I’m not really arguing for a different norm. I’m just noting that it seems the norms have changed.
Also, you still haven’t really justified your opposition to the claim. Even if you aren’t going to be charitable, you should at least explain why you’re rejecting it, in a more substantial critique than “naive”.
I’m inclined to call it “not even wrong”, but let’s take an example. The Financial Crisis is the crisis of 2008. It started (the crisis itself, not the preshocks), notably, with a bankruptcy of Lehman Brothers which the Fed allowed to happen. This, by the way, was later deemed to have been a mistake and the TBTF—Too Big To Fail—monsters were born. The immediate danger during the September and October of 2008 was that the global payment network would freeze because of counterparty uncertainty and that the world finance would, essentially, collapse. That did not happen, but the effects on real economy were severe nevertheless—consult any GDP graph for the relevant period.
So let’s apply Levine’s definition. Who in 2008 were the borrowers and who were the lenders? It was deemed “socially or politically unacceptable” for which creditors to not get their money back? Is it a useful way to think about the situation?
AIG was the borrower (and separately Fannie and Freddie), banks were the lenders, it is absolutely useful to think about the situation in those terms. It highlights the conflict between our political intuition that insurance should be protected and financial speculation should not—some people thought AIG was doing one, some people thought the other. Likewise some people thought Freddie and Fannie were widows-and-orphans investments that the government should guarantee and some people thought they were private financial traders. Clarifying these things could have averted the crisis, it’s absolutely a useful model.
I’m not really arguing for a different norm. I’m just noting that it seems the norms have changed.
Also, you still haven’t really justified your opposition to the claim. Even if you aren’t going to be charitable, you should at least explain why you’re rejecting it, in a more substantial critique than “naive”.
I’m inclined to call it “not even wrong”, but let’s take an example. The Financial Crisis is the crisis of 2008. It started (the crisis itself, not the preshocks), notably, with a bankruptcy of Lehman Brothers which the Fed allowed to happen. This, by the way, was later deemed to have been a mistake and the TBTF—Too Big To Fail—monsters were born. The immediate danger during the September and October of 2008 was that the global payment network would freeze because of counterparty uncertainty and that the world finance would, essentially, collapse. That did not happen, but the effects on real economy were severe nevertheless—consult any GDP graph for the relevant period.
So let’s apply Levine’s definition. Who in 2008 were the borrowers and who were the lenders? It was deemed “socially or politically unacceptable” for which creditors to not get their money back? Is it a useful way to think about the situation?
AIG was the borrower (and separately Fannie and Freddie), banks were the lenders, it is absolutely useful to think about the situation in those terms. It highlights the conflict between our political intuition that insurance should be protected and financial speculation should not—some people thought AIG was doing one, some people thought the other. Likewise some people thought Freddie and Fannie were widows-and-orphans investments that the government should guarantee and some people thought they were private financial traders. Clarifying these things could have averted the crisis, it’s absolutely a useful model.