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Ferguson of Harvard Apologizes for Remarks on Keynes

May 6, 2013 by Leave a Comment

Mr. Ferguson, who is the Laurence A. Tisch Professor of History at Harvard, has been an outspoken critic of Keynesian economics, warning that high government deficits would hurt economic growth, rather than help it, as Keynesians argue.

The comments Mr. Ferguson apologized for came in response to an audience question on Thursday at the Strategic Investment Conference in Carlsbad, Calif., where he was a featured speaker. The questioner mentioned the familiar Keynes adage favoring immediate government intervention in the economy: “in the long run we are all dead.”

According to a reporter for Financial Advisor, Mr. Ferguson’s language described Keynes as “effete,” and said about his marriage to a Russian ballerina that he was more likely to be speaking with her of “poetry” rather than procreation.

In his apology, Mr. Ferguson stood by his criticisms of Keynesianism, but completely repudiated his reasoning last week: “My disagreements with Keynes’s economic philosophy have never had anything to do with his sexual orientation. It is simply false to suggest, as I did, that his approach to economic policy was inspired by any aspect of his personal life.”

That a prominent professor is apologizing for comments about Keynes more than 60 years after his death speaks to his still central role in the debate over the role of government in the economy.

Online, Mr. Ferguson’s comments became a proxy for that debate.

At National Review, the opinion ranged from those who worried that his comments gave the other side an easy argument against austerity, to those like Jonah Goldberg, who wrote that Mr. Ferguson’s argument was a common one. Mr. Goldberg listed the many conservative writers who had tied Keynes’s views to his childlessness and gay relationships.

George Chauncey, a Yale scholar of gays in American history, in an interview emphasized that he was not weighing in on the economic arguments involved, but noted that Mr. Ferguson’s comments resembled past attempts to undercut gays in public life. “The idea that homosexuals are so self-centered that they pose a threat to the family, to the social order has become a habit of thought” in America, he noted, reaching its peak in the 1950s.

Rather than in the world of ideas, “the most excruciating pressure was put on gay people who were rising into senior ranks of management,” he said, adding “the fact that a man wasn’t married was a bar to reaching the highest levels of authority of corporation.”

In his blog post, Mr. Ferguson described his comments as “doubly stupid.”

“First, it is obvious that people who do not have children also care about future generations,” he wrote. And he apologized for a factual error. Referring to Keynes’s marriage to Lydia Lopokova, he wrote: “I had forgotten that Keynes’s wife Lydia miscarried.”

Article source: http://www.nytimes.com/2013/05/07/business/economy/ferguson-of-harvard-apologizes-for-remarks-on-keynes.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Obama, Before Facebook Crowd, Presses G.O.P. on Budget

April 24, 2011 by Leave a Comment

In a town-hall-style forum with the 26-year-old Facebook chief executive, Mark Zuckerberg, Mr. Obama seized on a question about the House-passed budget to mount a long, withering indictment. The questioner, an employee of the social networking company, noted that some news media accounts suggested that the sponsor of the Republican budget, Representative Paul D. Ryan of Wisconsin, is “bold and brave” for proposing the deep spending cuts.

“The Republican budget that was put forward I would say is fairly radical,” Mr. Obama said. “And I wouldn’t call it particularly courageous.” He added: “I do think Mr. Ryan is sincere. I think he’s a patriot. I think he wants to solve a real problem, which is our long-term deficit. But I think that what he and the other Republicans in the House of Representatives also want to do is change our social compact in a pretty fundamental way.”

“Nothing is easier,” Mr. Obama said, “than solving a problem on the backs of people who are poor, or people who are powerless and don’t have lobbyists or don’t have clout.”

Mr. Obama’s critique in many ways echoed his speech at George Washington University a week ago, two days before the House passed the plan without any Democratic votes. There he first called for a more balanced approach for reducing deficits by $4 trillion in 10 to 12 years, with spending cuts and tax increases. But here he grew particularly exercised in contrasting his and Republicans’ visions for reducing annual deficits, with his energy and the enthusiasm of the estimated 1,200 mostly young people giving the event a campaignlike partisan air.

While Mr. Obama’s new energy in criticizing Republican policies has stirred supporters, it is infuriating Republicans even as he is calling for bipartisan talks with them to reach a compromise framework in time for Congress’s vote before July on raising the $14.2 trillion debt limit.

In a statement just before Mr. Obama’s appearance here, the House majority leader, Representative Eric Cantor, Republican of Virginia, reiterated that if the president and Congressional Democrats “refuse to accept serious reforms that immediately reduce federal spending and end the culture of debt in Washington, we will not grant their request for a debt limit increase.”

Early in his remarks, Mr. Obama recounted the origins of the current debt, recalling the trillions of dollars added in the past decade when Republicans controlled the White House and Congress and cut taxes, opened two wars, and created a new Medicare prescription drug benefit — all without offsetting spending cuts or tax increases.

He joked to the billionaire Facebook founder that wealthy Americans — “people like me and, frankly, you, Mark” — should pay higher taxes to reduce deficits. But Republicans, he said, would further reduce taxes for rich taxpayers and corporations and cut deeply from clean energy, education and transportation programs “to make his numbers work.”

“I guess you could call that bold. I would call it short-sighted,” Mr. Obama said, provoking another burst of applause.

He said the Republican proposals to shrink projected health spending, by eventually turning Medicare into a voucher system and Medicaid into a limited block grant to the states, would not curb the rise of health care costs.

Mr. Zuckerberg, who posed questions to Mr. Obama from his employees and from Facebook users nationwide, as both men sat on stools in a cavernous hall, wore a sport coat and tie for the occasion, along with jeans and jogging shoes. But at the end he brought out his trademark hoodie, in purple, and presented it to the president.

From the Facebook campus, Mr. Obama headed to nearby San Francisco for the first of several fund-raising events over two days, including in Reno, Nev., and Los Angeles on Thursday.

Article source: http://feeds.nytimes.com/click.phdo?i=b6dbe3d912655968d5a30a5ed027b454

Filed Under: Economy News Tagged With: , ,

DealBook: Buffett’s Ruthlessness Is Oddly Absent

April 5, 2011 by Leave a Comment

Warren E. Buffett said he would refer questions about David Sokol back to a written statement.Mustafa Quraishi/Associated PressWarren E. Buffett said he would refer questions about David L. Sokol back to a written statement.

Warren E. Buffett has a favorite saying: “Lose money for my firm, and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless.”

But as speculation of insider trading swirls around Mr. Buffett’s onetime heir apparent, David L. Sokol, it has to be asked: Why hasn’t Mr. Buffett been ruthless?

Mr. Buffett is likely to face a barrage of questions this month at Berkshire Hathaway’s annual meeting in Omaha, often described as “Woodstock for Capitalists.” This year, it could be called “The Great Inquisition.” Every year, Mr. Buffett and his partner, Charlie Munger, take questions from shareholders and a panel of journalists — including me — in front of 35,000 people for five hours.

When Mr. Buffett announced Mr. Sokol’s resignation last week in a detailed announcement, he stated, “If questioned about this matter in the future, I will simply refer the questioner back to this release.”

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But given the scrutiny that Mr. Sokol’s behavior is now under, it will be hard for Mr. Buffett to dodge the inquiries.

Here are some of the questions that deserve answers from Mr. Buffett.

¶In the statement announcing Mr. Sokol’s resignation, you acknowledged that he had made “a passing remark” that he owned shares in Lubrizol in January, two months before Berkshire announced a deal to buy the chemical maker. What, exactly, did he tell you? Do you feel he misled you? If not, why, given your penchant for straight talk, did you not come out later and say, “I should have asked more questions.”

If it was only a passing remark, why did you tell Mr. Munger about Mr. Sokol’s investment? Did you tell the rest of Berkshire’s board about Mr. Sokol’s Lubrizol holdings before it voted on the deal? What prompted you to ask Berkshire’s chief financial officer for Mr. Sokol’s trading records just days after announcing the acquisition of Lubrizol?

¶During Mr. Sokol’s interview on CNBC last week, he said, “I guess knowing today what I know, what I would do differently is that I wouldn’t have mentioned it to Warren and just made the investment and left it alone. I think that’s a disservice to Berkshire. But if that’s what people want to do in the future, that’s fine.”

Do you believe Mr. Sokol — to whom Citigroup floated the Lubrizol deal in his capacity as officer of Berkshire — had a fiduciary duty to run the idea past you? Or was he free to make a personal investment, without discussing a potential acquisition with you? What is Berkshire’s policy on such trading?

Mr. Sokol also compared his investment with one that Mr. Munger, vice chairman of Berkshire and one of your best friends, previously made — that is, buying a 3 percent stake in BYD, the Chinese electric carmaker, before Berkshire took a big share in the company. Was it an apt comparison?

¶You have said that Mr. Sokol did not do anything “unlawful.” But Mr. Sokol bought shares of Lubrizol a day after he told Citigroup to indicate Berkshire’s interest in buying the company.

Why don’t you consider that “material” information, a crucial component of insider trading? Do you not believe that a Lubrizol shareholder would have considered such information important to their investment decision? Clearly Lubrizol felt that Mr. Sokol’s inquiry was material enough to hold a board meeting on Jan. 6, one day before Mr. Sokol bought almost $10 million of shares.

If Mr. Sokol was aware of Lubrizol’s board meeting, would you consider that material information? And if a news outlet had reported Mr. Sokol’s inquiry or Lubrizol’s decision to meet, do you not think that the price of Lubrizol’s shares would have risen?

Here is another way to think about it: If a Citigroup banker had bought shares of Lubrizol at the same time as Mr. Sokol, would you have considered that insider trading? Isn’t that the definition of insider trading? What did Mr. Sokol do that was different?

¶Berkshire has always been a very decentralized institution with only 21 of its 257,000 employees working at headquarters and each subsidiary left to its own devices. “Most of these managers are happiest when they are left alone to run their businesses, and that is customarily just how we leave them,” you recently wrote in the annual letter.

This structure might seem like a bastion of efficiency. But given Mr. Sokol’s possible transgressions, do you now think Berkshire needs more compliance programs and people to manage them?

¶In your statement, you said Mr. Sokol “told me that” the trades in Lubrizol “were not a factor in his decision to resign.” Many Buffett watchers, including myself, noticed that you did not unequivocally say that his resignation was unrelated to the trades — just that Mr. Sokol said it was.

If you believed Mr. Sokol, why didn’t you just say it was unrelated? And if you didn’t believe Mr. Sokol’s explanation, why did you relay his story?

¶You have long followed the mantra of Dale Carnegie: “Praise by name, criticize by category.”

But in recent years, you have been criticized, for example, as being too soft on companies like Moody’s, in which you had invested. You often publicly lambaste certain industries or practices, but rarely specific companies or people.

Given your stature in the business world, do you think you have a broader responsibility to call out wrongdoing?

¶Finally, how has this scandal changed your evaluation of potential successors?

Do you have a question to ask Mr. Buffett or Mr. Munger at Berkshire’s annual meeting later this month? Please send it to me at arsorkin@nytimes.com. (Also, let me know if I can use your name and if you are a shareholder.)

Article source: http://feeds.nytimes.com/click.phdo?i=c207625ae798fff5e1a26ba76845938d

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