Coming from a lunch event at the home
of the country's vice president, Gilbert Bukenya,
Franklin could see the "energy" in the crowd
and heard that some people were being shot,
according to his YouTube report. (Watch below).
He and his entourage sought refuge
at a local police station.
Franklin was riding in a car, but others with him
were on a bus, which was pelted with stones.
After entering the bus to check on his team,
a police officer began
shooting rioters from the bus.
On the YouTube video,
the singer said: "I was so scared ... but
I'm coming back to Africa.
This won't be my last time ... God's grace."
The concert on Franklin's schedule was held
the next day at Nakivubo Stadium
in the Ugandan capital.
Franklin went to Kenya next and
is now in Japan.
http://www.youtube.com/watch?v=9Mfzr7CsbDo
Link here
L'énergie éolienne pourrait satisfaire tous
les besoins en électricité de la Chine en 2030,
ce qui permettrait de réduire les émissions
de C02 dont ce pays est
le principal responsable, selon
des experts américains et chinois.
Passer des centrales électriques au charbon
aux éoliennes diminuerait notablement le CO2,
principal gaz à effet de serre,
émis dans l'atmosphère, estiment les auteurs
de l'étude publiée dans la revue
américaine Science datée du 11 septembre.
"Le monde se débat avec la question de savoir
comment passer de l'énergie fossile
à des sources dépourvues de CO2",
relève Michael McElroy, professeur
de science environnementale
à l'Université de Harvard (Massachusetts,
nord-est des États-Unis), principal auteur de ces travaux.
La Chine est devenue le second producteur
d'énergie éolienne derrière les États-Unis avec
une capacité de 792,5 gigawatts par an et
cette puissance devrait augmenter de 10%
par an, note-t-il.
En outre ce pays est le plus grand émetteur
de CO2, donné comme le principal
responsable du réchauffement climatique
qui menace la planète, a poursuivi cet expert
ajoutant que "la vrai question pour le monde
est de savoir quelles sont
les alternatives offertes à la Chine ?".
Le développement des énergies renouvelables,
surtout éoliennes, a bénéficié d'un
important encouragement en Chine
avec l'adoption d'une loi en 2005
qui offre un régime fiscal favorable
aux investissements dans ce secteur énergétique.
De plus, le gouvernement chinois a mis
en place un système d'adjudications
qui garantit une rentabilité raisonnable
pour les grands projets de production
d'énergie éolienne.
Dans leur rapport, les experts imaginent
un réseau d'éoliennes qui "n'occuperait
que 0,5 million de kilomètres carré",
soit la superficie de la France (la Chine
fait plus de 17 fois la superficie de la France)
et nécessiterait un investissement de
quelque 900 milliards de dollars
sur les 20 prochaines années,
un montant jugé raisonnable au regard
du poids de l'économie chinoise.
Ce réseau de turbines éoliennes tournant
à seulement 20% de ses capacités pourrait
produire jusqu'à 24,7 pétawatts/heure ce qui
correspond, selon les experts, aux besoins
de la Chine en 2030 et à sept fois
la consommation électrique actuelle de la Chine.
Le réseau permettrait ainsi de subvenir
aux besoins de la Chine bien au-delà de 2030.
L'impact environnemental de ces turbines
devrait aussi être faible, permettant aux zones
où elles se trouveraient de poursuivre
l'exploitation agricole, selon ces experts.
En comparaison, si la Chine continuait
à dépendre du charbon pour répondre
à la demande électrique des
vingt prochaines années, le pays devrait
construire des centrales capables
de produire 800 gigawatts d'électricité par an
entraînant un accroissement potentiel
de 3,5 gigatonnes d'émissions
de CO2 annuellement.
Link here
Paris aura été l'hôte de deux salons consacrés au très haut débit.
Le premier, "Broadband World Forum", comme son nom l'indique
clairement, était un événement international et a eu lieu du 7 au 9 septembre.
"ODEBIT 2009", très centré sur l'équipement du territoire
national français, aura lieu les 22 et 23 septembre 2009.
Je m'y suis inscrit, bien sûr, car c'est un sujet stratégique
sur lequel je travaille beaucoup.
En lisant le programme, quelle ne fut pas ma surprise
en constatant qu'il n'était question, pour l'essentiel,
que de la fibre optique !
Je suis très inquiet, car j'entends actuellement en
France un discours simpliste sur ce sujet :
- La France est en retard sur le Très Haut Débit, oui.
- Les pays qui sont en avance, Japon, Corée du Sud
ont déployé de la fibre optique, oui.
- Donc, il faut déployer de la fibre optique en France !
Et si ce raisonnement, en apparence logique, était erroné ?
C'est ce que je vous propose d'analyser avec moi.
Les atouts de la France, aujourd'hui
Remarque : ce que j'écris sur la France est valable
pour la grande majorité des pays développés.
La France n'a pas à rougir de sa position concernant les accès à Internet :
- Elle est très bien placée en Europe dans le haut débit, entre
Creuser des dizaines de milliers de kilomètres
de tranchées pour installer des fils ! En 2010 !
Quelle ringardise ! Quel gâchis financier !
Et si l'on sautait, directement, dans l'ère du
History leaves its mark on geography; t
hat much is obvious.
Less obvious are its echoes in our
opinions and attitudes, which can
be heard, unwittingly repeated,
in modern form, whenever we talk
about politics or values.
The historian Diarmaid MacCulloch
has observed, for instance, that
the former Protestant strongholds
of southern France, which suffered
horribly under the persecution of Louis XIV,
were among the most radically anti-clerical
during the French revolution.
The region later became a hotbed of
French communist resistance to the Nazis,
"and even in the late twentieth century
they were still delivering a reliable vote
for French Socialism."*
It's odd how often oblivious we are to
the fact that our opinions form inside
an invisible framework, which History constructed.
Yet there are the Southern French,
voting socialist, in part because of something
Louis XIV did.
Ideology is all around us and we don't
notice it, shaping our views, and our toilets.
The French Senate has already signaled
that some tightly regulated form of surrogacy
may be allowed in the 2010 draft
of the bioethics law.
Calls for its decriminalization have been
on the rise here, in part because
of the plight of a few French parents,
who have been unable to win legal recognition
for their children conceived abroad
in countries where surrogacy was legal.
As hubs of commercial surrogacy make plain,
like the town of Anand, in the Gujarat state
of India, gestational surrogacy
has become a global industry.
Many in France still harbor reservations.
And in a way, surrogacy is like a cultural
Rorschach test.
Picking through the ethical dilemmas it raises,
as the French see them, is as good
a method as any for understanding
what makes the French tick.
To start with, there's the issue of exploitation,
where already French and American
views diverge.
Anytime someone provides a service out
of desperation or for lack of an alternative,
they can't be said to have entered
into the transaction freely.
This is the main reservation that Americans
tend to have about surrogacy.
We worry whether individuals are free
to act as they choose.
So long as a transaction isn't immoral,
often in some religious sense,
we tend to think people should be
free to do as they choose.
Many view prostitution as immoral,
for example, but even if you set aside
religious objections to it, it may still be
considered objectionable,
since it is not often entered
into willingly, except maybe in Nevada.
In France, by contrast, safety is not
the overriding concern regarding surrogacy,
though it does figure in the debate.
Nor do they worry whether the transaction
can ever be fair in a contractual sense.
Quite the opposite—the exploitation,
according to the French view,
lies in the indignity of the transaction itself.
In fact, one thing advocates and opponents
alike can agree upon is the corrupting
influence of money.
Both would like to see it taken out
of the equation altogether.
Last May, for instance, the Conseil d'État,
France's highest administrative court,
strongly advised against altering
the bioethics law to allow gestation
pour autri.
And the essence of the problem
for them, likewise, was money.
It is a fundamental principle of French law
that the human body is inviolable,
and no part of it can be treated
like property.
In its decision, the Conseil d'État reasoned
that since altruistic surrogates usually
receive some form of stipend,
and since the nature of the relationship
between the intended parents
and the birth mother is necessarily
contractual, then, in essence,
surrogacy is a transaction,
which treats the child like
an object and the surrogate
mother's body like a commodity.
This is a concern echoed by other
French critics, such as
philosopher Sylviane Agacinski,
who view the practice as degrading,
by definition.
"To solely use [a woman's] belly is
contrary to dignity," she told
the left-leaning website Rue89,
"even if no money changes hands,
because it places the very existence
of one human being at the service of another."
The issue is whether, as the American
philosopher Michael Sandel has argued,
certain goods or social practices
can be degraded if bought
and sold for money, or "marketized."
Often Americans tend not to perceive
how the voluntary commercial exchange
of objects may diminish them
or tarnish them.
Though often we are unable to imagine
the things we truly hold sacred ever being
bought and sold.
But consider the reaction if folks somehow
learned that John Roberts had purchased
the office of Chief Justice of the Supreme
Court in a backroom deal (which obviously
he hasn't, so don't take this out of context.)
The point being, it's easy to see how
certain transactions, in and of themselves,
can corrupt an institution,
just by virtue of turning it into something
that can be bought or sold.
What is truly ironic is how close this
all brings the rabidly secular French
to that group of Americans with
perhaps the strongest sense of the sacred,
that is, fundamentalist Christians,
who also happen to be deeply divided
over surrogacy.
Of course, American Christians
who do object to it tend to do so
on explicitly biblical grounds.
They just don't sublimate their
quasi-religious view of the womb
beneath a Marxist term
like "commodification".
Yet ultimately, surrogacy is likely to win
out in France.
And the reason why is because
telling hopeful parents that they can't have
children seems cruel, especially when
richer parents can afford to pay
for the procedure outside of France.
As a woman in the French journal L'Express,
whose sister bore her child,
wrote in a letter in response
to Sylviane Agacinski:
Yes, we need a legal framework
to prevent abuses and scams.
But bearing children is not
about money.
It's a gift of love between
sisters and friends.
It's normal to reward someone
who comes to our aid
and improves the quality
of our life.
In our consumer society, money
is the only way to compensate
someone so that they
too can live better.
Emotional politics, indeed. What's more,
charges of inhumanity carry a lot
of weight in France.
So, in all likelihood, surrogacy
will be decriminalized, if not legalized,
by next year.
Perhaps it's for the best.
After all, the moral of 20th century French history
is that rigid ideology serves
no good end, when it's inhumane.
*Diarmaid Macculloch.
"Reformation : Europe's House
Divided, 1490-1700." Penguin
Books Ltd, September 2004.
Special thanks go out to Dr. Eileen Servidio,
President of the American Graduate
School of International Relations
and Diplomacy, for her invaluable
help with French law.
The news from the art trade has been grim
the past year.
Many art galleries around the United States
have closed their doors, and major
and regional fine arts auction houses
have watched sales revenues
and prices go down and the percentage
of unsold lots go up.
Fewer people have been looking
to buy or sell, and
that trend is likely to continue a little longer.
"Top-quality objects continue to do well,
" said Matthew Girling, chief executive
officer of London-based Bonhams,
but "the supply of very good things
has been drying up in this soft market."
As a result, "people are going to auctions
looking for bargains,"
and they are willing to pay only lowball prices.
"For the sort of people buying from us,
confidence is needed," Girling said.
"Their businesses need to be doing well,
and the economy needs to be back on track."
Then, presumably, they'll start collecting again
in the way that they had between 2005
and early 2008. Maybe.
In past years it was a truism that
the art market lagged six to 12 months
behind the rest of the economy.
Collectors splurged on art purchases
for that period of time while the stock market
plummeted or held off from buying until
the financial markets had recovered
for a half or full year.
More recently, the correlation between trends
in the stock and art markets has been higher,
according to Rachel Pownall-Campbell,
an assistant professor of finance
at Maastricht University in the Netherlands
and an advisor to The Fine Art Fund
in London, a hedge fund investing solely in works of art.
"There is more interdependence than
there used to be," Pownall-Campbell said,
attributing this in part to "people in the
finance industries who also invest in art.
We saw most recently these markets
falling at the same time and
at the same rate, in large measure."
As a growing number of economists predict
that the U.S. economy will come out
of the recession later this year (perhaps
heralded by climbing share prices
on the New York Stock Exchange
over the past few months),
the opportunity for a rebound
in the art market also could be in the offing.
One test may be seen on November 4
in New York City at Sotheby's evening sale
of Impressionist and modern art.
Sotheby's will offer seven paintings
from the Paul Durand-Ruel collection
from France.
The combined estimated value
is $8.9/12.6 million.
These artworks include Pierre-Auguste
Renoir's Woman with a White Hat
(est. $2.5/3.5 million), Camille Pissarro's
The Boieldieu Bridge and Orleans
Train Station in Rouen on
a Sunny Day (est. $2/3 million),
and Alfred Sisley's The Seine
at Argenteuil (est. $1.5/2 million).
Beginning in September the seven paintings
will be exhibited in Paris, Hong Kong,
London, and then New York City
prior to the auction.
The U.S. dollar is still low relative
to the British pound and the euro.
Possibly U.S. buyers will snap up some
or all of these paintings,
but Sotheby's hopes through these maneuvers
that foreign collectors will see them
as bargains, and that Americans
will at least spur some competitive bidding.
William Goetzmann, director of the
International Center of Finance at
the Yale School of Management,
claimed, "The key indicator to watch
is how the markets and institutions
fare at the very high end.
For example, the profits on Wall Street
and the recovery of the hedge fund
industry are good indicators that
high-end art buyers will feel
more comfortable investing in art.
The calming financial markets also
suggest that major investors
could begin to turn their
attention back to collecting."
As a caveat, however, Goetzmann noted
that it is unclear "whether the culture
of collecting may have changed
as a result of the criticism
of excessive compensation.
With bankers and hedge funds
still under criticism and scrutiny in Europe,
it may make investors from
these sectors wait until
the adverse publicity blows over."
Corporate profits for publicly owned
companies is one of the key indices
on which Christie's bases its forecasting.
The auction house also is "in touch with
our own bankers, clients who
are bankers, and contacts in different
parts of the world," according to Paul Provost,
director of trusts, estates, and appraisals
for Christie's New York.
There is no single index that follows
the art trade, he noted, but he tracks
the market for "high-end residential
real estate" as indicative
of the financial health of would-be clients.
The market for high-end residential real estate
has suffered greatly relative to "low-end housing,
where prices increased at a much higher
percentage during the boom period 1997
to 2006 and where all the foreclosures
are now," said Donald R. Haurin,
professor of economics at Ohio State
University and board president of
the American Real Estate
and Urban Economics Association.
"Prices went up for high-end real estate
during that boom period too
but not relatively as much or as fast.
Prices are probably being lowered
for these properties, but the wealthy
have delayed selling properties—if
they can delay—until prices
return to higher levels."
Major sales are slated at the auction houses
in November, but because these sales
were put together months in advance,
they are likely to represent
the worries of past months rather
than any newer optimism,
according to Donald Thompson.
Thompson is a professor at
the Schulich School of Business
at York University in Toronto
and the author of The $12 Million Dollar
Stuffed Shark: The Curious Economics
of Contemporary Art (2008).
Fewer lots continue to be offered
in the upcoming sales, "all with
as low estimates as they can manage."
Of late, the percentage of sold artworks
in these sales has risen,
but Thompson attributes this
to the fact that "so many
of the lots being offered
carry irrevocable bids
that serve as guarantees."
An irrevocable bid is one
that is promised before the sale
at a given price, ensuring
the lot will sell.
"That is one reason the lots
are being offered."
He does not expect that we will
see "price levels for art anything
like eighteen months ago.
The very best museum-quality items
will sell at 2003-2004 level prices"
only "because some wealthy
new museums" (such as those
in Abu Dhabi, Qatar) "are
still buying.
Anything aggressively
priced will struggle."
There may be opportunities
in this crisis for buyers
who can sniff a bargain.
"The next two years will be
the best time to buy," said Philip Hoffman,
director of The Fine Art Fund,
"because there will be distress sales,
and some sellers are going
to be willing to take thirty percent less"
than what they might have earned
as recently as early 2008.
Sometimes, even more than 30%.
Deborah Davis, a New Jersey art advisor,
noted that she recently helped a client
who needed to raise money
sell two works from his collection—an
early 20th-century American photograph
and a lithographic print by
Pop artist James Rosenquist—for $45,000
and $6000, respectively.
That's 40¢ to the dollar when compared
with what she would have expected
in the first half of 2008.
"There are a lot of people looking
to sell these days," Davis said.
Some galleries of contemporary art
mention to her the possibility
of significant discounts, even before
she indicates an interest
in buying anything.
"They never did that in the past."
That 20th-century photograph was sold
to an art dealer, and the Rosenquist print
went to a private collector.
Davis noted that the seller chose
not to bring them to Christie's or
Sotheby's because "they don't give
guarantees anymore, and they won't take
something that isn't star quality."
(A guarantee, used as an enticement
to obtain consignments,
is a promise that the auction house will
sell the item at or above a certain price
or purchase the piece itself.)
The high percentage of unsold auction lots
over the past year, sometimes
reaching 40% or higher,
is embarrassing to the auctioneers
and damaging to the future sales prospects
of the artworks.
As a result, the major auction houses
are holding smaller and fewer sales,
turning away pieces less likely
to find buyers, and
lowering estimates to lure bidders.
Many art galleries are undergoing a degree
of retrenchment-reducing prices
or increasing discounts, holding
fewer exhibitions, maintaining smaller staffs,
and perhaps attending fewer art fairs,
especially those on other continents.
"The overhead in the gallery business
is enormous," said Roland Augustine,
a Manhattan gallery owner
and president of the Art Dealers Association
of America.
Attending the annual June Basel Art Fair
in Switzerland, for instance,
cost his gallery $300,000 for crating,
shipping, and insuring artwork,
for gallery staff travel and accommodations,
for booth design, and
for entertaining clients.
("We made back our costs," he said.)
Overall, the monthly cost of running
Luhring Augustine Gallery, with its
18 full- and part-time employees,
is $350,000.
He estimated that the average monthly
overhead of smaller galleries with only
three or four employees
is at least $35,000 to $50,000.
In some cases galleries have been
able to renegotiate their rents downward.
There is less talk of "waiting lists"
for sought-after artists-getting
on a gallery's waiting list had often
involved purchasing artworks
from several exhibitions in order
to prove one's commitment to
the gallery-and precipitous price rises
aren't as likely for art by acclaimed artists.
"The process of restructuring the
art market will be more protracted
than anyone likes to admit," Augustine said.
The economic recovery will likely
be accompanied by some degree
of inflation, since governments around
the world, particularly the U.S.
and the U.K., have been pouring
tremendous amounts of money into
their economies through bailouts,
low-interest-rate loans,
and stimulus efforts.
It is not clear if inflation will have
a positive or negative impact
on the art market's recovery.
"Inflation is an indicator of
an expanding economy," said
University of Chicago economics
professor David Galenson,
and the optimism generated by expansion
tends to be bullish for all markets.
In addition, at times of rising prices artworks
have been purchased as a hedge
against inflation,
which makes activity in the art trade
twice as likely.
Simon de Pury, chairman of Phillips
de Pury & Company, noted that
"back in the 1970's, when there was
considerable inflation, it proved to be
a good thing for the art market."
One of the winners during that period
was the British Rail Pension Fund,
which invested $100 million (2.5%)
of its portfolio into the purchase of
a wide range of decorative and fine art,
such as African tribal artifacts,
Chinese porcelain,
and French Impressionist paintings.
Between 1987 and 1999 the fund sold
all its art assets, and the returns
represented an annual compound
interest of 11.3%.
On the other hand, inflation that exceeds
economic growth "is a negative,"
said John Silvia, chief economist
for Wachovia, because it hampers growth
by making it more expensive
for businesses to expand.
The high cost of money limits
"the availability of credit, which affects
art buyers, as well as
home buyers and business owners," he said.
Another drawback of inflated amounts
of money paid for artworks,
according to Gianfranco Mossetto,
chairman of the department of art
and cultural economics
at the University of Venice, Italy,
is that "prices could increase
independently of the quality
of the art," especially as investors
seek tangible assets such as art
for a hedge against inflation.
Overpriced art—a new
bubble—could be in the making.
Since the global financial system started
unraveling in dramatic fashion two years ago,
distinguished economists have suffered
a crisis of their own.
Ivy League professors who had trumpeted
the dawn of a new era of stability have
scrambled to explain how, exactly, the worst
financial crisis since the Great Depression
had ambushed their entire profession.
"Minsky" was shorthand for Hyman Minsky,
a hitherto obscure macroeconomist who died
over a decade ago.
Many economists had never heard of him
when the crisis struck, and he remains
a shadowy figure in the profession.
But lately he has begun emerging as perhaps
the most prescient big-picture thinker
about what, exactly, we are going through.
A contrarian amid the conformity of
postwar America, an expert in the
then-unfashionable subfields of finance and crisis,
Minsky was one economist who saw
what was coming.
He predicted, decades ago, almost exactly
the kind of meltdown that recently
hammered the global economy.
In recent months Minsky's star has only risen.
Nobel Prize-winning economists talk about
incorporating his insights, and copies of his books
are back in print and selling well.
He's gone from being a nearly forgotten figure
to a key player in the debate over
how to fix the financial system.
But if Minsky was as right as he seems
to have been, the news is not
exactly encouraging.
He believed in capitalism, but also believed
it had almost a genetic weakness.
Modern finance, he argued, was far
from the stabilizing force that mainstream
economics portrayed: rather, it was a system
that created the illusion of stability
while simultaneously creating the conditions
for an inevitable and dramatic collapse.
In other words, the one person who foresaw
the crisis also believed that our whole
financial system contains the seeds of
its own destruction.
"Instability," he wrote, "is an inherent
and inescapable flaw of capitalism."
Minsky's vision might have been dark, but he was
not a fatalist; he believed it was possible
to craft policies that could blunt the collateral
damage caused by financial crises.
But with a growing number of economists eager
to declare the recession over, and the crisis
itself apparently behind us,
these policies may prove as discomforting
as the theories that prompted them
in the first place.
Indeed, as economists re-embrace
Minsky's prophetic insights, it is far from
clear that they're ready to reckon
with the full implications of what he saw.
That orthodoxy, born in the years
after World War II, was known as
the neoclassical synthesis.
The older belief in a self-regulating,
self-stabilizing free market had
selectively absorbed a few insights
from John Maynard Keynes,
the great economist of the 1930s
who wrote extensively of the ways
that capitalism might fail
to maintain full employment.
Most economists still believed that
free-market capitalism was a fundamentally
stable basis for an economy,
though thanks to Keynes, some now
acknowledged that government might
under certain circumstances play
a role in keeping the economy - and
employment - on an even keel.
But Minsky was cut from different cloth
than many of the other big names.
The descendent of immigrants from Minsk,
in modern-day Belarus, Minsky was
a red-diaper baby, the son of Menshevik socialists.
While most economists spent the 1950s
and 1960s toiling over mathematical models,
Minsky pursued research on poverty,
hardly the hottest subfield of economics.
With long, wild, white hair, Minsky
was closer to the counterculture
than to mainstream economics.
He was, recalls the economist
L. Randall Wray, a former student, a "character."
So while his colleagues from graduate school
went on to win Nobel prizes and
rise to the top of academia, Minsky languished.
He drifted from Brown to Berkeley and
eventually to Washington University.
Indeed, many economists weren't even
aware of his work.
One assessment of Minsky published in 1997
simply noted that his "work has not
had a major influence in
the macroeconomic discussions
of the last thirty years."
Yet he was busy. In addition to poverty,
Minsky began to delve into the field of finance,
which despite its seeming importance
had no place in the theories formulated
by Samuelson and others.
He also began to ask a simple,
if disturbing question: "Can 'it' happen
again?" - where "it" was, like Harry
Potter's nemesis Voldemort, the thing
that could not
be named: the Great Depression.
Instead, Minsky drew his own, far darker,
lessons from Keynes's landmark writings,
which dealt not only with the problem
of unemployment, but with money
and banking.
Although Keynes had never
stated this explicitly, Minsky argued
that Keynes's collective work amounted
to a powerful argument that capitalism
was by its very nature unstable
and prone to collapse.
Far from trending toward some magical
state of equilibrium, capitalism
would inevitably do the opposite.
It would lurch over a cliff.
This insight bore the stamp of his advisor
Joseph Schumpeter, the noted Austrian
economist now famous for documenting
capitalism's ceaseless process
of "creative destruction."
But Minsky spent more time thinking
about destruction than creation.
In doing so, he formulated
an intriguing theory: not only was capitalism
prone to collapse, he argued,
it was precisely its periods of economic
stability that would set
the stage for monumental crises.
Minsky called his idea the "Financial
Instability Hypothesis."
In the wake of a depression,
he noted, financial institutions
are extraordinarily conservative,
as are businesses.
With the borrowers and the lenders
who fuel the economy all
steering clear of high-risk deals,
things go smoothly: loans are
almost always paid on time,
businesses generally succeed,
and everyone does well.
That success, however, inevitably
encourages borrowers and lenders
to take on more risk
in the reasonable hope
of making more money.
As Minsky observed, "Success breeds
a disregard of the possibility of failure."
As people forget that failure is a possibility,
a "euphoric economy" eventually develops,
fueled by the rise of
far riskier borrowers - what he called
speculative borrowers, those
whose income would cover interest payments
but not the principal; and those
he called "Ponzi borrowers," those
whose income could cover neither,
and could only pay their bills
by borrowing still further.
As these latter categories grew,
the overall economy would shift
from a conservative but profitable environment
to a much more freewheeling system
dominated by players whose survival
depended not on sound business plans,
but on borrowed money
and freely available credit.
From the 1960s onward, Minsky elaborated
on this hypothesis.
At the time he believed that this shift
was already underway: postwar stability,
financial innovation, and the receding
memory of the Great Depression
were gradually setting the stage
for a crisis of epic proportions.
Most of what he had to say
fell on deaf ears.
The 1960s were an era of solid growth,
and although the economic stagnation
of the 1970s was a blow to
mainstream neo-Keynesian economics,
it did not send policymakers scurrying
to Minsky.
Instead, a new free market fundamentalism
took root: government was the problem,
not the solution.
Yet throughout this period,
the financial system - not the economy,
but finance as an industry - was
growing by leaps and bounds.
Minsky spent the last years of his life,
in the early 1990s, warning of
the dangers of securitization
and other forms of financial innovation,
but few economists listened.
Nor did they pay attention to consumers'
and companies' growing dependence
on debt, and the growing
use of leverage within the financial system.
By the end of the 20th century,
the financial system that Minsky
had warned about had materialized,
complete with speculative borrowers,
Ponzi borrowers, and precious few
of the conservative borrowers
who were the bedrock
of a truly stable economy.
Over decades, we really had forgotten
the meaning of risk.
When storied financial firms started to fall,
sending shockwaves through
the "real" economy, his predictions
started to look a lot like a road map.
"This wasn't a Minsky moment,
" explains Randall Wray.
"It was a Minsky half-century."
Minsky is now all the rage.
A year ago, an influential Financial Times
columnist confided to readers
that rereading Minsky's 1986
"masterpiece" - "Stabilizing an
Unstable Economy" - "helped clear
my mind on this crisis."
Others joined the chorus.
Earlier this year, two economic
heavyweights - Paul Krugman and
Brad DeLong - both tipped their hats
to him in public forums.
Indeed, the Nobel Prize-winning Krugman
titled one of the Robbins lectures
at the London School of Economics
"The Night They Re-read Minsky."
Today most economists, it's safe to say,
are probably reading Minsky for the first time,
trying to fit his unconventional insights
into the theoretical scaffolding
of their profession.
If Minsky were alive today,
he would no doubt applaud
this belated acknowledgment,
even if it has come at a terrible cost.
As he once wryly observed,
"There is nothing wrong
with macroeconomics
that another depression [won't] cure."
But does Minsky's work offer us
any practical help?
If capitalism is inherently
self-destructive and unstable - never mind
that it produces inequality
and unemployment,
as Keynes had observed - now what?
To prevent the Minsky moment
from becoming a national calamity,
part of his solution (which was
shared with other economists)
was to have the Federal Reserve - what
he liked to call the "Big Bank" - step
into the breach and act as a lender
of last resort to firms under siege.
By throwing lines of liquidity
to foundering firms, the Federal Reserve
could break the cycle and
stabilize the financial system.
It failed to do so during the
Great Depression, when it stood by
and let a banking crisis spiral
out of control.
This time, under the leadership
of Ben Bernanke - like Minsky,
a scholar of the Depression - it took
a very different approach,
becoming a lender of last resort
to everything from hedge funds
to investment banks
to money market funds.
Minsky's other solution, however,
was considerably more radical
and less palatable politically.
The preferred mainstream tactic
for pulling the economy out of
a crisis was - and is - based on
the Keynesian notion
of "priming the pump" by sending money
that will employ lots of high-skilled,
unionized labor - by building
a new high-speed train line, for example.
Minsky, however, argued for
a "bubble-up" approach,
sending money to the poor
and unskilled first.
The government - or what he
liked to call "Big Government" - should
become the "employer of last resort,
" he said, offering a job to anyone
who wanted one at
a set minimum wage.
It would be paid to workers who
would supply child care, clean streets,
and provide services
that would give taxpayers
a visible return on their dollars.
In being available to everyone,
it would be even more ambitious
than the New Deal, sharply reducing
the welfare rolls by guaranteeing
a job for anyone who was able to work.
Such a program would not only
help the poor and unskilled,
he believed, but would put
a floor beneath everyone
else's wages too, preventing salaries
of more skilled workers
from falling too precipitously,
and sending benefits up
the socioeconomic ladder.
While economists may be acknowledging
some of Minsky's points on financial instability,
it's safe to say that even liberal policymakers
are still a long way from thinking
about such an expanded role
for the American government.
If nothing else, an expensive
full-employment program would veer far
too close to socialism
for the comfort of politicians.
For his part, Wray thinks that the critics
are apt to misunderstand Minsky.
"He saw these ideas as perfectly
consistent with capitalism," says Wray.
"They would make capitalism better."
But not perfect. Indeed, if there's anything
to be drawn from Minsky's collected work,
it's that perfection, like stability
and equilibrium, are mirages.
Minsky did not share his profession's quaint
belief that everything could be reduced
to a tidy model, or a pat theory.
His was a kind of
existential economics: capitalism,
like life itself, is difficult, even tragic.
"There is no simple answer to
the problems of our capitalism,
" wrote Minsky.
"There is no solution that can be
transformed into a catchy phrase
and carried on banners."
It's a sentiment that may limit
the extent to which Minsky becomes
part of any new orthodoxy.
But that's probably how he would
have preferred it, believes liberal
economist James Galbraith.
"I think he would resist
being domesticated," says Galbraith.
"He spent his career in professional isolation."
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