23 Dec A Capitalism for the People
Posted at 15:28h
in Credit Spectrum
Luigi Zingales teaches finance at Chicago Booth.
It is not exactly a secret that Glenn Hubbard was his research collaborator in the run up to the presidential election, or that Zingales was positioning himself for an economic advisory role for Romney before he lost the election. Nevertheless, he's a lot smarter than Hubbard, and seems sincere. Right before the election, he went on a speaking tour to promote his book, A Capitalism for the People. I read it after attending one of his speaking events for Booth alums in NYC. In my opinion, it is the best of the worst of Chicago thinking.
What is good and true in Zingales’ book is his discussion of how power interests have corrupted our market economy. I particularly liked his analysis of why anti-trust law is important in the chapter “Crony Capitalism American style.” Not that it enforces the laws of micro-economics and keeps marginal pricing competitive, but that it allows firms to grow to be mega firms who can bend the state to their will. His observation is subtle, astute and hits the mark.
The poverty of his analysis shows up on p. 156 in his explanation of why competition does not cure predatory lending: most people do not pay attention to their finances, he says. From there, his argument takes a “right turn.”
Our title is but a thinly veiled allusion to the hero of the namesake novel [Герой нашего времени] by the illustrious Russian novelist and poet Mikhail Lermontov who, on the death of the legendary Alexander Pushkin, assumed the role of Russia’s leading poet.
The hero in question (Pechorin) is not the kind of heart-throbbing, virile, impeccable stud personified by a fictitious character, like James Bond. On the contrary, Pechorin is a deeply flawed, some would even say amoral, man. It may surprise you that the quintessential hero of 19th Century Russian literature is not someone we would want as Santa Claus.