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<DIV><FONT size=2>Bill,</FONT></DIV>
<DIV><FONT size=2> (I'm using up yesterday's quota
of messages and am about to get</FONT></DIV>
<DIV><FONT size=2>off the list tomorrow anyway).</FONT></DIV>
<DIV><FONT size=2> For the record, Shiller is one
of those who advocates the "behavioral</FONT></DIV>
<DIV><FONT size=2>finance" approach that rejects the idea that people behave
rationally in</FONT></DIV>
<DIV><FONT size=2>economics. He has been one of the more astute and
perceptive analysts</FONT></DIV>
<DIV><FONT size=2>of speculative behavior in financial markets, dating back to a
very important</FONT></DIV>
<DIV><FONT size=2>paper back in 1981. He is not at all a crackpot or a
fool, although I am not</FONT></DIV>
<DIV><FONT size=2>much of a fan of the insurance proposals in his latest
book. However, his</FONT></DIV>
<DIV><FONT size=2>earlier books, Market Volatility and Irrational Exuberance are
both excellent,</FONT></DIV>
<DIV><FONT size=2>almost as good as Doug Henwood's Wall Street, with Irrational
Exuberance</FONT></DIV>
<DIV><FONT size=2>hitting the shelves at the very peak of the stock market
bubble in early 2000,</FONT></DIV>
<DIV><FONT size=2>which was mighty good for his sales as it called the crash as
it hit.</FONT></DIV>
<DIV><FONT size=2>Barkley Rosser</FONT></DIV>
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<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A title=billbartlett@enterprize.net.au
href="mailto:billbartlett@enterprize.net.au">Bill Bartlett</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A title=lbo-talk@lbo-talk.org
href="mailto:lbo-talk@lbo-talk.org">lbo-talk@lbo-talk.org</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Wednesday, June 11, 2003 2:17
AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: [lbo-talk] Socialism by any
other name?</DIV>
<DIV><BR></DIV>
<DIV>At 10:48 PM -0700 10/6/03, Gar Lipow wrote:</DIV>
<DIV><BR></DIV>
<BLOCKQUOTE cite="" type="cite"> Bill Bartlett <<A
href="mailto:billbartlett@enterprize.net.au">billbartlett@enterprize.net.au</A>>
Forwarded<BR></BLOCKQUOTE>
<BLOCKQUOTE cite="" type="cite">Shiller could be a crackpot writing letters
to newspapers. In fact, he's a professor of finance at Yale
University.<BR></BLOCKQUOTE>
<BLOCKQUOTE cite="" type="cite">The two are not neccesarily mutually
exclusive.</BLOCKQUOTE>
<DIV><BR></DIV>
<DIV>Very true. But I thought the sentence following that was more
intriguing:</DIV>
<DIV><BR></DIV>
<BLOCKQUOTE>"He's the celebrated author of Irrational Exuberance, in which
he pooh-poohed the New Economy and warned that Wall Street's boom
couldn't last."</BLOCKQUOTE>
<BLOCKQUOTE><BR></BLOCKQUOTE>
<DIV>Gee, you mean he actually PREDICTED that a stock market boom would
eventually come to an end? Wow, that puts him right up there with the
prophets, who would have ever thought that prediction might come true.</DIV>
<DIV><BR></DIV>
<DIV>But it probably says more about the journalist than the interestingly
named Shiller, who also seems oblivious to the supposed "endowment
effect", in his reported proposal for "livelihood insurance". Gitten reported
on the proposal thus:</DIV>
<DIV><BR></DIV>
<BLOCKQUOTE>"Such "livelihood insurance" would require the development of
many</BLOCKQUOTE>
<BLOCKQUOTE>indexes for the growth in average salaries paid to people
in</BLOCKQUOTE>
<BLOCKQUOTE>particular occupations. So the policy for an employed male
architect,</BLOCKQUOTE>
<BLOCKQUOTE>for instance, might involve him being reimbursed by the
insurance</BLOCKQUOTE>
<BLOCKQUOTE>company for half the gap between his salary and the average
salary</BLOCKQUOTE>
<BLOCKQUOTE>for architects. This would leave him with an incentive to work
hard</BLOCKQUOTE>
<BLOCKQUOTE>in his career and thus would overcome the "moral hazard" problem
that</BLOCKQUOTE>
<BLOCKQUOTE>comes with all insurance - the temptation to stop trying once
you're</BLOCKQUOTE>
<BLOCKQUOTE>covered."</BLOCKQUOTE>
<BLOCKQUOTE><BR></BLOCKQUOTE>
<DIV>Of course this whole "moral hazard" crap assumes that the only motivation
people could ever have for engaging in useful work is money, which is
ridiculous on the face of it. But even given (for the sake of argument) that
it was true - the "endowment effect" doctrine tells us that the said
architect will value the insurance payout of 50% of the difference between his
low salary (which he already has) far more that the 100% which he could get by
working hard. So the gap between insurance guaranteed income and potential
income for busting your gut and grovelling to the employer won't be enough of
a disincentive to maintain labour discipline. Any such livelihood insurance
undermines thus the essential premise of the capitalist system - the threat of
hunger and want if you don't toe the bosses' line.</DIV>
<DIV><BR></DIV>
<DIV>I'm sure this Shill fellow is well intentioned, but he simply doesn't
know his arse from his elbow. Hasn't got a clue. Tragic, but that's
professional economists for you.</DIV>
<DIV><BR></DIV>
<DIV>Bill Bartlett</DIV>
<DIV>Bracknell Tas</DIV></BLOCKQUOTE></BODY></HTML>