prices.
pedro
29 Jul 10 at 5:43 pm
Rog lost all his money in the market. Woolworths he thinks.
Infidel Tiger
29 Jul 10 at 5:44 pm
Rog, ssn’t your current bout of depression caused by a lack of a carbon market?
Infidel Tiger
29 Jul 10 at 5:46 pm
Stiglitz’s comment is really nuts. Only market prices give any basis for confidence. All other prices are made up or manipulated by a person not subject to market discipline.
pedro
29 Jul 10 at 5:47 pm
Ken:
Let me. I know what Wodgie is trying to convey (in his inarticulate zombie like way).
Wodgie is trying to say that he doesn’t quite understand why prices move all the time and the market is always looking like it’s in a state of flux. It frightens wodgie. He’s scared.
This basically applies to most things to do with human exchange we call markets.
What Wodgie doesn’t seem to understand, or grasp, in his limited intellectual capacity is that people are always attempting to figure out the future and market movements say in stocks are basically a discounting mechanism of future expectations.
What Wodgie seems to be pining for is stability and doesn’t appear to like change.
That also seems to apply to poor old Joe.
Here’s a vid I put it up the other day but it’s worth revisiting. It’s poor old Joe copping an intellectual hiding for being an idiot from a Hugh Henry a well known London based fund manager.
Hugh doesn’t think poor old Joe lives in this world and it’s not unreasonable to agree with Hugh.
http://www.youtube.com/watch?v=E4MAifsp-8E&feature=player_embedded
JC
29 Jul 10 at 5:47 pm
“Rog, ssn’t your current bout of depression caused by a lack of a carbon market?”
LOL, and he had a big argument with CL as to whether the ETS was a market based scheme. Mind you, on that point Rog had a rare moment in the right.
pedro
29 Jul 10 at 5:48 pm
“I dont have to offer an alternative, the current system has proven to be not perfect and therefore does not inspire confidence.”
Don’t apply to be an engineer. You’ll go mad.
.
29 Jul 10 at 5:50 pm
Wodgie is essentially correct here. If certain outcomes don’t inspire confidence in him we should not continue.
If Wodgie gets scared we should stop doing what we’re doing and try it Wodgie’s way. Geoffrey did and look how happy she’s made him.
JC
29 Jul 10 at 5:56 pm
Stiglitz has obviously lost his mind and should be put in a secure dementia unit at an aged care facility.
Samuel J
29 Jul 10 at 5:59 pm
Or perhaps it’s a little rancid, Samuel.
He’s obviously on a speech circuit as you often see him on US TV programs pushing the same old barrow.
I’m guessing that he’s finagled a method of cashing in before he finally retires.
He’s obviously found a profitable niche after the GFC that brings in the cashola and saying stupid things doesn’t present a problem and in fact gets him engagements from that target audience he thinks are partial to those views.
Take a look.
http://www.allamericanspeakers.com/sportspeakers/printerbio.php?speaker_id=4128
JC
29 Jul 10 at 6:05 pm
Here’s more about his fees.
http://www.allamericanspeakers.com/feerange_popup.php
JC
29 Jul 10 at 6:06 pm
Even Time Magazine seems to be suggesting the Gulf oil spill was over hyped crap.
Yes, we’ve heard horror stories about oiled dolphins — but, so far, wildlife response teams have collected only three visibly oiled carcasses of any mammals. Yes, the spill prompted harsh restrictions on fishing and shrimping, but so far, the region’s fish and shrimp have tested clean, and the restrictions are gradually being lifted.
Read more: http://www.time.com/time/nation/article/0,8599,2007202,00.html#ixzz0v3bxyeXD
JC
29 Jul 10 at 6:16 pm
It’s hard to judge the veracity of a statement made out of context but if he’s won two Nobel prizes for economics surely he must be aware that this sentence is counter-intuitive within the field and have some reason for making it. And his lack of confidence in markets insofar as he possesses it does not mean that he endorses central planning.
.
To this I can only add that if adherance to a doctrine is a requirement to qualify as an economist then the field loses any claim to science.
Adrien
29 Jul 10 at 6:29 pm
JC et al continue to defy logic.
I have a car and the motor only runs sometimes and the gearbox occasionally connects and other days it just gives up.
I am supposed to accept this clunker because I cant design another car
Not only that, by stating that I lack confidence in this erratic piece of junk I am opening myself up criticisms that I need to be reeducated, that I am scared and a wimp and that I need a sex change operation, or whatever.
Phht
rog
29 Jul 10 at 6:35 pm
JC now says that the gulf oil spill wasnt so bad, maybe it was an OK thing to do?
He hasnt the foggiest but he knows how to read what he wants to read
rog
29 Jul 10 at 6:38 pm
“…is not my way of thinking about economics” ≠ “…is not an economist’s way of thinking”.
FDB
29 Jul 10 at 6:44 pm
I have a car and the motor only runs sometimes and the gearbox occasionally connects and other days it just gives up.
Ummm Okay
I am supposed to accept this clunker because I cant design another car
WTF? Who says you “have to accept this clunker”. You can always buy a new one. And who says that unless you’re subsidized by $2,000 to buy a 4 wheeled motor scooter you will be forced to design your own?
What a stupid argument. Not even Homer would try this on and until now he was the gold standard of stupid.
Not only that, by stating that I lack confidence in this erratic piece of junk I am opening myself up criticisms that I need to be reeducated, that I am scared and a wimp and that I need a sex change operation, or whatever.
No one suggests you need to be re-educated Wodgie. Frankly I for one couldn’t give a shit what happens to you. You do sound like a wimp at times and the sex change is in reference to your weekend makeover from someone who believed in right wing ideas to a doctor’s wife, which is someone that sours on his or her beliefs in a flash and goes ferrel, criticizing people she used to agree with previously. Unless I’m mistaken your makeover occurred over a weekend, no?
In other words you’re a dickhead Wodgie. A first rate one. A low rent dick.
JC
29 Jul 10 at 6:46 pm
Wodgie:
Your comprehension level is terrible, which is one of the many reasons people make fun of you here…… and you’ve turned yourself into nasty troll.
I didn’t say it was good, you illiterate dickhead. I said the spill was over hyped.
How you can move from overhyped to, it was an ok thing to do, is incomprehensible junk logic.
Wodgie
Get the hell out of here as you’re too stupid to be posting comments and it only make you angrier and more bitter and twisted.
JC
29 Jul 10 at 6:51 pm
“…is not my way of thinking about economics” ≠ “…is not an economist’s way of thinking”.
.
I do have to say that from my first essay at Uni (on Marx) and ever since the argument that markets don’t work as well as something else has never held water very long.
Adrien
29 Jul 10 at 7:44 pm
kudos for the use of a “not equals” sign, FDB.
daddy dave
29 Jul 10 at 7:49 pm
Stiglitz did some excellent work with Akerlof and Spence on information asymmetry. But that was a long time ago. He was recognised for this with the 2001 The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (there is no Nobel Prize in Economics).
But it has been downhill since – he has largely expressed irrelevant and irrational views that suggests my dementia statement may not be entirely in jest.
Samuel J
29 Jul 10 at 8:49 pm
How come folks who think market prices are usually wrong aren’t filthy rich then?
Put your money where your mouth is.
asf
30 Jul 10 at 1:39 am
The prices would then correct. Academic integrity y’know…
.
30 Jul 10 at 7:32 am
I don’t have an awful lot of confidence in market prices.
Following this, I don’t have a awful lot of confidence in Nobel laureates or even Lauriats.
dover_beach
30 Jul 10 at 9:43 am
Lariats?
Rococo Liberal
30 Jul 10 at 4:55 pm
RL, see Steve’s first paragraph.
dover_beach
30 Jul 10 at 4:58 pm
DB
I was extracting the urine.
Rococo Liberal
30 Jul 10 at 5:16 pm
Sorry RL, I’ve been conversing with Homer so I find it takes a while before I’ve fully re-calibrated my ‘taking the piss’ metre.
dover_beach
30 Jul 10 at 5:32 pm