The Ig Nobel Prizes are out, and Iceland wins big.
The title, explains it all (short version, with apologies to Krugman).
Long version, with translation, follows.
Yes, it is Ig Nobel Prize time, and the winner in Economics are the new Vikings of Finance:
"Economics: The directors, executives, and auditors of four Icelandic banks -- Kaupthing Bank, Landsbanki, Glitnir Bank, and Central Bank of Iceland -- for demonstrating that tiny banks can be rapidly transformed into huge banks, and vice versa -- and for demonstrating that similar things can be done to an entire national economy."
Sadly the former governor of the Central Bank, Ex-Prime Minister and current Editor in Chief of the Morning Paper, Davíð Oddsson himself, could not attend to receive the Prestigious Prize.
Fortunately Paul "I just have a Bank of Sweden Prize" Krugman stepped up to cover the Economics slot.
Paul had a longer explanation:
"
Given decentralized constrained optimization by maximizing agents with well-defined convex objective functions and/or convex production functions, engaging in exchange and production with free disposal, leads, in the absence of externalities, market power, and other distortions, there exists an equilibrium characterized by Pareto optimality."
Oh dear. Typical impenetrable academic jargon.
Let me attempt a translation:
"Given failure to regulate or enforce laws, with a bunch of greedy thiefs in charge, who know what they want and will call in their friends and relatives to cover, if you let them steal with no one to check their excesses, you will, in the absence of the rest of us putting a stop to this, or general corruption, get to a point where they have actually stolen everything. This is good for them."
- Log in to post comments
Your axe-wielding ancestors would have found a quick way of dealing with these guys.
I suspect we will never hold those responsible for the "mess" to full account, as we are all slightly culpable and further, most would like to be those who were/are responsible.
That jargon is not that impenetrable. It says under so perfect conditions that they are ruled out by the most basic laws of the physics you actually manage to strike a target that is so HUGE that it spans literally from one side of the space of all possible outcomes all the way to the other side.
Impressive result. Like "Iff you ignore gravity, friction, all three thermodynamic laws, and fire it with infinite precision inside a sealed room free of obstacles, this bullet will eventually hit the wall."
Well, no, that's not what it's saying at all. What's it's saying is that maximum total economic output is reached when you have effective competition. It is also stating that monopolistic practices, which you seem to be talking about here, actually bring the entire economy down (while benefiting the few).
I don't think you'd ever see Krugman arguing for more deregulation of the economic markets. See this blog post, for instance, where he puts the cause of the current financial crisis squarely on Reagan and his deregulation:
http://krugman.blogs.nytimes.com/2009/09/30/moral-decay-or-deregulation/