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Peter Radford

Peter Radford

Peter Radford is publisher of The Radford Free Press, worked as an analyst for banks over fifteen years and has degrees from the London School of Economics and Harvard Business School.

Articles by Peter Radford

Weekend read – Neoliberal angst?

18 days ago

From Peter Radford
I wonder why it is that neoliberals so reject the label we have given them.  Is it because they’e embarrassed?  I don’t think so.  They all seem very proud of their attachment to the old order.  Every so often one of them will surface and proclaim bitterly that they are misunderstood and they they don’t deserve the opprobrium piled on them by those nasty “leftists” who want to sully the pristine reputations of people like Mises and Hayek.  Poor dears.  Are we to feel sympathy for a group of thinkers who, collectively, opened the door to regression and decline?  All in the name of some misty eyed nostalgia for ideas that had been overwhelmed by history in the early part of the twentieth century?
I recently came across this problem at a much narrower and personal

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Wages. Just for fun.

December 11, 2023

From Peter Radford
This is just for fun.  It’s nearly the holiday season after all.
Let’s tell a story: a friend of ours here in southern Vermont was looking for a job.  She saw an advertisement posted by a local business.  Or, perhaps, she heard something about a job from a friend.  In any case she applied and got the job.
Well done.
Her wage is, naturally, determined by her marginal productivity.  We all know that.  All wages are determined by individual worker marginal productivity.
Our friends’ new employer has an education in economics and remembers what Mankiw says:
“Economic theory says that the wage a worker earns, measured in units of output, equals the amount of output the worker can produce. Otherwise, competitive firms would have an incentive to alter the number of

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Weekend read – The great re-boot. Perhaps.

December 1, 2023

From Peter Radford
I keep coming upon ideas that seem to make such sense that, surely, they have been imported into economics.  But, no, hubris prevents an expansion of the discipline to include such novelty.  The threat they represent to the entire mainstream edifice is too much of a threat.  The guild closes ranks.  The guild closes its mind.  And gets quite snooty in the process.  Outsiders are seen as simple, lacking in basic understanding, or naively misunderstanding the great explanatory powers hidden in some distant niche of economic theory.   Yes, the guild closes ranks.  It is sensitive to criticism from without.  Perhaps it feels vulnerable?
[Cue a great deal of eye-rolling amongst economies tired of being criticized.  Why can’t we just all leave them alone to get on with

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Milanovic gets feisty

November 21, 2023

From Peter Radford
To ignore power is to ignore reality.
How can you construct a theory of economic activity that excludes the power embedded in relationships between the various actors on the stage you are directing?  More to the point why would you?  To ignore power is to ignore reality.
I think, perhaps we need to reverse those two questions.  You see, power matters even in the construction of economic theories.
The reason you ignore power is because the powerful want you to.
It’s that simple.
I have just finished reading the excellent new book by Branko Milanovic.  It’s called “Visions of Inequality” and is a tour through the history of economics since the days of Quesnay.  More specifically it takes a look at how a handful of prominent economists have treated the topic of

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Andreesen at bay

October 27, 2023

From Peter Radford
The machine makers are restless!

There’s quite a debate going on about something called “techno-optimism” which roughly translates as anything technological is good and will, inevitably, make us all much better off.  That it makes fortunes for its owners is of secondary importance.
The debate has emerged as a result of the publication of Marc Andreesen’s ‘Techno-Optimist Manifesto’, a strange and rather long paean to the many virtues of technology and the much more abundant vices of the dullards like you and me who do not innovate or break things on a regular basis.  We are, apparently, a bunch of softies incapable of moving civilization forward and we thus rely on the virility of our superiors like Andreesen and Peter Thiel who have, collectively, saved us from the

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Weekend read – An order of men

October 6, 2023

From Peter Radford
And women in this more enlightened era.
One of the great ironies of the last few decades is the ascendancy of “individualistic” thinking in  economic theory combined with the primacy of the “collective” we call the corporation in the real world.  The two offer highly contrasting explanations of how economic activity takes place.  The one is based upon relationships between individuals acting rationally and equipped with amounts of information — and, presumably, the computation power to go with it — that only deities can possess.  The other is based upon the hierarchical assertion of power over a circumscribed set of resources carved out in time and space to defy competition and create rents.  
Individualistic thinking is, of course, highly attractive politically.  It

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Notes for the beginning of: what to do?

August 1, 2023

From Peter Radford
This is how I explain what has happened to myself.
Nobody should begin without warning.  So we ought jot down some initial observations that provide a starting point for what follows.  Some will become highly relevant.  Others will fade as we dig deeper into our subject and discover that they were not germane to the main theme.  They are in no particular order, since imposing order suggests a level of understanding unjustified by experience.  We simply do not know what we do not know and therefore ought make no pretense otherwise. [My economist friends please note!]
Here goes [borrowing along the way from DeLong, Gerstle, and one or two others]:
The spate of growth experienced in industrialized nations accelerated radically sometime around 1870
The spate of growth

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Leftists are not “anti-market”

April 30, 2023

From Peter Radford
I have been reminded by Tyler Cowen of Bryan Caplan’s simplistic theory of left and right.  It’s short and to the point.  Leftists are, he says, “anti-market”.
He is wrong.
Leftists are anti-market obsession.  They are anti-market fanaticism.  They are anti-market worship.  Specifically, they are opposed to the form of idealization used to articulate “the market” in economics.
There’s a difference.  And I assume Bryan Caplan knows as much.
There has been a recent attempt amongst mainstream economists of various nuanced differences to soften their discipline’s unhealthy attachment to markets.  This seems to be a recognition of the absurdly monotonous application of market-this or market-that to whatever problem falls within the purview of economics.  The

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Silicon Valley Blues

March 16, 2023

From Peter Radford
The circumstances of Silicon Valley Bank are well rehearsed by now.   The bank sat at the epicenter of the tech-bro start-up ecosystem and played a pivotal role in the collection and disbursement of all the cash that flows through that system.  It was an extremely odd bank.  Unlike the everyday banks most of us deal with it had very few deposits that originated from regular customers.  Most of its deposit base consisted of the chunky piles of cash belonging to start-ups and their various hangers-on.  That meant the average size of each deposit account was well in excess of the limit the FDIC insures.
This odd customer base added to the strain on the bank during recent years when the combination of low interest rates and excess cash slopping about the economy led to a

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Wolf knows better. I know he knows

February 28, 2023

From Peter Radford
What am I supposed to make of this?
Martin Wolf, someone whose work I always pay attention to, flubs it and leaves us with a partial picture.  That’s unlike him.  Perhaps it was the editing?
In any case the notion that the UK needs to generate more savings, which is what Wolf is arguing in his recent Financial Times article, needs a slight augmentation in his basic analysis.
The problem begins when he says that “Investment is financed by savings”.  This is a very un-Wolf like statement.  He is as aware as we are that savings do not cause investment.  This is simply one of those accounting identities that sometimes confuses people into imagining causation where there is none.  This unfortunate sentence then opens the door for the avoidance of the sort of deeper

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State of play at year end

December 30, 2022

From Peter Radford
Is it just me?
Or is the realm of punditry in a state of confusion?
There seems to be an emerging consensus that something big is happening.  It’s just that we don’t quite know what.  The problem is that the template we are all applying is frayed if not shattered.  Consequently we are searching for the safety of explanations but finding that our questions do not elicit comfortable answers.  This is not a place we like to inhabit.  What are we to do?
Let’s speculate.
Stagflation?  Growth seems to have slowed dramatically over the last decade if not longer.  There’s talk of malaise.  There’s talk of a post-growth economy.  Some folks even applaud the idea that the days of vertiginous growth are behind us.  Now, we are told, we can focus on the environment and pivot to

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Reflections on the US election results

December 12, 2022

From Peter Radford
Let the dust settle.
Absorb the information embedded in the results.
Take a deep breath and avoid partisan primping.
First: this election was insanely expensive.  Candidates seeking election to Federal office spent an estimated $8.9 billion.  Their state level counterparts spent a further $7.8 billion.  
Second:  all that expenditure had little effect.  Sure, the House changed hands, but by the slimmest of margins, and for all the pre-election talk of various color waves the reality is that only 40 House seats were truly competitive — if by competitive we mean that the victory margin was  5% or less.  That means 90% of the election was decided before the starting gun.
Third: elections have thus become a major industry that produces little change.  America is,

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We need our Hutton

October 7, 2022

From Peter Radford
– the question is how does economics get its much needed revamp?
This caught my eye:

“Debreu noted in his Nobel Prize lecture that the success of the mathematization of economic theory depended “on the fact that the commodity space has the structure of a real vector space”. We have shown that this is incorrect. The “price vector” is not a vector, and GET [General Equilibrium Theory] is therefore false. But we may go further and assert that not only was the proof incorrect, what was set out to be proved was not true in the first place. The real economy cannot be brought into equilibrium by adjusting prices. And indeed, the real economy is never in equilibrium.”
That’s the concluding paragraph in Philip George’s paper in the recently published Real World

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Share buybacks — again?

September 7, 2022

From Peter Radford
What isn’t said is often more telling than what is.  The silence denotes either a disrespect for thorough analysis or an ignorance of issues beyond the ken of the speaker.  Then, of course, a third option arises: that those issues are an embarrassment to the point being made and are thus best left unmentioned.
For some reason stock buybacks appear to fall into such a zone of silence.  There is some controversy currently about the topic because of the recent proposal to impose a very modest tax on stock buybacks here in the U.S.
The usual arguments have been put forward to defend buybacks.
Michael Mauboussin, who is head of something called consilient research in an arm of Morgan Stanley, recently wrote this in an op-ed for the Financial Times:
“An essential role of

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Tax stock buybacks?

August 25, 2022

From Peter Radford
Taking a short break from my crusade to get information taken more seriously in economics …
Yesterday’s Financial Times includes, on page 9 of the print edition, one of its regular “Market Insights” columns.  This is the space the FT allocates to sundry financial market types to opine on subjects of general interest to other financial market types.  It’s always a good read if you want to gain insight into how our magnificent financiers talk to themselves whilst allocating capital appropriately around the economy.  Well that’s what they see themselves doing, so let’s not nitpick.
The column yesterday was written by a luminary of the investment community, someone who sat on the board of a popular retirement fund, and who has written extensively on subjects related to

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Say it ain’t so

August 19, 2022

From Peter Radford
re-visiting economics’ basic concepts
I am nothing if not annoying.  Allow me to elaborate.
Let’s be basic.
I mean really really basic.
Our model world initially consists of two people, Adam and Eve.  I know, it’s been done before.  But we are economists.  What are we interested in?  What problems that Adam and Eve face do we want to study?
Well, they need energy.  Human bodies, like all ordered structures, need flows of energy to maintain that structure.  The Second Law of Thermodynamics is the damndest thing.  It gets in the way.  But that’s life.  So what do Adam and Eve do?  They go look for energy, which in our speak we call food.  They avert death by searching for, finding, and consuming food.  Problem solved.
What do we make of this?
Demand — the need for a

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Machine age musings on algorithmic growth theory

August 7, 2022

From Peter Radford
Don’t mind me.  I am just thinking out aloud…
That we live in a Machine Age is indisputable.  Our lifestyles depend entirely upon the mediation of machines.  Without them modernity collapses back to whatever existed in the prior ages and we surrender most of what we currently cherish.
And it is important to use the phrase “machine age” because other phrases such as Industrial Age and so on limit us.  Some say we are now entering a Digital Age, but this too is a mistake.  All that is changing is the nature of our machines.  The Machine Age lives on.
So what is a machine?
It is a piece of information that allows us to channel energy and concentrate it such that we amplify the output we expect from that application of energy.  In this case the information is embodied in

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Thinking like an Economist?

May 19, 2022

From Peter Radford
Thinking like an economist.
What a horrible thought.  Can you imagine anything more restrictive and less imaginative?  It requires you to disengage from reality and enter a world constrained by absurd assumptions, odd definitions, and a lack of foundation.  The entire edifice of economics sits, in all its glory, suspended in mid-air and relying on what the philosopher Daniel Dennett describes as “sky hooks” to hold it up.  Beneath it is only vapor and foggy notions of the phenomena it purports to describe and explain.  Just ask an economist to describe a market in detail and you will understand how vague the enterprise is.  
Perhaps I am wrong.  It takes a lot of imagination to conceive of what passes as economics as being a study of actual economies.  You need a

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Free to trade efficiency?

March 23, 2022

From Peter Radford
The war in Europe is messing with some major preconceptions and exposing some as illusions that, perhaps, we would be better off without.
Take, for instance, The Economist magazine’s leader article entitled “Trading with the enemy.”  Here’s the key question the article poses:
“Is it prudent for open societies to conduct normal economic relations with autocratic ones, such as Russia and China, that abuse human rights, endanger security and grow more threatening the richer they get?”
You and I might answer in the negative with a certain ease, but for the Economist and its ilk the question is more nuanced.  After all aren’t freedom and free trade one and the same?  If you stop trading freely aren’t you surrendering your freedom?
The Economist goes on to

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A note on Furet

March 7, 2022

From Peter Radford
Intellectual vanities abound in a technocratic society.  It seems inevitable that as we push the boundaries of knowledge further and further into the space of potential beyond our current state that the division of labor presses down on us.  We become, each of us, more distant from any sense of self-sufficiency.  Such a state is an absurdity in our technologically infused and dependent world.  We have become enmeshed in the very supplementary support system we developed to drive ourselves out of the Malthusian trap we lived in for millennia.  As the complexity of our society rose, as the interdependence implied by the ever increasing network of specialities grew, and as we left behind the visceral ways of life we were prepared for by our evolutionary trajectory,

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All wet like a river

March 3, 2022

From Peter Radford
I am still stuck wondering about Diane Coyle’s defense of economics.
Heraclitus exists only in fragments.  That’s unfortunate because aphorisms are not the best way to tackle the hubris of the technocrat.  He was on to something though.  We all know his well-worn saying about stepping into rivers.  He tells us that they’re never the same twice.  And yet they stay the same.  Beware, then, the analyst that thinks she sees a regularity in our economy.  It may look the same as before, but it isn’t.  Not in detail.
Yes, I am still stuck wondering about Diane Coyle’s defense of economics.  It has, she says, changed a great deal since it was exposed as somewhat vapid back during the Great Financial Crisis.  I am trying to be gentle.  In truth it was exposed as being a lot

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Democracy? Surely not!

January 4, 2022

From Peter Radford
Let’s stir things up for the New Year by continuing with one of my recent themes.

A quote from an opinion piece in the NYT this morning [January 3rd]:
“James Madison boasted that the Constitution achieved “the total exclusion of the people, in their collective capacity.” Its elaborate political mechanics reflect the elite dislike and mistrust of majority rule that Madison voiced when he wrote, “Had every Athenian citizen been a Socrates, every Athenian assembly would still have been a mob.” Madison’s condescension has never gone away. Walter Lippmann, perhaps the most prominent intellectual of the short American Century, reckoned that citizens were ignorant, confused and emotional. Democracy brought “an intensification of feeling and a degradation of significance”

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Confusion reigns

December 29, 2021

From Peter Radford
What on earth were they doing?
Rocked but undaunted by the great financial crisis the orthodoxy of our central banks survived to fight another day.  The system had been saved.  That no one saw the onrushing crisis is still being debated.  Of course some people saw it coming.  Anyone with a scintilla of understanding of Minsky for instance.  But those folk are hard to find in the top seats of central banks.
The objective of the so-called independent central bank is to preserve the system.  To make it safe for markets to continue undisturbed by the intrusions of political whims.  To save, that is, capitalism from the depraved intrusions of democracy.  The idea is to separate as firmly as possible the political and the economic realms.  After all as economists seem to

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Domain shift

December 7, 2021

From Peter Radford
Brian Arthur tells us that technology most often advances in the form of domain shifts.  In his narrative technologies cluster in related groups he calls domains.  So individual technologies might advance through a tweak here or there, but the economy advances through a shift from one cluster of technologies to another.
I like this idea.  Especially when we then broaden the topic to use technology as a background against which we view a particular slice of history.  Thus we can think, legitimately about the “steam era” and such.  Adding insight to this, Arthur situates all technologies as extensions of natural phenomena.  So he characterizes a technology as a phenomenon being “captured and put to use”.
All good.  This gives us a practical definition of technology and

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More is different: a redux

December 1, 2021

From Peter Radford
“Formation is the vanishing of being into nothing, and the vanishing of nothing into being”
Hegel loved his dialectics.  But it isn’t just contrasts that illuminate reality.  It is connections also. Connections matter.  Single things are interesting.  Perhaps even intriguing.  But it is the way in which things connect that leads us to the better understanding of our surroundings and of ourselves.
Our modern world rests largely on a web of technology that mediates our existence and removes us from our primitive origins.  We pride ourselves on this web.  Our ability to render nature compliant and exploit both our context and our intellect to produce comfortable lifestyles is the essence of modernity.  Any brief study of the past two hundred years will astonish us at

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Is there a “policy”?

November 25, 2021

From Peter Radford
I read this morning that the Federal Reserve had bought, at the peak of the recent crisis, about 40% of all US government bonds being issued.
This may, to some of you, be something of no concern.
Think again
The illusion that there are separate spaces for monetary and fiscal policy is belied by this fact.  Which one was it?  Was it the Fed flooding the economy with money?  Or was it the government issuing debt to finance economic support? I suppose it was both.  But it wasn’t fiscal policy.  The effect of all that money was simply to support asset prices.  Whether that was the intention is irrelevant.  The flood found its way into the financial system and relatively little found its way into the economy in the form of an expansion of productive activity.  We could go

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The sabotage of efficiency

November 23, 2021

From Peter Radford
Not the sort of sabotage we associate with plucky heroes undertaking dramatic action like blowing up railway lines and so on.
No, the sort of sabotage that is a great deal more subtle.  The kind that is summed up by the metaphorical boiled frog.  The slow devious and underhanded chipping away at something termite-like until the edifice is more fiction than fact.
That sort of sabotage.
The sort of sabotage that Thorstein Veblen wrote about a hundred years ago in his curious collection of papers later accumulated into the volume entitled “The Engineers and The Price System”.  I must admit that every time I read those papers I come away with a furrowed brow.  What on earth was Veblen getting at?  The argument ends with a reference to a soviet of engineers

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And now for something completely different …

October 4, 2021

From Peter Radford
My summer of research is almost over.  The season here in Vermont is changing and the view from our window will soon be dominated by the brilliant autumnal colors our region is famous for.  All is both regular and well.
Sort of.
Perhaps there’s something in the water down there in New York.  There are rumblings of life in economics.  The long sclerosis inhibiting the emergence of theories that explain rather than re-invent reality might just be close to loosening its grip.
I hope so.
In case you are unaware, there has been a paper published that has emerged as something of a viral hit.  We all need to add to its fame.  It begins thus:

“Mainstream economics is replete with ideas that “everyone knows” to be true, but that are actu- ally arrant nonsense. For

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Weekend read – Who’s in charge: us or our technology?

August 28, 2021

From Peter Radford
So who is in charge?  Who controls the flow of technology?  Is it us?  Or does the technology now control us?
We live in a technology infused world.  Our current civilization sits on a foundation accumulated through the past few centuries and built of machine power.  We cannot separate ourselves from this cumulative support system without regressing to a pre-industrial way of life.  Which is something few of us either want or are equipped to deal with.  We have forgotten how to live that life, and despite the sentimentalism of our artists and poets, it is not returning without a crash forced upon us.  We will not return willingly.
The rise of this technologically mediated existence crept up on us.  At first the technology was resisted: it displaced human beings from

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Diversity in economics

August 19, 2021

From Peter Radford
In this case geographical diversity.
Dani Rodrik has brought to our attention a rather serious problem within the economics profession: it is still dominated by people living and working in the West.  As a consequence it has a decided bias towards issues that are of significant interest to the West.
This is, of course, not news to any of you not living in the West.  Nor is it news to anyone outside the profession paying attention to the product of the journals and various other outlets.  The ideas that get the most attention and the work that gets most lauded is still channeled through a very narrow lens.  The result is a considerable — massive? — underrepresentation of viewpoints and experiences that inhibit the ability of the discipline to engage broadly with the

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