Chris Dillow produces evidence that there is no
relationship between financial reward and creativity.
Well a nice example of that springs to mind. On the one
hand there is the IMF, which as Ann Pettifor points out is “an
institution with a staffing of about 1100 professional economists (most of whom
have PhDs) and an overall personnel budget of about $800 million”. It’s made a total hash of things. As Bill
Mitchell has said over and again, it’s not fit for purpose and should be closed
down.
In contrast, there is Positive Money which works on a
shoe string: its turnover last year was I think £40,000. That wouldn’t pay the salary of one IMF
PhD - never mind the costs of the early
retirement packages available to IMF employees.
I’m not saying Positive Money is perfect and that it
gets everything 100% right. But the “creativity per dollar” ratio of PM is
VASTLY better than that of the IMF.
As for this blog you are now reading, I get paid
NOTHING for producing it.
The nearest the IMF gets to being creative is taking an
old idea and making a hash of it: at least that’s the case with Benes and
Kumhof’s recent paper on the Chicago Plan. When I say “hash”, I mean the
following.
B&K incorporate in their proposal a massive debt
jubilee. Now debt jubilees are actually a complete nonsense and for the
following reasons. First, do we write off the mortgages of those who have got two
million dollar mortgages so as to enable them to buy five million dollar
houses? I think not.
Second, take two people on lowish incomes. One might
decide to buy with a 90% or 100% mortgage, while the other rents. Than along
comes the jubilee, writes off the mortgage, which effictively means giving a
house to the first individual: clearly a nonsense.
So how do B&K get round this? Well they just assume
that everyone is on the same income and has the same amount of debt:
COMPLETELY, TOTALLY, 100% unrealistic.
But that’s what you get from academics sitting in ivory
towers desperatly trying to justify their salaries. REALITY doesn’t interest
them too much, as Simon Wren-Lewis pointed out.
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