Report on MPS Meeting in NYC

Report on MPS Meeting in NYC

This past weekend I attended the special meeting of the Mont Pelerin Society was the called to address the financial crisis that we are facing. Speakers included Nobel Prize economists such as Ned Phelps and Gary Becker; famous economic thinkers such as Anna Schwartz, Arnold Harberger, Axel Leijonhufvud, and Harold Demsetz; leading economic policy makers such as Richard Cooper and Justin Lin; major contemporary economic theorists and policy makers such as John Taylor; leading financial journalists such as Martin Wolf; and perhaps the leading financial historian of our age Niall Ferguson. The program was put together by Deepak Lal.

Ferguson worries that right now we are in the midst of the “Great Repression”, where our governments – not New Zealand’s though – are actually repressing the financial crisis with their (our) vast resources, but that the crisis won’t go away because the stimuluses are misdirected.

The most common question Ferguson is asked is whether this crisis proves the “death of capitalism”. His response is “no, but it is the death of Basle 2” – the ineffective attempt by global financial regulators as recently as 2004 to ensure that a mess just like this one wouldn’t happen. Similarly, the Sarbanes-Oxley law of 2002 was a US congressional attempt to do much the same thing, constraining investment banks and auditors, but with little macro benefit.