I’ve recently heard Martin Wolf described as one of the world’s preeminent financial journalists (here and here). I was therefore puzzled to read his column characterizing banking as a “high productivity sector.” In March, 2011, Wolf called the financial sector “locusts” in his Ralph Milliband Lecture. I doubt anyone who listened to the lecture would get the idea that Wolf wanted to praise the implicit governmental backing that is at the heart of the sector’s prosperity as a model of “productivity.” The paradoxes here are enough to make me turn to James Livingston’s discussion of productive capacity in the appendix of his recent book Against Thrift.
On another puzzling note from Britain: it appears that Nassim Taleb has become a key advisor to David Cameron, the Prime Minister. The Tories have seized on Taleb’s withering skepticism as an epistemological foundation for a politics of austerity (that is, since no one has any idea what to do, the safest thing is for government to do nothing but downsize itself). I think Taleb may be poised for a long career as a bipartisan advisor, since Labour could use theories of epistemic modesty to prove that no one knows if government intervention would fail.
The Tories aren’t going whole hog for Taleb, though: they appear singularly uninterested in his proposals to end bonuses at TBTF banks, or to break them up. I strongly suspect that the only parts of the Taleb program that will pass are those that help entrench existing elites—a selective adoption that only exacerbates the fragility he identifies as the critical problem of modern society.