The Winner of the 2015 Ig-Nobel Prize, for the Worst Book by a Nobel Prize Winner Is . . .

Ignoble   adjective 1. Not honorable in character or purpose

Synonyms: dishonorable, unworthy, base, shameful, contemptible, despicable, vile, degenerate, shabby, sordid, mean, dastardly

Ladies and Gentlemen, thank you for attending our Annual Gala, where we present the Ig-Nobel Prize, our humble effort to identify the worst books written by the smartest people. This year was particularly challenging for the Prize Committee. The Committee was torn. The book that eventually won the prize as the Worst Book by a Nobel Prize Winner was actually deemed, by 6 of the 13 committee members, to be the best book because it broke new ground in literary technology. It used sophisticated algorithms to produce a complete 52-chapter book—admittedly a terrible book, but you have to start somewhere—by producing 51 chapters that merely re-ordered the key words and hackneyed concepts presented in Chapter I, including:

  • Inequality
  • Rising inequality
  • Shrinking middle class
  • 1%
  • .1%
  • financialization
  • speculation
  • deregulation
  • too big to fail
  • rent seeking (wealth appropriation)
  • rent seeking (taking a bigger piece of the pie)
  • excessive leverage
  • monopoly profits
  • talented tax lawyers
  • pollution tax
  • carbon tax
  • financial transaction tax
  • higher income tax
  • essential public investments

Ultimately, however, the Prize Committee concluded technological innovation was not exculpatory. A terrible book is a terrible book, even if ghost-written by a computer. Therefore, the 2015 Ig-Nobel Prize goes to . . .

. . . the envelope please . . .

. . . . Joseph Stiglitz for his latest “book,” The Great Divide. It says pretty much the same thing in every chapter, with little documentation and no consideration of conflicting evidence or alternative points of view. Nevertheless the book (which is a compendium of previously published articles) does have merit as a window into the mind of a doctrinaire socialist who throughout an illustrious career has had no hands-on contact with the private economy he hates. Here, for example, are . . .

. . . Six Stiglitz Bloopers

Regarding the 2008 financial crisis, JS claims “for the preceding three years I, together with a small band of other economists, had been warning of the impending implosion.” Hold the self-congratulation, JS. You actually failed to predict the financial crisis even after it started. In a Vanity Fair article published in December 2007 (four months after the crisis began) you lament the Bush tax cuts, shrinking budget surplus, and Iraq War but failed to predict a housing bust or banking crisis. The big challenge of the “next president,” you wrote, will be moving the economy from a savings rate of zero to a more normal 4%. No mention of a banking collapse.

JS’s hobby horse is “rent seeking” (grabbing wealth via monopoly rather than creating it) which supposedly is how the notorious 1% gets its money. He forgets that the biggest rent seekers are governments and non-profits such as the Federal government, teachers unions, universities, the UN, the IMF, and the World Bank. Of the ten richest counties in the U.S., six are in the Washington DC area. Universities comprise a credentialing cartel that kills competition and uses its market power to jack up tuitions.

JS believes financial deregulation produced rising income inequality as Wall Street vampires sucked the blood out of the real economy. But why, then, has financial re-regulation—Dodd-Frank, giant bank fines, etc.—failed to reduce inequality?

JS opines, “there is no begrudging the wealth accrued by those who have transformed our economy—the inventors of the computer, the pioneers of biotechnology. But, for the most part, these are not the people at the top of our economic pyramid. Rather, to a large extent, it’s people who have excelled at rent seeking in one form or another.” As usual, he provides no evidence; here is some. Of the top 50 people on the Forbes 400 list, 41 possess wealth generated in the “real economy” and only 9 are in finance; 37 are self-made men (sic) and 13 are second generation wealth. Financiers are resourceful entrepreneurs, not parasitic rent seekers. One reason for faster GDP growth in the U.S. than Europe and Japan is wider and deeper financial markets, as well as shareholder pressure on companies to become more efficient.

JS largely ignores big government’s central role in creating the housing bubble. Based on the myth (since disproven) that mortgage lenders, contrary to their own self-interest, were discriminating against credit-worth minorities, Clinton and Cuomo pressured Fannie, Freddie and private banks to make risky, low-down-payment loans to marginal borrowers–most of which were later re-labeled “predatory loans.” It was the Federal bureaucracy and pressure groups such as ACORN—not Wall Street—that destroyed the credit culture of the mortgage market.

JS claims “growing inequality is the flip side of something else: shrinking opportunity.” History suggests otherwise. In a buoyant economy such as the 1920s or 1990s the rich get richer and inequality rises, but living standards also improve for other income groups. Median household incomes rose 10% in the tech-frothy 1990s. Conversely, in troubled economies (1930s, 1970s) inequality declines as companies and financial markets stagnate, but the middle class struggles as well. Between 1970 and 1983 median household income fell 1% despite a huge increase in the number of women in the workforce. Perversely, Obama’s anti-capitalist agenda has produced the worst of both worlds: rising inequality and declining opportunity. Median household income was 8% lower in 2013 than 2007. Faced with anemic 2% GDP growth (bad for the poor and middle class) the Federal Reserve has tried to stimulate growth by pumping financial liquidity into the economy (great for investors, speculators, and Wall Street deal makers).

Copyright Thomas Doerflinger 2015. All Rights Reserved.

 

 

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About tomdoerflinger

Thomas Doerflinger, PhD is a prominent observer of American capitalism – past, present and future. http://www.wallstreetandkstreet.com/?page_id=8
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