Adam Davidson

You are currently browsing articles tagged Adam Davidson.

Adam Davidson of the New York Times Magazine sat down with former Bain Capital managing director and Romney supporter Edward Conard for an open discussion about how the latter believes the 1% getting richer is better for all Americans. Conard seems to be living in a delusional bubble, but it’s a fascinating article. An excerpt:

“Nearly every economist I spoke with said that Conard has too much faith in the market’s ability to reward only those who create real value. Conard, for instance, insists that even the dodgiest financial products must have been beneficial or else nobody would have bought them in the first place. If a Wall Street trader or a corporate chief executive is filthy rich, Conard says that the merciless process of economic selection has assured that they have somehow benefited society. Even pro-market Romney supporters take issue with this. ‘Ed ought to be more concerned about crony capitalism,’ Hubbard told me.

Unintended Consequences ignores some of the most important economic work of the past few decades, about how power and politics influence economic growth. In technical language, this field is the study of ‘rent seeking,’ in which people or companies get rich because of their power, not because of their ideas. This is one of the few fields in economics in which left and right share many influences and ideas — namely that wealthy individuals and corporations are able to influence politicians and regulators to make seemingly insignificant changes to regulations that benefit themselves. In other words, to rig the game. One classic example is banking. Banks have enormous resources to constantly put explicit or subtle pressure on lawmakers and regulators so that regulation can eventually serve their interests.

Conard’s version of the financial crisis ignores much reporting and analysis — including work I’ve done with NPR’s Planet Money team — that shows that some of the nation’s largest banks actively manipulated customers and regulators and, sometimes, their own stockholders to profit from dangerous risk. And for many economists, rising inequality can create exactly the wrong outcomes for society over all. Rather than simply serving as an invitation for everybody to engage in potentially beneficial risk-taking, inequality can allow those with wealth to crush new ideas.”

Tags: ,

From “Why Countries Go Bust,” Adam Davidson’s New York Times Magazine piece about the poverty-reduction theories of superstar economist Daron Acemoglu, an explanation of how we managed to screw up even the post-Hussein Internet access market in Baghdad:

“On April 9, 2003, the day the city was captured, one of the world’s most tightly controlled economies suddenly became a free-for-all. Amid the chaos, many former state functionaries turned into entrepreneurs. Nearly every engineer from the ministry of housing, it seemed, had opened his own construction company. Satellite TVs, once illegal to all but a very small elite, were sold on every major street. Under Hussein, only one company (widely rumored to be monitored by the intelligence service) offered Internet access, and it was incredibly bad and expensive. After it was gone, there were so many new Internet companies that I had far more access options then than I do today in Brooklyn.

Yet the American authorities, who had not planned for this budding free market, all but destroyed it when they gave the bulk of new contracts to large companies outside the country. Often, these outsiders subcontracted to Iraqi firms with close ties to the state’s new political establishment. By the anniversary of the United States invasion, it was clear that economic success would again come from connections and corruption rather than talent and hard work. Today, Transparency International ranks Iraq as one of the most corrupt nations on earth. An Iraqi friend once told me that he had hoped we would teach the Iraqis how to be Americans. Instead, the Americans learned how to be Iraqi.”

Tags: ,