HLS Library Book Talk | Panel discussion In memory of Tamara Lothian
Hello everyone. Welcome. Welcome. Today to this to, this spring, 2018 on the flight the Harvard Law School library's, first quote, faculty book talk for, the spring semester and today, I'd like to introduce, and, the book that, we're talking, about and. Recently. Published by Columbia University, Press, this talk is in honor of the law and the wealth of nations finance. Prosperity. And democracy I would, also like to add. To that today's talk is being, held in honor and in memory of this books off author, tomorrow. Lothian. Joining. Us today as comment, commentator, to my left is Professor. Duncan Kennedy, who is Carter, professor, of general jurisprudence. Emeritus. From Harvard Law School and also, joining today's panel, are we have special guests visiting, us Mark berenberg, who is the Isidore in Seville Sol's Parker professor, of law at Columbia University, School of Law, Robert. Hockett, who was the Edward Cornell professor of law from Cornell Law School and Sanjay. Reddy who is associate professor of economics, at the New School for Social, Research and finally, professor. Christine Tucson who is Leo Gottlieb, professor of law at Harvard Law School and with special thanks today to Professor, Tucson for, her role in organizing, today's talk let's. Get. Started I have just two reminders. Okay we are going to have books on sale today from, the, Harvard Law School ku the, books have not arrived, at the law school yet they are, scheduled. For delivery, they are scheduled for delivery this morning they will be here hopefully, by the end of today's talk and will be on sale right outside the door here and secondly, I'd like to remind you all that today's talk will be recorded, and will be available to, you particularly for folks who have to leave or can't be here for the entire talk on the law schools YouTube channel, approximately, two weeks after, today's event, so thank you and now I will turn the microphone over to Professor, Kennedy. So. Welcome to this event, it's. Great to see this turnouts, but. Both Tamia, the book fully deserved. To have to be celebrated, in this way and it really makes me feel great to see you all here so, I've my role is to be the warm-up so I'm, not gonna talk except, briefly at the end about the book I'm gonna talk about what. Tammy was like during. The time when I knew her well which was when she was a law student and if shortly, thereafter I knew, her quite well and, I. Just want to give you some sense of what she seemed to me to be like a very, very subjective way, of approaching it because. Maybe she would have said she wasn't like that at all and she. Might well have because the first characteristic, of Tammy was that she was disrespectful. And, highly. Ironic. So. The competition was there different. Ways to be disrespectful, this. Was a period of a crisis, of legitimacy for. Harvard Law School so the whole school the, faculty, and the whole student body were. Caught in a moment in which the, legitimacy, of the school was challenged. From the left and. Tammy. Was completely, part of that in. That thing many people were disrespectful, and furious, so. Disrespectful. Owed in all directions from, the old people to the young people among the, young people among the old people Tammy, was more, not respectful. She wasn't disrespectful in the sense of being pissed, off her, basic attitude was you don't deserve any respect until. We see what your life would, be something like that and that. Was a great. Relief but it was also a kind of Baram in the situation. Of increasing, tensions so she, was really just unwilling, to give anybody credit. Unless, they, deserved it and that's, all so this was a situation where everyone, is respecting, someone, intensely, so, all the camps, have their internal, hierarchies, where, the people who were on top are being earnestly, followed, and stared, at and respected, by people in their faction, and earnestly. Disrespected. Intensely, from people from the other factions, so, non respect. Was, an amazingly, powerful.
Combined. With irony, so, the basic her basic attitude was almost, everybody, in some way is oddly quirky. A little, contradictory not. Really to be taken as seriously, as they want to be taken very. Very appealing. In the context. Second. Trait, would. Be this so, Tammy, was. Interested, in what's, going on in a way that was one step, removed, from. The experience. Of the participants, so. In these struggles, over the legitimacy of the institution. People, are very, wound, up in the question, of what's going on is the question of what's happening to, their own approach. Or point of view where. Tammy had, that but, she was completely interested. In capable, of stepping back and saying well wait a minute what's, really, going on here this superficial, battle. Doesn't. Tell us all we need to know so, I first had this excuse in my torts class she, was a fantastic. Student, of the law of torts I mean just an amazingly, good student, she, was an A+, student, in the strongest, possible sense, of the word but, she was perfectly capable at the end of the class I would say Tammy, what, was going on and she was said the women, were furious, at you now. This was just not the usual way for students to talk to the professor about what was going on in the class or, she might say that, Gunnar has reached almost the end of his string and he, will be lynched you, wait you'll see he's going to be lynched so. This is a sense that there's a bigger context. Of play. Gamesmanship. And rivalry, within which everyone is operating. He. Also had that attitude towards the, faculty, so one more anecdote, of this particular, attitude would be this an, important, moment I think. In. Tammy's, life was. When she came, to my office she, made an appointment with me which she didn't usually do she just came to my office hours and, she came to Mike from a disappointment, she said I want to ask her a question. What. Do you think of mr.. Unger. So. Literally, the words were in the tone I tried to imitate the tone mr.. Unger so. The tone was very complicated, as this message which was in two levels when, messages, he's just mr., Unger I mean, he's, just another guy so. Everyone. Thinks he's such a big deal so, what do you think of mr. Unger I could, cut him down to size in two minutes that was the underlying thing, and the, other was, mr.. Unger, evoked. For, me, how. True is this a Jane. Austen novel mr.. Unger mr., Darcy, maybe, I was mr. Bennet, the the. Patriarchal. Figure, who is trying to preside, over the marriages. And non marriages, of all the people who resisted, so. That was an amazing, Tandy, move it, was immediately, apparent that this was a very significant, conversation, so. I said Roberto, is absolutely, wonderful, he's a great, guy I think he would be a fantastic life. Partner, I didn't say that. So. Anyway. Now. How, is this connected to the book so. It is connected, to the book in the following way one, of the oddities, of the book which would not have been the case if kami had finished it I'm sure. And. I don't think Roberto could very well have, really intervened, on this dimension of it a very striking, aspect, of the book is it refers in three different occasions to, say the most important. Thing about the book, know.
One, Of the key ideas, of the book is, to develop, the idea, that. Within. Private. Law Theory, there. Is a tradition. Of critique, of the. Idea that the market, is given. Its canonical. Or correct, form, by. The conceptual. Development of the ideas of property and contract editorial, so, this idea recurs, and recurs and recurs. The. Moment. That. Tammy was a student, at Harvard Law School and the world she participated, in was. A moment, when this idea. Exactly. As she says as, part of a very long what she calls it a 100, year old tradition. Of, thinking about law was. Most, prominently. Being, developed, by the faculty, and, the people, who were very involved in it some of them were in this room, but. Not all so, on one. Level Roberto. And wordy Horowitz and myself very. Self-consciously. Understood, ourselves to be part of a hundred year tradition and Frank. Michel Madana was sitting right here was. Older. Than us had, been involved in this very precisely, exactly the, same inquiry, for, his whole academic. Career since, the 60s, when he began to write about the, relationship, with know what Jerry, Frug, had recently, joined the faculty Jerry, FRU taught, a whole course the message which there's no such thing as a free market because, all markets are heavily, in fact understood, as artifacts. Of different interpretations of contract and property in tort but. It's not just that Tammy, was part of the generation in, which many. Of our students, became professors, but. I said many of our professors that I mean, a lot so, they were already on the presences, this the five, as for assistant, professor, is called the shrimps which included, Claire, Dalton governor. Dan Tarullo, soon. Later, to become a governor of the. The. New, year of the fed and the, architect, of the Basel Accords about, to be fired from Harvard Law School summarily. Because. He wrote an article critiquing. The, free trade doctrines. Being propagated by John Jackson the, leading trade theorist of the time so, it's like. So. It's. Very important, that Tammy, is actually, in my mind very. Much a product of this thrilling, moment, of the challenge of legitimacy, and the, book really does, develop. That idea in a fascinating way by, applying it to finance so, law in the wealth of nations is something, that in this tradition, had, not been done before I think they're now quite a few people working. It's she, found a topic, which, if she'd lived. And been able to finish and develop would have put her at the center of a lot of law and development debates because. Finance. Interpreted, in different ways is everywhere, in the discussion, often. In a way that, could be said to reduce, to economic. Growth is caused by innovation, innovation. Is caused by finance more. Finance, more, innovation, therefore, economic growth, the. Innovation. Mantra, is everywhere and her book is deeply, deeply subversive. Of, and critical, of this completely, now, ritualized. Appeal, to innovation, is everything so, I'm just about done with my time what, I'm gonna say Tammy was she to say she was an appealing, character, is really under, stadion she, was very, funny. Her, non respect. And irony. Were directed, incredibly. Consistently. At windbags. And stuffed shirts she was, completely. A devoted, scholar, at the same time that she was a lawyer, and activist. A consultant, and all the other things and I, feel, that I'm very fortunate to have known her and to have known her at this great time in the history of the law school and of her emerging, himself so, thanks for listening. Thank. You Duncan and and thanks, for inviting. Me Chris and Roberto. I'll.
Jump Into the book but, first. I want to say that this, chance. To remember tomorrow, Lothian, that in this setting and to. Talk about her magnificent. Book among. These people. It. Carries, a lot of importance, for me as. A matter, of intellect. And and feeling. When. We were at Law School tomorrow and I were classmates and, friends. Then. She taught law and Finance as my colleague, at Columbia. So. Our conversations. And, friendship. Continued. For four decades. At. The center of the book is tomorrow's vision, for restructuring finance. Toward, the, ends, of deep democracy. And politics. And. In. The market economy and radical. Freedom and individual, lives. She. Wants a democracy, through, which people can quickly and capacious, ly reshape. Basic. Economic, and social, structures. And, she wants a market that vastly, increases. Opportunities at, and capabilities. For. Denari people, to. Enlarge their lives. She. Says the book doesn't offer comprehensive, proposals. For revolutionising. All of market capitalism, just, finance. But. In that disclaimer. I'd, say she's being modest. Along. The way her program. Reaches, from finance into many other big domains, the. World trading system the constitutional. Order the structure, of party politics. The. Shape. Of that economic Enterprise. Contract. And property, of Education. Of immigration, of Labor. In. The time allotted I'll comment, only on what she has to say about the last of those, the. Tight connection between restructuring. Finance, and, the. Sphere of work. The. Book makes a far-reaching breakthrough. On that subject I believe and. It shows how steadfast. And successful. Tomorrow. Was throughout her life and searching, for ways. To enlarge, the lives of working, people. When. We were law students. Tamar. And I and a few others came together in, the Harvard Labor Law Project we. Hope to think up radical, reforms, to attack for the oppressiveness, of wage, labor of the, sort that we, saw in our time. There. Were some smart creative people in that group but.
Tamara's. Intellect. And vision, and, fearlessness. Ran. Deepest. She. Jumped into combing. Far and in international regimes, looking. For institutional, pieces, that that, might be reconfigured, to. Do the job. One. Of tomorrow's very, early published. Papers. Shortly, after law school showed. That. Her method, and imagination. Could pay off. The. Papers mission, was to devise a labor regime, that fulfills, four big goals. Big. Goals worker, emancipation. Democracy. Within worker, movements. Continuous. Mobilisation. In. Politics. Of the. Working class and. Overcoming. Or mitigating. Economic, dualism. Across the. Sectors. Of the economy. The. Paper begins, by comparing. The, American. Labor. Regime in certain South American, regimes. North. American. Regimes. Are construct. Contractual. Estores. Jews in decentralized. Work. Units whether they want unions, if, they do vote, to unionize, then, they. Can select among. Multiple. Unions. To be their representatives. Unions. Aren't arms, of the ruling, state, or for party. But unions, being, decentralized. And only partial. In. Their coverage of the workforce. Privileged, workers in the organized, sector. And. Reinforced. Dualism. In the economy. Other. Regimes, in the Americas, are corporatist. The, state requires, workers, to join unions there, are state designated. Unions, that hold a monopoly on representation. The. Comprehensive, coverage, of the. Unions is a potential, force for D segmentation. Of the, economy. And unification of, the, working class and, the. State mobilizes. Workers in displays, of. Populism. That, nonetheless. Incite. Workers, to become an, independent. Political force. So. Tami's. Prescription. Was to make a hybrid of the corporatist, mandate, that. Workers join comprehensive. Unions. And the contractual, estores. Ation, of. Workers, to choose among competing unions, not controlled, by the state to, combine, political. Activation. Of workers. With. Democratic, vitality. In workers. Movements. Decades. Have passed but. I still assign that, wonderful. Paper every spring and my, seminar, on labor, in the global economy that.
Papers. Proposal, resurfaces. In law, and the wealth of nations. I. Suppose. That's one reason why the book, stirred. A feeling, in, me of walking beside, tomorrow. Down, her intellectual path since law school in law, school and her early, writing, her intellectual, practice. Enacted. A tacit, theory. But. That germinated. Into the books. Mature. Articulation. Of a. Complex, way of thinking, and a method, to apply it. But. As I said the books, big programmatic. Breakthrough. For labor has, to do with the connection between finance, and work. Her. Argument doesn't, rest on the familiar progressive. Critique. About the triangular. Nexus of high finance, and corporate. Headquarters and, stock, markets, in, that and that more familiar, story. Big. Banks and institutional. Funds. Squeeze. CEOs. To, raise stock, prices, and CEOs. Pander, to the short-term, mentality. Of. The, market, by ordering, mass, layoffs, or, corporate restructuring. In, ways, that can wreak whatever, high, trust production, systems, had been, painstakingly. Built. By. Workers and local, production managers. Supported. By an array of local. Public. And private institutions. Tomorrow, understands. That pathology. But, when she embeds the reconstruction. Of finance in. Her larger, project, of democratizing. Mark, gets an extending, individual, freedom, a she. Uncovers a different, connection, between finance, and labor lying right at the heart of what finance, is supposed to do and. More. Revolutionary. In its implications. The. Job of finance, is to take savings, and move them to production, it's not supposed to divert savings, into, speculation. Removed. Several removes from. The. Real economy, so. At, the core of tomorrow's, program is the design of institutions. That tighten, the relation, between finance. And production, and one. Goal of integrating, finance and production, is to quicken the pace of innovation and. Productivity. Growth. Another. Is to disseminate, high knowledge high, trust. Forms. Of, production. From the lucky workforces, the vanguard, of the, economy, to the rearguard sector.
Of More, precarious. Work. The. So-called precariat. Suffers, chaotic. Uncertain. Employment, and when those precarious. Workers are employed, they suffer, routinized. And machine-like, deadening. Work. Tasks, a, third. Goal is attained financial, instability and, better. Synchronize, growth, in supply and demand, so. So tomorrow wants finance, to do those things. Innovation. Dissemination. Of high knowledge, production. More stable, and balanced growth but. From, the standpoint of the labor question. And. Even more profound goal is to, emancipate. Workers, from coercive, wage, labor. To. Enable them to live. Greater, lives in, a democratized. Market, that's enormous ly richer in opportunities. Now. The. Proposition, that wage labor is coercive, might, seem fishy to some of you. Our. Law says it's not, wages. Laborers are taken for granted institution. And market economies, as we know them. But. Tamara's, way of thinking, like. Roberto's. Is to. Relentlessly question. The necessity, of social arrangements, that, constrict, freedom. So. What's the argument that wage labor is coercive and, why is it unnecessary. In. Its, response to those questions law, and the wealth of nations. Stands. At least implicitly. As a rebuke, to a certain, narrow vision. That you find oddly, in both conventional, Marxism, ad in. Modern mainstream labor, law. For. Traditional Marxism, it's inequality. In the labor market, that. Accounts. For domination. At work, the. The single secret, to capitalists work is the fact that workers are property, listen to survive they have to sell their labor power. To. Capitalists, that's wage labour that's the root of class domination. Of the class struggle between labour and capital that's, the motor of history. Capitalism. Is an indivisible. System. Of institutions. Ordained. By that class structure, by the core institutions of wage labor in cap private, ownership of the means of production but. After, Marx political. Economists. Of, the 20th century on the left and right from. Very aware to Schumpeter. Keynes. Plan. Ye many, many others, made. The case that capitalists, wage labour can't, be. Understood. Or explained, unless. You look beyond the immediate institutions. Of the labor market and private enterprise.
To. A historical. Array, of other institutions you. Can't understand, our market economies economy's. Particular. Constriction. Of freedom at work unless. You look into the particular, structure of. Product, markets, of production, systems the monetary, system financial. Institutions. State. Structures. That sustain, financial, and monetary systems. Even. The global system of rival, or estates, that, reassures. Against, confiscation. Of, private. Property corporate. Property. Along. With the hegemonic, states that, stabilize. International. Finance, and money, as, I. Said modern mainstream labor law follows, conventional. Mark of Marxism. In just the same narrow field, of vision, section. 1 of the National Labor Relations, Act of 1935. Says, what. Karl Marx says, duress. Coercion. In the workplace, is rooted in property. Of this workers, need, to sell. Their labor to owners of capital, in the asymmetric, bargaining, power between. Workers. And capitalists, in the labor market. So. Then regulation. Of labor markets, and, workplace. Institutions. Defined, in that thin way. Takes. Care of all or, at least most of what needs taking, care of. So. Contemporary. Labor law is a it's, a. Artificially. Depleted. Field. It's. One of many instances. Of legal fields whose boundaries, are just true slides and power politics. At an, ideological. Struggle, the. Horizons. Of labor law today are. Essentially. The boundaries, of the social-democratic and. New Deal settlements. After World War two so. Labor. Law looks no further than regulation. Of employment, contract, collective, bargaining, and. Employment. Related social insurance, and. Legal. Academy, those boundaries, of labor law were hardened, by professors. In, other fields protecting. Their turf. The. Same in labor economics I, believe some but not many, professors. Of financial, institutions. Or corporate law or constitutional politics. Or international, relations want. To be told. Few of them want to be told that, workplace. Power is a core. Sub-object. In their study, and. Labor. Lawyers. And the, labor, economists, defer, to. That distaste. Even. Though the institutions. That preoccupy. Those other fields, in all their historical, particularity, are absolutely, key to what happens, in our workplaces, in all their, historical. Particularity. But. Here's the point. Tamara's. Different. She's. Alert, to the deep relation, of particular. Financial financial. Institutions. To, particular. Institutions. Of wage. Labor, she. Proposes, reconstructing. Financial, institutions, to radically, enlarge the credit available, to ordinary people. And. To create institutions to, give them the technical political. And. Educational. Support they need so they can escape the, coercion of deadening wage, labor, by. Becoming, their own masters. Either. In, their own small businesses, or in worker cooperatives. Or in other forms, of. Collaborative. Work so. Those are escape, routes to. Uncoerced, labor. But. The opportunity. For escape would. Also radically increase. Workers, bargaining power, in the wage labor sector, during. The step-by-step, transition. To. Tamara's new kind of market socialism. Just. Like in the 19th century the possibility, of escape to small holdings, in, the frontier. Enabled. Workers on the East Coast to bargain for the highest, wages in the world, of. Course better wages aren't, the the touchstone. Of tomorrow's, labor program, if the, markets democratized. In this way if good opportunities, proliferate. For workers to be their own masters they could lead bigger lives. By. Widening the arena in which they exercise, creativity. And critical, thought. For. Which a revolutionised educational. System prepares, them, so. This program, of market democratization. It, converges, on an important, point, made by Roberto. In one, of his great books. There's. Many great books. Democracy. Realized, which. I know tamarah, admired, very much. Conventional, thinking on the Left. See. Small business, the petty bourgeoisie, as, inevitably. Adversarial. Toward. Wage. Laborers. Roberto. Encouraged. The left to rematch, reimagine. Those two classes, as allies. Tomorrow's. Book is the, fullest account we have of how financial. Restructuring could, help align those class interests. The. Right financial, institutions, would enable, each class to empower the, others the. Other so far I've, talked only about the books program and has a second, equally ambitious project. Proposing. A new way of thinking, about institutional. Transformation and. A. Method, for applying that way of thinking. Neither. The right nor the left has, yet come up with, a convincing theory, of institutional, transformation and. The. Book overflows, with original, insights into, that project. It's. A masterwork, in social. Theory. In. The time I have I'll just mention how the labor question illustrates.
Tamara's, Way of thinking and Method. So. She marches under the banner structure. Not system. Existing. Institutions, are a hodgepodge there. The historical, product, of political, and intellectual. Conflicts. With. Political, a Nigel ideological. Settlements. Expressed, through long. They. Don't lock together in a predestined, combination. System. But. They are a structure, meaning they are resistant. To change, so. Institutional. Imagination. Needs, to, search for points of leverage in. A resistant, structure, the. Search is informed. By what tomorrow calls fragmentary. Theory, that. Means rummaging. The existing, fields of political, economy, and law for useful tools, she, thinks it's premature for the left pronounce a new full-blown. System. Of thought of the sort that corresponded with. The, predefined, social, systems, of 19th. Century social. Theorists, and, in. Just the same way that means sifting, institutional, elements, from the past and from foreign regimes and imagining. Institutions. Possibly. Adjacent. To. The resistance structure, before, us and. Institutional. Transformation. Revolutionary. Change it happens. In the same fragmentary. Way, we. Want to imagine radical. Reforms. That had incrementally. In the, direction of deep democracy. And heightened freedom starting, from where we are ok. So tomorrow's, link, between finance. And work is a good example, it. Offers a wedge into. The institutional. Structure, of the coercive labor. And in the way I've described. Tomorrow. Exploits. That wedge by, thinking. Of institutions. That combine, elements. From contractual. List and corporatist, labor regimes, from cooperative. Movements, of the, post-civil, war era. Labor, republicanism. That is from, community. Banking, institutions. Implanted, in the Jacksonian. Years. From, Agricultural, Extension programs. And land-grant colleges. Of the 19th century, from. The New Deal's government-sponsored. Enterprises. From. Contemporary, venture. Capitalism, those. Fragments. Haven't. Been at the center of progressive. Thinking about finance, at least until after the 2008. Crisis, when some progressive, theorists. Emphasized. Rediscovered. Some of those. Fragments. Community. Banking, municipal, banking, post office, banking. But. Tomorrow's, the first to situate, those. Along. With many other pieces in a comprehensive. Program, for reconstructing. Finance. Connected. To overcoming, labor coercion, and economic, dualism, and, guided. By the revolutionary. Goals of, democratizing. Market, institutions. Deepening. Political democracy, in. A way that enables us collectively. To. Reshape our political economy, and empowering. Individuals to, live more freely. So. The book says it hasn't yet arrived at a systemic, social theory and it.
Looks Ahead to collaborative, work. Conversations. Among. Intellectuals. Left. Intellectuals. Who engage. In. Its, ideas. But. I think tomorrow again. Speaks, modestly. About. The books contribution. I think she's taken us quite a long distance, down. The path to a highly ratified. Original. Framework, of thinking. What. A terrible, loss that she's not here to continue. The conversation, with. Us. Her. Ideas. Live, I. Hope. Her. Exemplary, fearlessness. Lives. In some. Of us, thank. You. So. Mark gives me a, great place to start, I would. Agree that, Tammi, Lothians, book is a manifesto. Tammi. Writes with fury, she has set her sights on the catastrophic. Failure of finance. To. Live, up to deliver on, his promise, to make capital, productive. So. How. Is it possible she would ask that each day more than 700. Billion changes. Hands on the, bond markets. Total. Annual trading therefore of a, hundred, and seventy five trillion, in. 2015. And yet. At the same time the. Vast bulk of most firms productive. Investment, comes from their retained, earnings, right. How is it possible that they're using their retained earnings when what is all the all the that activity, on the bond market doing how. Is it possible at the same time that we have 175, trillion passing, hands, passing. Between people, the, total annual savings, of the American public is a scant, three trillion, there's. A disconnect, here how, is it possible, at the same time, 30. To 50 percent of the American public is unbanked, unable. To get the services, of the financial, industry. Her. Point is that there's a disconnect between finance. And the real economy and her, tone is rousing. Liberatore, evocative. There's, one great sentence after another in this book you really have to pick it up she, aims, to disturb, us and to mobilize us, but, her book is also a manifesto. In a deeper sense so, I mean, literally, manifesto. From the Latin to make apparent, palpable. Visible. To, bring into view to make public. The. Book Maps finance. As something, that is cognizable, and something, that's open, to our understanding, something that we can we can talk about publicly, that, we can make Democratic, that we can democratize so. The point of the book is to claim finance, not to abandon it. Finance. Is at the core of modern, capitalism and, as she says kind of so at one point if we can reclaim, finance. Then maybe we can reclaim capitalism. Right, if. We can redirect the power and, capacity of finance to productive, aims it would be a huge accomplishment, and, just, as important, it would break the whole that, modes of thinking about finance, and thinking about the economy have on us conceptually. Which. Are enormous, ly powerful, kind of categories, of our thought so, today I want to talk briefly about Tammy's, approach mark has actually set it out so well I will say very little, you. Know that that. Elaborates. On what he said and then I want to apply it to kind of give it a test run so, to speak so. Tammy's. Approach is twofold, as you, could already as. Mark has suggested, first there's critique, and then there's programmatic. Reconstruction. So, critique, the orthodoxy, is wrong that includes, the neoclassical orthodoxy. For Tami the Marxist orthodoxy. The liberal, liberal, progressive, regulatory, orthodoxy. How. Can we know, she. Would say we use law and history. To. Expose, the places, where they've gone wrong right, to contest their assertions, so, so, for example neoclassical, economics, supposes, that the market will be allocated. Will allocate, resources to, it their most efficient, uses insofar, as there aren't. Market. Failures, but this view she would say assumes, she does say assumes a constancy. Of, institutional. And legal content. Of the market, and as. Duncan first set out and Mark elaborated, there is no such, constancy. Of the market so the market has been rebuilt. Real aberrated, time again, reconstructed. By politically, diverse, means to. Institutionally. Divergent. Ends, so. We can't actually make a sweeping, generalization, about the efficiency, of the market. Without. Knowing all those terms and. That includes, these rebuilt, institutions. Include, banks, capital market financial entities they've all worked different ways over different times, another.
Example, The progressive, regulatory, orthodoxy, assumes that it must simply cure the regulatory, failures, of the, market, but, this view, ordains. Of prehistoric Marr kit, whose. Failure were curing and in this moment she, says it reinforces, the neoclassical model. So. Critique, is essential, in her view second, step is programmatic. Rican ception the, goal is to connect finance. To the real economy and Mark really laid this out wonderfully, if we built the institutions, of the market including labor, and wage labor we can rebuild them is her. Contention, and. Her focus is in particular on the speculative, activity, of finance, she, shares this focus, with Keynes, who, was very concerned with the kind of self referential. Nature, of financial. Trading. That. Activity, some, significant. Portion of the hundred and seventy five trillion that I spoke about at the outset creates. Significant. Dangers, so for, one it, destabilizes, the. Market we've all lived through this is a generation, that knows the financial. Instability because, of the financial crisis. It, also channels, wealth. Away from the productive, to. To. The, speculators, so away from the hands and projects, of producers. And. This brings me to a related programmatic, point so Tami's larger goal is to democratize the market, she wants us to return. Finance. To the service of smaller producers, and, consumers. And. And. Her. Her. Invitation, her promises, that we can direct. It to those to. Those agents, if we redesign, the channels, through, which it's flowing so that's the basic, challenge we. Might for example make options and hedges she has all these ideas so if you want ideas, just dip into the book anywhere right we could make options, and hedges available. To the small farmer. Not the commodities, trader we, can reimagine securitization. Opening. Up opportunities say for green technology. Ok, so now. Now. I want to apply this approach. Both. The critique and the. And the. Programmatic reconstruction. Critique, is a huge job and Tami doesn't expect, that, just, by saying institutions. And they change convinces. People of their mutability, or of our political ability. To change them an example. I take from my own work money, is an institution, it's changed, over time many, people recognize, that many. Of the same people have. Created models, that deeply naturalize, the institution, and its changes, so I'll. Try a few on you you've all heard this money is a commodity like gold, or a basket, of goods or Bitcoin, right. It's just a commodity and in fact in that very example you hear the evolution, right we've gone from gold to a basket of commodities to a Bitcoin to the virtual so we've changed. Or. You know money. Is a social agreement. Like, to use an inch. Or an ounce so. Tami, would tell us go to law, and see what money actually is, I was. Just doing this in class the, answer is neither. Right. Money is neither a commodity, nor a convention. And Tami would say use the law. Bring. The artillery, of law to the critique. And, make. It real so money the, very, medium. Of finance is legally defined by statute and by the Supreme Court what, is money it's, a sovereign liability. This is about the US dollar I'm speaking, we just I just did this as I said in class it's.
According. To title 12 USC. 411. A sovereign. Debt something. The US will take for. Value in taxes, part. 2 it has cash, properties, it's, a sovereign debt that can change hands, that, is enhanced, and its value, is enhanced, by that property, so what difference does that kind, of definitional. That's sort of the, legal, grip, make, if. Money. Is a sovereign debt with cash properties, given by the government, if we can nail that down, and see its legal definition, we. Know that it's not something naturally. Occurring, outside of law, in. Fact, it's not a commodity spontaneously. Chosen, by people without law it's not a convention. On which people converge. Socially, as opposed to legally, or politically. Moreover, if money is a sovereign debt we can consider the myriad ways that the government can structure, sovereign. Debt and can, restructure, sovereign, debt and has done those things so, we can actually look at the nitty-gritty and Tammy, I believe would say yes let's see how the US has structured money in law and let's see if we can make those structures, more democratic, so. Now I get to the apply the programmatic, part, so, part 2 of the application of, her thought how, does the u.s. structure money in law the. US has a structure, has an instrument of choice for money creation the. Instrument, of choice for money creation is banks, right. There are two kinds of banks a central, bank it's, in the business of creating little, pieces of sovereign, debt called dollars, so. Every, time the Fed buys a longer term debt it, pays in shorter term dollars. All right so it's just taking longer term debt and atomizing. It into dollars. And. Those dollars land in that accounts of commercial banks so that brings. Us to the second kind of bank that that is an instrument of choice in the u.s. the. Central bank is at the center of this payment system, a whole huge. Clearing, House it is the clearinghouse, for all these banks, who, are using these little atomized, pieces, of debt and they, multiply them. In. There through their own representations. Of credit, that's. What all those deposits, are so. The whole system, the whole monetary, system is something we've made through, law, we're. Publicly, supporting, as an institution. And we can remake so. Tammy points, in particular to the Democratic. Potential. Of local. Banks in the, 19th century banks, democratized. Credit, to access, access. To credit they are often actually working with state created, debt in that case not federally, created debt but they're working with debt they spread money through urban and rural, areas. The. Early on they often worked directly, at the behest of legislators. Who, are chartering. Them to go do a certain kind of project. Or lending, today. The industry is much more consolidated. So specifically, the six largest banks, hold 67, percent of all the assets in the financial, system as compared. To 37, percent five years ago right, so that amount of consolidation, the. Four largest banks control, 50% of all bank assets, so Tammy, points us to that kind of change. And. Suggest, that we revitalize. Local. Banks right we should make, them make. Them the leaders and make. Lending, responsive. To local needs, so. I want, to go the direction that that Tammy's inviting, us to go on banking, and suggests one possibility I'm going to actually pick up the postal banking example. That mark mentioned. Nineteenth-century. Banks. The banks that, Tammy. Is using, as an inspiration. These kind of democratic, these more decentralizing. Credit. Institutions, had, many problems that limited, their, Democratic. Reach so money pooled in New England for example using. These banks, using. These banks as the instruments, of choice for money creation Rhode, Island had $77. And 16 cents cash, per capita, after. The after the Civil War and Alabama. Had guess, how much. 13. Cents, per, capita, right. After. The war Massachusetts. Alone had five times the money stock of the entire south, and one, town in Connecticut had as much money supply using, these local banks as the, states of Texas Alabama, North, and South Carolina combined. Moreover, banks. Commercial, banks tied, their, lending, decisions to calculations, of profits. Made. Quite narrowly by family loyalty or by short-term their particular self-interest.
Finally. Banks took in and still take in, significant. Profits, or seniors from creating money so they're lending non-interest. Bearing dollars. And they're, being paid to lend those dollars, so they're earning on the spread as money, creators, they're. Earning senior age so, imagine, another kind of Bank this is Tami's. Move right, imagine. Another kind of Bank she would say a postal, bank imagine, that local communities, could put their deposits, at the, post office. Could. Gets that the post office could get seed money from the regional Federal Reserve, that, the post office could get grant money from foundations like, Bill gay it's Creuset. Bazo's most, wealthy, in the world that. That, the postal. Bank could get money from venture capitalists. Imagine. That local, communities, could elect boards. To. Create the, lending, rules right, they, could set up to have, a board of directors who, actually set. Criteria to, support. Local entrepreneurs, who. Could award credit competitively. To those entrepreneurs, and transparently. Imagine. That they had a payment, system that was supported, by the fed. By the Clearing. House power of the Fed and by its power as lender of last resort so, there's plenty of precedent, for such a plan the, land bank the. Land, banks of the 18th century or something like this the. Agrarian crop, credit proposals, of the late 19th century the old lombard banks of the early medieval, of. The early modern period the. Postal banks of some other countries. The. Payoff oh. I. Should add the posts the post office has actually made such a proposal. Offering. Suggesting. That it at least provide, check cashing, and and. And. Deposit. Services so, the payoff would be both programmatic. And critical it, would be programmatic. In the sense that we could see a real. Democratic. Design, that deepened, the link between finance, and productivity, that changed the way we currently, think about those things and it, would also be critical, and in the conceptual, level so it would change the way that we think about finance. As something. Other than the, train of kind of high-flying, elites. Here. It's actually a commercial enterprise but not only a commercial enterprise it's also a public enterprise. And. Engendered. You know basically. Directed, by people who have. Broad. Set, of values, that they're furthering. So. I would say that something like that would be framed to support productive activity, and yet disciplined in ways that really joined, public, capacity to innovate individuated. Judgment so at this point Tammy, would ask the penetrating, question so she would say, she would show me what's wrong with this proposal. And, then she would also point to its potential, and. And. She would push it forward in a transformative, direction, and that is why the book is so fantastic. And it's also why we miss her voice so, much I. Wish. Sure was me. I'll. Go ahead and do that applause. Just. Gonna wait for a moment until the transition, is complete. They're almost complete. Alright, go ahead and start now so, first up thanks, to the library of course for hosting this, this very important occasion and thanks so much to Chris for having organized, it and thanks also to Roberto, for having asked Sanjay and me in the first place to sort of help bring, this book to supress. And. For many other things as well and of course thanks to Sanjay I couldn't have had a more. More. Stimulating, and deaf and just, marvelous, sort. Of collaborator, with Roberto, and even putting the book together or sort of finishing with the the editing and recommending, of the book, so. I want to say just a few things first about Tammy as a person, and, then a few things about Tammy as a thinker, that's. Of course an artificial distinction but I guess I'll simply you know I'm, emphasizing the, sort of personal attributes, first and then moving to the the, more intellectual, attributes. So. To begin. In talking a little bit about Tammy as a person, I'm going to open with maybe three mysteries. And. How Tammy. Was sort of the solution, in, a sense or the answer to these mysteries so, about fourteen years ago I was doing doctoral. Work at another school and, my principal supervisor, was a finance, proverb. Shiller, but. I and as you know Bob is something of a visionary where finance is concerned, but. I was I suppose well-read enough are well educated enough to know that there were much more visionary. Folk even than Bob. And. One of them of course was Roberto so shortly. Sort. Of toward the end of my last year starting, with Bob I started, tea f'ing for, Roberto, and I kept, for him with a couple of very close friends, who, were also alums.
Of. Harvard and, several. Mysteries sort of emerged during the course of this sort of involvement with, with Roberto, the. First I had to do with a distinction. That Roberto sort of well known I think for drawing so. Oftentimes when Roberto gives a talk, students. Will sort of ask for more detail and Roberto's, answer will often be what what I'm giving you isn't a blueprint, direction, right one, time in a chat after. Class I was talking with Roberto, and I said well you, know it seems to me there's a lot of space between. Blueprints. And directions, and my guess is a lot of value could be added so to speak if, there were somebody out, there who fully. Understood, the direction, and the deed maybe even contributed, to, forging. The direction but who was also maybe filling in some of the space between blueprints. And directions, and, Roberto sort of gave me this kind of knowing he's, sort of chuckled, as, if I were sort of naive there was something he knew that I didn't, and. I wondered what this was that he knew that, I didn't, so that's mystery number one. The. Second mystery, was that Roberto. Clearly, knew a lot about finance. We talked a lot during that t effing period but. It wasn't technically, speaking his field it wasn't something he was teaching but, he seemed to be very well informed on, matters financial, and his, vision his sort of directional. Vision seemed, to involve finance. A great deal in financial institutions and the potential financial institutions, and I thought well where did he get this right I mean clearly Roberto's very well-read, but he didn't seem to be somebody who was reading all the finance texts and yet he seemed quite well-informed and. I wondered how that could be so that was mystery. Number two mystery. Number three actually. Emerged from conversations. Among myself, and my friends. Who were again, Kody effing for a bear - at this time we, would talk about Roberto, a piece of course a very sort of forceful personality you. Don't forget Roberto when you meet him and so, we would sort of wonder, in in our more sort of gossipy moments, what, kind of person, could marry Roberto. Because. We understood that he had a wife and that he had children right, that he had a life, partner and we thought who, could actually stand, up to this sort of Titanic, personality.
Without. Cringing, or shrinking, or, dissipating, or dissolving, that, was a mystery number three as. It, happened all three mysteries were, solved in one evening, and it all happened, I believe it would have been March of, 2004. When. Roberto, invited. A lot of us to, join him and Tammy for dinner so, we went over to the house and, there. Was the answer to all three mysteries, there was this absolutely utterly, remarkable. Person. Who. Was sharing the house, with Roberto, I would have loved to have met the. The offspring at that time but, I think they were busy doing, their homework or something so, we spent the evening with Roberto, and Tammy and, Tim it was absolutely, again just sort of flabbergasting. As, a personality, I mean she was clearly brilliant just a just, an unbelievable, an ingenious, intellect, on the one hand at, the same time very, well informed in, a kind of empirical. Maybe actually a more practical, in the sense of she's somebody, who it was a practitioner, about. Matters. Financial, and she, was very I'll, use a word that's a little bit reminiscent of the word that, Duncan used but it's just not quite the same word I mean to say irreverent, she, wasn't overawed, by Roberta. Oh she clearly, respected. Him but she. He. Was just, as fitting, a target, of her barbed wit as anybody else and, we all of course got, a big kick out of that we thought all right well there's the kind of person who could sort. Of stand with Roberto. So, maybe, needless to say there after a rather, deep. And, lively, friendship, developed. Between Tammy. And myself that was independent, of even. If operating, sort of in parallel, with. My friendship with Roberto, and the reason was fairly clear I mean Tammy was. A financier, she was an investment banker at the same time that she was teaching over at Columbia and. That of course had her in New York a great deal I was in New York a great deal shortly thereafter, working. Over at the New York Fed and so, Tammy and I would meet quite regularly, in New York because she worked there quite regularly herself, as, I recall she. And Robert had actually had a place in New York and she would sometimes be staying there so we would meet up in New York and talk about, matters financial, and we would talk about matters financial, on the, one hand from a sort of theoretical, point of view in, the way that Roberto and Tammy and I might, have spoken but. On the other hand also highly, practical again because she was so well informed had done so much in the way of, Investment, Banking and so, I suppose we sort of cross-pollinated. Although I think that probably the pollination moved, primarily. In, from the direct in the direction of Tammy, to. Me I learned, a great deal from. Tammy through this sort of ongoing, interlocutor. Tory interlocutor. Tory Kotori, friendship, and, at the same time I felt, like I had a sort of ally a really close friend in, the city when. I was working, there now, ever, after, this point. There. Were a couple of attributes about Tammy that sort, of pronounced. Became even more pronounced, you might say over time the. First that I always remember is. The expression, on her face that. Seemed the perfect compliment to her voice and the way that she would intervene. In conversations. And discussions I think, there was a sort of fusion, or a something in the in the sort of margins, or endured intersection, between. A quizzical. On, the one hand, astonished. On the other hand and then finally sardonic, on at another hand there, was a kind of an ironical, sort of skeptical, cast to her look the expression, on her face when. She would hear things that were said by wertha docks economists, or, Orthodox, financiers, or, by lawyers who weren't really fully cognizant, at the role that their discipline discipline, plays in, constituting. A financial, system or an economy, or even money itself for that matter let alone all of the financial the other kinds of financial instrument, that, circulate, out there Tammy. Came. To multiple. Events. That I was a part of sometimes at my invitation. Other, times at my importune, meant other times on. Her own just, quite spontaneously. I still. Remember very well a, world, economic roundtable. Conference in New York back in 2011 in, connection, with a paper. That. Nouriel Roubini and I had put out that had gotten a fair bit of attention so. There was a big sort of talk about this a big conference around it and Tammy, came and I thought there's my only this is the only person in the room who, I actually sort, of think like who sort. Of a truly an intellectual, ally in, addition, to just a dear, friend later. There was a liquidity conference. Here, at Harvard that Chris organized. And there were a lot of very interesting people there in particular a lot of very, important exponents, of the MMT movement, but also a number of post-keynesian.
X' And, learn aryan functional, finance folk there and. Tammy and I think. Were both quite intrigued, by and we're taking, in much that, was offered by these different schools at the but at the same time sort of trying to retain a certain degree of distance so as to be able to kind of synthesize. All. That we were sort of taking in tamii. I always got, the impression throughout, that entire event, already. Knew all of this stuff that was being talked about at. Chris's conference. I for my part however was learning, a great deal more so. I thought okay I've got to hang around with Tammy out even more, so. I could sort of go on and on with examples, like this, the, last one maybe it would be a. Conference. That Roy. Crichton or / Tel Aviv and I organised, called law economy and equality, sort, of occasion by the Cadi book we, had a number of very interesting participants. Speakers, there but Tammy was. By far the showstopper. And what, was sort of interesting, was this, was actually the first hint I think to me at least that there, might be a bit of a health challenge to, Tammy and so I want to say, something about the kind of heroism of, Tammy in this connection as well so, at this conference we, held it in New York she was to be there like everybody else in. The end she wasn't able to come in, person so. But she insisted that we beam her in so to speak, virtually. So, there's a large screen about the size of this and Tammy. Was participating. Throughout, the entirety of the conference, but as a large face, right, here sort of looming over the entire room and here, was a case in which Tammy filled, the room not, only with her intellect, and not only with her, active. Interventions. But, also with her sort of constant, visual, presence, sort. Of presiding, over all of us and while. In some cases that might have been thought sort of comical this seems somehow fitting, she was clearly the, towering intellect in the room and so it seemed to make sense that she would sort of be there, on the wall sort of watching, over all of us, the. Next thing I want to say is just a little bit about Tammy when, I'm again, under the heading of Tammy as a, person, as. I want to emphasize. How warm, a personality, she was to just how loving, and caring a person. She was you, might think at this point given what I've said thus far that, she's a kind, of. You. Know sort of an intimidating, and sort. Of ominous figure which, she certainly could be when, she was intellectually, engaged when, she was in the midst of a discussion or an argument even, in the midst of certain conversations, I mean she could be a very forceful. Personality that, I suspect could have bowled over any number of people but, that might give the wrong if I left you with just that impression that would be an inaccurate impression. She, was one of the warmest, and sweetest, and most caring, people I think I've ever met she, was, I hope this doesn't sound too sexist, but she was maternal. At the same time that, she was clearly a towering intellect and, a passion and a. Practitioner. Of, what. We might think of as egalitarian finance. Or progressive, finance. I can't, tell you how many times we, would talk on the phone or, meet for, dinner over. In New York walking around Wall Street where, the first questions were always how I'm doing you know how am i faring am i getting enough rest am i eating properly, and she always asked, these questions not in a kind of perfunctory way, not as if she was sort of trying to get that business, out of the way before getting on to what's important, it, was clear that this was at least as important, to her as, was. Whatever. Subject we were going to talk about by. Way of theory or practice just. An unbelievably. Comforting, presence. And her voice even over the telephone could, be so soothing she, could see, she would sense if you, yourself were stressed or a little bit sort of maybe. Burning the candle at both ends as they say she, could sense it even if you didn't say anything about it and she immediately sort, of zeroed in on that and.
Insisted, That you do something about making sure that you're honest. Sort of even keel. Biologically. Even just sort of physiologically. So. As I, mean first of all just because that's important in this tone right but second because you really can't be a helpful contributor, to. The world if you're not. So. That sort of Tammy the person at least assured the traits that I would want to I think emphasize most and those are the traits that I keep remembering and. Those are sort of what come to mind whenever. I imagine. That that sort of that, expression on her face between, sort of warm quizzical. Astonished. Incredulous and. What-have-you and I still actually revert. To or resort to. Visualizing. That base even to this day particularly, when things are getting a bit stressful out there you. Know in the in the world of finance. Okay now, a little bit more about. Tammy as, a thinker, which again is a sort, of artificially, distinguished, from her as a person because her person came through so vividly, in all of her thinking and in all of her advocacy. Of the views, that she took but. Nevertheless. Just. To focus a little bit on what she emphasized, Tammy. I believe, is, the founder, of an entire school of thought in, the realm of Finance if. Not also in the realm of the law and yet ironically she's. Perhaps. The only one who isn't regularly. Named yet, that's, going to change not that the book is out when, people talk in, terms, of this particular school of thought so. The school of thought I'm referencing, is something that's come to be called the legal theory of Finance right, and. There are a number of purveyors, of this view a number, of papers, sort. Of setting forth this view that, are treated to sort of canonical now. Out, there the, basic idea behind the view is that finance. Is legally, constructed, which. On the face of it if you've said just that way it sounds sort of trivial but. More importantly, if you elaborate, the idea if you elaborate, what it is to say that finance, or the financial system is legally constructed, it, becomes, things. Become quickly, much more rich and the, significance, of the view becomes much more apparent as one. Elaborates, the detail so. As Tammy would have been among the first to point out if not the first to point out or to emphasize in, the current environment all, of the instruments, all of the financial instruments, that are circulating in a financial system are legal, instruments, indeed they're all contracts. Of one kind or another they. Circulate, pursuant, to particular, rules or norms or standards of, law there, are themselves. Constituted. For the financial system including. Such, familiar, phenomena, as negotiability, the, negotiability, that you find in the case of negotiable, instruments. So. The sense in which and. Of course money, is as well as Chris, pointed out a moment ago if, you take out a dollar bill or a $5 bill and you look across the top of the bill it'll read Federal, Reserve note those, who are lawyers understand, that note here isn't like note to your girlfriend, or note to your boyfriend it's promissory. Note it's short for promissory, note that, of course is a legal instrument and, pammi of course you, know was sort. Of stunned that.
Ordinary. Financiers and indeed, many ordinary lawyers, didn't. Seem to grasp this, or didn't seem to understand, the the deep, running significance. Of, these readily. Observable, facts, now, it's sort of often it's an oft I think. Sort. Of stated or a specified, trait of of genius. Or brilliance that somebody. Sees what everybody else sees, but. Sees the significance, to it that nobody else sees right see something that everybody else sort of takes for granted or, views a sort of trivial and understands. That there's a sort of a deeper and far more sort of systemic, a much more pervasive significance. That. This commonly, overlooked, or, sort, of dully looked at fact has and that, was Tami what, she drew from these. Observations. On her part, was, it the financial system as a, whole including. Not. Just as a whole but including, all the parts they Rob in the interactions. At the parts there are all, legal. Creations, or legal constructions, and in, that sense they're all political, creations, or political constructions, that's to say that, they are our, product, right we make them right the, so called invisible hand isn't really invisible at all if you actually look a little bit more carefully it's our hand, and we can either use that. Hand in, a manner that's sort of in keeping with our own intentions, our own aspirations, our own dreams. And wishes and ideals or we, can pretend that it's somebody else's, hand that it's essentially, a kind. Of I. Suppose, a. Drunken. And arbitrarily, acting, parent, we. Could treat it that way or we can treat it as ours and we can act accordingly, that's. The sort of. Preliminary. Or you might say that the sort of animating, vision that, pervades, Tami's. So on but then of course things go a lot farther than, that I think. Maybe the most important, insight that. You find in Tami's thinking and in writing. Is. That finance. Isn't. Really, just about recycling, savings. Right now, one can sort of say that right there's a sense of which is true Marx suggested, something along these lines it's.
True That finance is about, recycling savings, but the key point is it's not about recycling money, that people have saved up in banks it's not about recycling pre. Accumulated, financial. Instruments, it's, easy to see why that's not the case if you just look at how an actual bank lending, transaction, works Chris, alluded, to this banks. Don't have to have deposits. Or depositors, in order to make loans in order to make monetized, loans that, are spendable, in dollar denominated, terms a bank. Simply, extends, alone right, if. It, and it does this of course by opening an account for, the person to whom it's lending the money or, it, credits, an account, that, the person already has or. It, provides, the, person in question with the draft that that person can then deposit, in an account that he or she has elsewhere, and at, that point, money is quote-unquote created, as, Chris. Put it a moment ago I think, if this is essentially, not. So much the creation of money as degeneration of money or the generation of credit money in, effect private, financial institutions, are supposedly private financial institutions, like banks are. Doing that they're generating, credit. And it's, monetizable, credit, and that credit is backed, up and by the United States indeed. You can think of and this is a view that I've developed over the last few years largely. In conjunction where they're through ongoing, conversation. With Tammy the, best way of viewing the financial system I think is as a kind of franchise. Arrangement whereby. The sovereign, public is a franchisor, it. Empowers, or authorizes. Certain privately. Owned, franchisee. Institutions. To, purvey what, remains ultimately, a public. Resource which, is the monetized, Full Faith and Credit of the sovereign in this, case the United States usually, it does through dust so through a monetary authority or a central bank in this case we do that through the Fed now, in that sense, if we're thinking in. Terms of sort of credit money there's. Nothing that's being recycled, at all right it's being generated and distributed and, the. Idea here is we're sort of outsourcing. The task of determining to whom to allocate, that resource, to, private institutions, which, in theory because, they're sort of on the ground are better, situated, to discern to determine what, are what are the better risks right, were the better risks to lend to or, who's for host projects. Are the most believable or the most likely to pan out now, it's, not necessarily. The case that private institutions, are best at doing that sometimes, they might be other times they might not be Tammy, I think was spot-on, and suggesting, that lately, in recent decades they. Haven't been particularly good at that at all indeed what they tended to do is, to sort of generate, eyes to sort of distribute, or allocate.
Credit To, secondary markets where essentially people are bidding up the prices of already existing assets rather. Than, directing, credit in, directions, were more productive new, productive, investment, new real economic, growth new real employment, new, real, bettering, of our material, circumstances, can, happen okay I think that's exactly right, and that's exactly, what Tammy how, time you would have put it and they're more or less exactly. The. Second thing to see in this connection is that it is nevertheless the. Case that. There is a kind, of recycling. Going on and here I think I'm getting to what Mark was saying and that, is that you. Are indeed, through a financial system recycling. Pre accumulated, resources. But. You're not recycling. Pre accumulated, funds or pre accumulated, money or pre accumulated, credit what, you're doing is you are recycling, or, you are determining, the distribution of claims. On those resources, and monetary. Instruments and credit instruments are all claims on such resources, so, in effect what you're doing when, you, distribute,