Capitalisn't

Several questions continue to swirl around the collapse of Silicon Valley Bank and its larger implications. In this special episode, Chicago Booth’s Raghuram Rajan – former Governor of the Reserve Bank of India and IMF Chief Economist – joins Bethany and Luigi to explore the risks in the financial system and possible solutions.Rajan discusses a paper he presented (with NYU Professor Viral Acharya) at the Federal Reserve’s Jackson Hole conference in 2022, arguing that the Fed’s liquidity provision left the financial sector more sensitive to shocks, and suggesting that the expansion and shrinkage of central bank balance sheets involves tradeoffs between monetary policy and financial stability. Together with the hosts, Rajan discusses the path forward on inflation, given economic and political pressures, and his recommendations on how to manage risks and tradeoffs.Link to the advertised Chicago Booth Review podcast:https://www.chicagobooth.edu/review/podcast?source=cbr-sn-cap-camp:podcast23-20230320Check out ProMarket's ongoing coverage of the recent banking turmoil, including a summary of Raghuram Rajan's paper and new research by Luigi, referenced towards the end of the episode, on the new dangers of ‘bank walks.’

Read ProMarket's ongoing coverage of the Twitter Files, including the research summary of the Twitter Files prepared by Stigler Center Research Professional Utsav Gandhi in preparation for this episodeRead the Stigler Center's 2019 Report on Digital Platforms, addressing many of the underlying issues discussed in this episode: trust and transparency in social media, business models of journalism, platform regulation when it comes to content moderation, and more.

We had initially prepared an entirely different episode for today, but last week's Silicon Valley Bank collapse, the largest in U.S. history since 2008, meant a quick change of plans.What happened? What is unique about this bank run, and what isn't? How much should regulators be blamed, and how much should bank management be? Do social media and today's frantic digital environment mean this is the end of banking as we know it?Luigi and Bethany talk to two experts with unique insights into the crisis: Chicago Booth Professor Douglas Diamond, who won the 2022 Nobel Prize for his decades-long work on bank runs, and Eric Rosengren, former Boston Fed President, for his view as a regulator. They discuss the factors that led to the collapse, including risky lending practices, lack of oversight, and the challenges of regulating the rapidly evolving world of banking. They also explore the broader implications of the collapse, including the impact on the broader financial system and the role of regulation in promoting financial stability.Show Notes:Nobel Laureate Douglas Diamond on How the Fed Could Have Prevented SVB’s Collapse, by Brooke Fox, on ProMarketHow Do We Avoid the Next SVB? by Chicago Booth Professor Anil Kashyap, on ProMarketLink to the advertised Chicago Booth Review podcast: https://www.chicagobooth.edu/review/podcast?source=cbr-sn-cap-camp:podcast23-20230320

Revisit:When the Profit Motive Kills, with Anand Giridharadas, on Capitalisn'tWhy the US Government Buys Overpriced Services From McKinsey, by Matt Stoller in ProMarket

Read the following articles in ProMarket:There Is a Direct Line from Milton Friedman to Donald Trump's Assault on Democracy, by Martin WolfGeorge Stigler and the Challenge of Democracy, by Anat AdmatiCorporations Are Not “We the People,” by Geoffrey StoneeBook: Milton Friedman 50 Years Later, a ReevaluationAlso, check out relevant past Capitalisn't episodes:Martin Wolf: Is Capitalism Killing Democracy?Why Capitalism Needs DemocracyThe Breaking Point Of Democracy With Morton Schapiro and Gary Morson

Read the following articles in ProMarket:There Is a Direct Line from Milton Friedman to Donald Trump's Assault on Democracy, by Martin WolfGeorge Stigler and the Challenge of Democracy, by Anat AdmatiCorporations Are Not “We the People,” by Geoffrey StoneeBook: Milton Friedman 50 Years Later, a ReevaluationAlso, check out relevant past Capitalisn't episodes:Why Capitalism Needs DemocracyThe Breaking Point Of Democracy With Morton Schapiro and Gary Morson

 In a Wall Street Journal article about Google’s Secret ‘Project Bernanke,’ Jeff Horwitz and Keach Hagey quoted Google Chief Economist Hal Varian's answer to a question he was asked during the Stigler Center's 2019 Antitrust and Competition Conference. Watch the video excerpt here."Why Google Dominates Advertising Markets," by Dina Srinivasan, Stanford Technology Law Review, December 2019Read ProMarket's ongoing coverage of Google here.

Show notes:On February 9th, 2023, "China’s New Covid Strategy," the next webinar in the Stigler Center's series on China's political economy, will feature Chang-Tai Hsieh, along with Schwarzman Scholars/Harvard Medical School's Joan Kaufman and the Financial Times' Nian Liu (Stigler Center Journalist in Residence, 2021). Register here.Revisit previous webinars hosted by the Stigler Center on China’s political economy and read a summary: https://www.promarket.org/2023/02/02/event-notes-chinas-political-economy-in-review/ Economists share blame for China’s ‘monstrous’ turn, Janos Kornai in the Financial Times.

Capitalisn't will be back in your feeds with a brand new episode on January 19. Don't forget to rate and review our podcast if you haven't already, and leave us a voicemail at https://www.speakpipe.com/Capitalisnt.