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Re:  Following "Against Learned Helplessness"

Author: Uri Praiss, Attorney at law (Israel, since 1990)

Law & Economics lecturer

            Prof. Paul Krugman’s May 30th N.Y.T. column, “Against Learned Helplessness,” shed light of highly professional courage and honesty, so rare nowadays. It drove me back to the first lines of Ch. 24 ("Concluding notes") of legendary John Maynard Keynes' "The General Theory of Employment, Interest and Money":

            "The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes."

it is indeed typical that O.E.C.D.'s "Learned Helplessness" for Unemployment mislead as if “The room for macroeconomic policies to address these complex challenges is largely exhausted" and instead “go structural”. The orthodox and biased scholars, "experts", bankers, conservative politicians and officials assume that unemployment is (almost) desirable. Those "policies" can say mostly lower interest effective rate and government action – meaning no more tax cuts for the rich (mostly).

The more extreme orthodox monetarists and other "experts" and bankers preach higher interest, tax cuts and government cuts even for recession (practically always). Then they are popular and well paid by I.M.F., central and big banks and their journals (even rated there!), research budgets, conservative parties and rich contributors.

Prof. Krugman gave the classic example of "repairing roads", "raising incomes", "serious program of mortgage modification, reducing the debts of troubled homeowners." Indeed, to create jobs we need state-area-city's deep and creative research. No wonder this blessed "Linkedin"'s IPO was so successful. They deserve a medal too.

If many American firms could be encouraged to do what MCD did Lately, all  over the U.S., meaning to offer temporary jobs, and take some social responsibillity, whether XOM, CVX, PFE, MRK, JNJ, PG, AIG, F, GM, GE, DE, CAT, HD, WMT, and many others.

            Myself, I recommend warmly that those banks and investment (traders') "banks" should hire temporarily, let's say for 5 years, all over the country, those millions that lost their houses, jobs and more,  and teach them some updated useful skills. The "bankers" can even spend time listening to their sad stories (and pay them generously) and build some spiritual recovery and defense for next crisis.

 I am sure last American White Knight, N.Y.A.G. Eric Schneiderman, as well as other states, would appreciate some very motivated employees for these investigations' tons of paperwork.

Lately we learned  about those 15 or so,  silent and highly – organized, States' and S.E.C. "partial-but-final rehabilitation-immunity-bargains'" ridiculous fines (as lately urged in New Jersey and Massachusetts) which N.Y.A.G. Schneiderman refused to accept, as was reported here.

 Legally those cheap bargains should be delayed or canceled at once, given April 13^th Levin's report as followed by this first criminal official "clean house" investigation that started. They didn't see Levin – Coburn Committee's horror report. They were misled. New York was the Central Scene of Crime. It is even a matter of Legal Jurisdiction and "Convenience's Forum" – The Origin of Cancer.  I wonder how come nobody attacked those bargains' sales in courts yet.

 Those Trading "Banks", each reporting $100 Million daily net trade profits easily (how exactly?!) were just tickled to laugh by those $1 Million State – fines.

Even $ 550 Million's S.E.C. selective "plea – bargain" fine appears now as a gift - their "Gold Mine Windfall" – approximately 1 day's total income, and let's pretend It's over. Nothing happened (!!) Kafka couldn't write it better. 

Indeed no need for any government expense for these solutions for unemployment, and many others.  

At the end of that chapter 24, Keynes even had some visionary awakening of those "Tea Parties" to come:

             "Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back." – "Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not only vested interests, which are dangerous for good or evil."  

            Lately I was happy to read fundamental Chicago Law and Economics' founder, Judge Richard Posner's "How I Became a Keynesian" on The New Republic, 23 September 2009. Some of Posner's students could suggest "Go Structure", as O.E.C.D., meaning deregulate all drugs and guns, for example, add them to Goldman's commodities definitions / franchise and get rid somehow of unemployment at once.

 If someone told us 5 years ago that Republican Bush's government would buy banks and insurance companies for $ Trillions to save them -  you would hospitalize him. Even American vocabulary knew "Privatization" but did not meet "Nationalization", "Publicization", "Q.E." etc.

So keep on the good work. Indeed it is the time to refresh Economics' theoretic assumptions and to practice Efficiency with some updated economic research (most of them Nobel Prize winners): "Games Theory" (John Nash got 1994's Nobel Prize, but that was his 1950's PH.D at Princeton), "Signaling" (M. Spence), Non competitive behaviors, Externalities, Failures of markets or assumptions, Transaction costs (R. Coase, Chicago, 1991 Nobel Prize), Asymmetric Information, Irrationality and so. (see also L.S.E., Dr. Paul Woolley's "Centre for the Study of Capital Market Dysfunctionality")

            Start looking back for Prof. John Kenneth Galbraith's (see his sharp and practical analysis of The Depressions' financial roots, including Goldman's Bubble Firms) and the one and only Judge Louis Brandeis ("Other People's Money and How the Bankers Use It")  

I guess they both roll over in their big seats at Heaven while reading N.Y.T. How I wish Brandeis' social, economic and legal Legacies were used now. He fought the first rounds, with the original JPMorgan and the Robber Barons. They did everything to sabotage his nomination but Roosevelt refused to give up.

Sincerely yours,

Uri Praiss, Attorney at law

Law & Economics Lecturer