RE: Introductions, Proposals and News

[Michael Harrington <mharrington@milken-inst.org>]

Deb,
I got a chance to read the literature on the IFG website and my reaction was
a bit mixed. My opinion is very much consistent with Norm Kurland's
elegantly expressed views in his email sent to the Homestead group. 

There is definitely a global phenomenon going on that is concentrating
economic wealth and control in much the same way as is happening
domestically, as you have often noted in citing Bill Greider's book. But it
seems like the IFG's best intentions are colored by anti-financial
capitalist sentiments with attacks against speculators, the use of
derivatives, high-yield securities, etc. This strikes me as misguided. 

Financial markets manage economic risk. To do this most efficiently, a
liquid trading market is required. Trading specialists fulfill this critical
function - they assume risk with the expectation of making a return: more
risk = more return. Sometimes they win, sometimes they lose, but either way
they create essential value and their profits are justified. Their
activities require a competitive market, public oversight and regulation,
but it would be foolish to throw the baby out with the bath water. The
problem really is how to get more citizens to participate in calculated
risk-taking through long-term ownership strategies rather than portfolio
speculation, because economic growth is essentially successful risk-taking.


The problem internationally is best noted by the difference between
long-term foreign direct investment (FDI) vs. short-term portfolio
investment. I would seek ways, consistent with Kelsonian principles, to
reward FDI without penalizing "speculators" except when their activities
violate law. Portfolio investment should be a diversification strategy, not
a get-rich-quick scheme. 

Globalization is ultimately about economic efficiency, while the dynamics of
free market exchange is concentrating the returns to that greater
efficiency. This is definitely an immense problem but to opppose
globalization outright strikes me as trying to rewrite the laws of
economics.

I think Norm Kirland states the overall principles most eloquently and
comprehensively,

Regards,

Michael Harrington, Ph.D.
The Milken Institute
mharrington@milken-inst.org
(310) 998-2699
 
    

-----Original Message-----
From: Deborah Groban Olson [mailto:dgo@esoplaw.com]
Sent: Thursday, September 02, 1999 8:29 PM
To: Michael Harrington
Subject: RE: Introductions, Proposals and News


M
www.ifg.org
Deb
At 02:45 PM 9/2/99 -0700, you wrote:
>Deb,
>I'm not familiar with the International Forum on Globalization. Is there a
>site or a cite available?
>M
>
>-----Original Message-----
>From: Deborah Groban Olson [mailto:dgo@esoplaw.com]
>Sent: Thursday, September 02, 1999 1:30 PM
>To: Michael Harrington
>Cc: Homestead
>Subject: RE: Introductions, Proposals and News
>
>
>Dear Michael:
>       You are doing precisely what is needed. To our knowledge, economists
>have
>largely ignored Kelso. Your efforts to make the case, as an economist, will
>be extremely helpful. If we can engage the economists in a debate on these
>issues, get publicity for the debate and get some experiments started to
>test the theories proposed, we will be making serious progress. I am
>herewith forwarding you email to the COG Homestead group. As a member of
>that group you should feel free send email to all the other Homestead group
>members whenever you wish by addressing it to Homestead@cog.kent.edu.
>
>       Do you know anything about or have any opinions about the
>International
>Forum on Globalization? 
>
>       Thanks,
>       Deb Olson