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Via Zero Hedge
Love him or hate him (and based on some recent appearances, notably side by side Hugh Hendry, he hasn't left much room for amorous intentions), Joe Stiglitz once again takes center stage, this time in this appearance at the Commenwealth Club, in which he discusses various things (among which are his grading of Obama, which compared to Dubya' administration, he gives an A+, and since this is roughly in line with where the rating agencies rate the US, it should raise all sorts of red flags). One of the key topics of discussion is his claim that efficient markets are a myth, and that Adam Smith's "invisible hand" appears as such because it was never truly there. Joe's bashing of economists with their hollow goal-seeked theories is one thing we can certainly agree with, and as to the market being propped by visible hands and other means, well, that is beyond the scope of this post (unless Chairman Shalom decides to grace the comment stream with his presence).
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"The theories that said that markets work perfectly were all based on very simplistic models of perfect competition and perfect information. My own work we show that the reason that when there is asymmetric information, the reason that the invisible hand often seemed invisible, was that it wasn't there. And I don't think today anybody would claim that the pursuit of self-interest by bankers, which is sometimes called greed [don't tell the screenplay writer for Wall Street] has led to the well-being of all of society. And yet this was the central notion taught in almost every graduate school in the country."
So there you have it - generations of economists brought up on flawed concepts, eagerly and blindly perpetuating the flaws with each new generation (and charging $50k a year in the process). Yet the notable issue here is, assuming one agrees with Stiglitz, that markets are imperfect, and benefit banks, precisely because banks, due to their unprecedented size and trading monopoly, now have unparalleled asymmetric information access, thereby cementing their position as the most lucrative establishments in the history of capitalism, which coupled with a government's unwillingness to touch these firms for fear of an imaginary Nuclear Holocaust, will likely persist as such until the onset of the real WWIII. .
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