{"id":14339,"date":"2013-09-02T08:07:50","date_gmt":"2013-09-02T12:07:50","guid":{"rendered":"http:\/\/ssgreenberg.name\/PoliticsBlog\/?p=14339"},"modified":"2013-09-02T08:08:03","modified_gmt":"2013-09-02T12:08:03","slug":"larry-summers-take-on-efficient-markets-and-regulators-brilliance-v-idiots","status":"publish","type":"post","link":"https:\/\/ssgreenberg.name\/PoliticsBlog\/2013\/09\/02\/larry-summers-take-on-efficient-markets-and-regulators-brilliance-v-idiots\/","title":{"rendered":"Larry Summers\u2019 Take on Efficient Markets and Regulators: Brilliance v. Idiots"},"content":{"rendered":"<p><em>New Economic Perspectives<\/em> has the William Black piece <a title=\"New Economic Perspectives article\" href=\"http:\/\/neweconomicperspectives.org\/2013\/09\/larry-summers-take-on-efficient-markets-and-regulators-brilliance-v-idiots.html#more-6278\" target=\"_blank\"><strong>Larry Summers\u2019 Take on Efficient Markets and Regulators: Brilliance v. Idiots<\/strong><\/a><strong>. <\/strong>Here is perhaps the key insight.<\/p>\n<blockquote><p>It would be good if economists read the criminology literature on control fraud.\u00a0 It would be good if economists read the regulatory literature on control fraud.\u00a0 It should be unacceptable that economists fail to read the economics literature about control fraud by a Nobel Laureate (Akerlof, 2001).\u00a0 Summers missed the most fundamental point about accounting control fraud.\u00a0 Here\u2019s the key passage again:\u00a0 \u201cthe parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves.\u201d\u00a0 \u201cInstitutions\u201d are not the issue \u2013 the controlling officers are the issue.\u00a0 In accounting control frauds the controlling officers loot \u201ctheir\u201d \u201cinstitutions.\u201d\u00a0 \u201cInstitutions\u201d are \u201c[in]capable of protecting themselves\u201d from their controlling officers.<\/p><\/blockquote>\n<p>I have heard it said that magicians love to perform in front of an audience of engineers. The engineers keep looking for logical explanations of how the tricks could be performed without realizing it isn&#8217;t logic, but deception that is behind the trick.<\/p>\n<p>Applying this to economists, they develop all sorts of theories on how the rational person will behave in an economic situation.\u00a0 What they don&#8217;t always take into account is how people might make money the easy way by deception.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>New Economic Perspectives has the William Black piece Larry Summers\u2019 Take on Efficient Markets and Regulators: Brilliance v. Idiots. Here is perhaps the key insight. It would be good if economists read the criminology literature on control fraud.\u00a0 It would be good if economists read the regulatory literature on control fraud.\u00a0 It should be unacceptable [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[166],"tags":[],"class_list":{"0":"post-14339","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-stevegsposts","7":"czr-hentry"},"_links":{"self":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/14339","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/comments?post=14339"}],"version-history":[{"count":2,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/14339\/revisions"}],"predecessor-version":[{"id":14341,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/14339\/revisions\/14341"}],"wp:attachment":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/media?parent=14339"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/categories?post=14339"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/tags?post=14339"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}