"System change is now inevitable. Either because we do something about it, or because we will be hit by climate change. '...

"We need to develop economic models that are fit for purpose. The current economic frameworks, the ones that dominate our governments, these frameworks... the current economic frameworks, the neoclassical, the market frameworks, can deal with small changes. It can tell you the difference, if a sock company puts up the price of socks, what the demand for socks will be. It cannot tell you about the sorts of system level changes we are talking about here. We would not use an understanding of laminar flow in fluid dynamics to understand turbulent flow. So why is it we are using marginal economics, small incremental change economics, to understand system level changes?"

Thursday, September 18, 2008

Grace under fire

The following is the beginning of a statement released by SEC Chairman Christopher Cox in response to Sen. John McCain saying earlier today on the campaign trail that if he were president he'd fire Cox over the crisis on Wall Street:

"While I have great respect for Senator McCain, we have sometimes disagreed, and this is one such occasion. ..."

1 comment:

Aaron said...

Trying to run a “free market economy” with less regulation and fewer regulators is like trying to run a basketball tournament with fewer rules and fewer referees.

Free market economies require good rule of law to resolve contracts and torts, fair rules for the markets and enough cops and regulators to keep everyone within the law and market rules.

Wall street is like a college basket ball team, it needs rules and referees.