The following are the questions for consideration that we will be discussing during our class mediation session on Wednesday. We look forward to a great discussion!
- Cassidy seems to hold a passive attitude towards the finance industry. For example, he argues “although certain financial activities were genuinely valuable, others generated revenues and profits without delivering anything of real worth”. Do you agree with him? Do you think certain financial activities are “socially useless”?
- Krippner argues that the increasing size and influence of financial institutions has been driven by political concerns. For example, in the seventh paragraph, she refers to “the U.S. government’s most visible interventions in the wake of the crisis in 2008” being directed to the auto industry as well as in the second to last paragraph referencing the “rescuing of Detroit” as a main pillar of Obama’s re-elction. But, could one make the argument that rather than being the driver of financialization, shifts in public policy are the result of financialization? What are some examples of how either phenomenon has taken place?
- Blyth dismisses the role of the state and individual morality as having significant impact on the global financial crisis and yet he writes “Note once again how none of this has anything to do with the state (beyond the fact that states chose not to regulate derivative markets – a cause only by omission). Thinking counterfactually (essentially asking “what might have occurred if…”), to what extent could this “omission” have altered the outcome of/or even avoided the crisis?
- The second assertion indicates the crisis took place in a moral vacuum in which different actors with the same motives would have the same results. How does he support this argument? Should this idea be widely accepted? For example, the imprudence of real estate buyers accumulating large amounts of debt could be considered a moral failing that contributed to the crisis.
- In Lanchester’s “How to Talk Money”, he cautions against economists’ tendency to rely too heavily on models. Blyth equates the Value at Risk (VaR) model with playing Russian Roulette. Both offer a bleak description of economic models. What positive utility do economic models have and what controls can be put in place to ensure they are not abused?
- Grabel suggests two alternative criteria termed the “principle of democratic credibility” and the “principle of fallibility”. To illustrate, on page 77, she argues that the principle of fallibility “begins with the presumption that the premises on which economic policies are founded are necessarily inherently imperfect”. Do you think these criteria are strong? What’s the weakness of them?
– Bethany and Xia