“Nicely Done”, or Overdone?
Eco-links in the world of the fiduciary
By Paul Schlossman
Recently I have been in several conversations recalling John Nash in the Russel Crowe film. After long travail, when John does well at the end of the film, his colleagues at Princeton (where John is one of the great mathematical economists of all time) give him their fountain pens. It is the custom for a big winner there, and he has just won the Nobel. They say, “Nicely done.”
Who else should receive a “nicely done?” Maybe some one associated with the Federal Reserve Board we would read about in a history book. (Alan Greenspan, book by Bob Woodward). But with the current credit crisis tidal waving the economy, maybe not. Alan felt he missed that last little part of his reign.
Maybe someone associated with the fed we read about in today's paper ( New Chair-Ben Bernanke). Poor Ben, presiding over the current turmoil. So maybe yes a nicely done for Ben so far and for good effort, Or,...if, if, if....maybe not.
Maybe someone who used to be on the local board of directors of the Fed, and its local chair, and issuer of the local section of the Fed's” Beige Book” that talks about how the Puget Sound is doing as an economy. (Each region contributes to the Beige Book) (One Mic Dinsmore). Probably not.
All of this is connected. In short, we cannot at one and the same time be (stewarding right alongside Tacoma) the nations third largest port area; with Dinsmore a former leading important official at the Fed; and at the same time tell the world we are a poor little provincial podunk just trying to turn a buck around at our port (by using best practices and the business judgment rule).
We stand as far as I can read in the papers, on the brink of a recession. Here, the Federal Reserve Board is the central banking system upon which world economic stability relies in last resort. The private banks do not have the dough to influx the injections sufficient to stabilize in the last resort.
Sorry to report that back in 1929-32 when J.P. Morgan and the boys couldn't get it together (Nor could Herb Hoover), Franklin D. had to ride to the rescue. (when I saw Eleanor Roosevelt in 1961 in NYC she was still riding to the rescue)
To do this rescue job (which holds together our economic lives by a visible, intelligible, plannable, controllable, knowable “hand”)--- requires standards which are fiduciary standards at the highest level. As my colleague, Christopher Cain described this in public hearings in Olympia and Seattle, the fiduciary duty is: “UTMOST GOOD FAITH, FAIR DEALING AND FULL DISCLOSURE.”
Fiduciary is as fiduciary does. Alternatively, and contrariwise, the abandoner of the fiduciary norm does not earn a nicely done. Nor a fountain pen from his colleagues.
Dinsmore was a colleague of the fiduciary folk at the Fed, and, indeed was the leading local official thereon. Central banking is a great and honored fiduciary tradition. In the five hundred years' history of nation states, this goes back through all the great names in national finance or economics. It is finance AND economics. It is economics AND law. It is finance plus fiduciary duties. Not just personalism. Dinsmore was as much a colleague of Greenspan and Bernanke and the rest of the Fed system as anyone is a colleague of any other.
And just as much as John Nash was a colleague of every other professor at Princeton. These are the “Parliaments of science” (and social scientists) that Daniel Boorstin described in his intellectual histories. They are great when the speak truth to power (whether in office or consulting to the leading officials) the are not getting the fountain pen when they are not.
Here, I doubt Dinsmore told the Fed, “Help the port is choking on too much debt”. And “Looks like a national debt crisis”
To underscore, the dignity required of and mandatory from a federal reserve officer (and the prestige of the office) is exactly equivalent to the dignity and gravitas from a full professor of economics at Princeton or a leading university. These parliaments of scientists keep the economic life of the citizens together by applying rigorous learning and ethics. There is no podunking about it.
My High school friend is a leading professor at Princeton in economics, and Nash's colleague. Eric Maskin is one of the kindest, gentlest, most thorough people who ever taught or studied mathematics or economics anywhere. This Princeton economics group meets together, and Benanke and columnist Paul Krugman are their current or former colleagues. Krugman has predicted the housing and credit meltdown for many months.
In contrast, Greenspan, a notoriously careful reader of local business reports, apparently got a little drifty on it towards the end of being Chairman of the board. His drift might has been corrected by an opposing signal, “ hey Mr. Chairman, did you notice this data” Does anyone seriously believe that the Seattle chapter of the Beige Book is not a constitaunt of the what the Fed knows and decides?
In Eric Maskins 2007 Economics Nobel speech (Google-able via Nobel Banquet Speech) in December he said that he wanted to quote Robert Kennedy, and talk about “normative” economics in terms of what economics should be; what can be done to make the world better and more just. Eric deserves a fountain pen, as Robert Kennedy did.
I would say, Ask not what Mr. Dinsmore is doing today; or what he was doing on the day the state audit came in; or what he was doing on the day the justice department announced, in essence, that it would enter the line of analysis built up by the Washington State Auditor Brian Sonntag.
Instead, we may ask why Dinsmore's personal time at the Federal Reserve Board's regional group of directors ended just a short time before the auditors report was released to the public; just a short time before the United States Attorney announced his plan to investigate. Has the timing an eco-link to the meaning? Or does the meaning echo the timing (Sory, I couldn't resist that)
The Federal Reserve Board and the fiduciary and scientific integrity which must guide its proceedings is not a subject remote to citizens. The aspiration toward a sound Sound, with the Port of Seattle at its center, cannot be financed unless the financing follows these three flows:
Necessary dollar flows; Pay the bills. Keep the debt down. Maintain the capital. Restrain costs and unnecessary projects.
Necessary information flows. (good faith, fair dealing, full disclosure).
Necessary fiduciary flows. (good faith, fair dealing, full disclosure).
Ecology seems like a different thing than finance. Aren't trees and sky no-cost items? Aren't they free? Maybe once they were, but not if they have been wrecked. (Trees also need a fiduciary for trees.)
Therefore, green of trees cannot be cultivated, and sustained, without paying the growers of trees, protectors of trees, and restorers of trees. Greenness of this sort can be nicely done, but not overdone.