Trade-Offs: The State, Economistic Thinking, and Risk Regulation in the Age of Crises
Scholar in Residence Lecture Series 2024
In her lecture series as this year’s MPIfG Scholar in Residence, Bașak Kuș from Wesleyan University will share insights into how governments conceptualize and mitigate risk, and the significant role that economists and economistic reasoning play in shaping these processes – essential analysis for understanding the foundations of the crises that mark our times, from finance to climate, ultimately extending to the crisis of democracy.
May 28, 2024
Counting Backwards from the US Financial Crisis: On Economists, the Protective State, and “Not Using the Power of the Crown”
“As a scholar of the Great Depression, I honestly believe that September and October of 2008 was the worst financial crisis in global history, including the Great Depression,” Bernanke remarked in 2014, his last year as chairman of the Federal Reserve. By the time the crisis was deemed over, more than 300 banks had failed, 10 million houses had entered foreclosure, roughly 8 million jobs had disappeared, and over 20 percent of Americans had found themselves with a negative net worth. It has often been argued that the crisis occurred because the US government, guided by neoliberal ideas, pursued deregulatory policies, creating an environment in which financial institutions were able to run amok and take excessive risks until they inevitably crashed and burned. This narrative is not flat-out wrong, especially from a bird’s eye view, but it is incomplete in some ways and misleading in others. In this lecture, I discuss which ideas, precisely, shaped the government’s approach to risk regulation during the last quarter of the twentieth century as financialization was underway, and how they gained political traction under successive administrations beginning in the 1970s, ultimately casting the state in economistic terms.
June 4, 2024
There Is More to It Than the Repeal of Glass-Steagall: Drifting, Micro, and Information-Based Financial Regulation
The transformation of the American regulatory approach was informed by theories put forward by economists like Stigler, Buchanan, and Niskanen in the 1970s, who problematized regulatory capture, rent-seeking, and bureaucratic inefficiencies, as the first lecture highlights. As the proponents of these theories assumed roles in the highest echelons of American bureaucracy, the government's approach to risk regulation shifted from direct and substantive oversight towards promoting private risk regulation based on market discipline and individual rationality. Further instrumental in this transformation was the ascendance of financial economics in the 1990s. While much of the neoliberalism literature focuses narrowly on deregulation as the main policy face of this paradigmatic change, the resulting transformation in the policy landscape was actually much more multifaceted. I discuss in this lecture how regulatory drift and the ascendance of micro-oriented and information-based approaches to risk regulation were as consequential as deregulation, if not more so, in terms of the way government tackled financial markets, systemic risk, and consumer financial protection.
June 18, 2024
From Finance to Climate: Risk Mitigation in the US
The economistic reasoning that has informed the American government's approach to risk regulation in a financializing economy is also evident in the realm of climate risk mitigation, which has been heavily influenced by climate economists. In this third and final lecture, I will briefly discuss the economic ideas that informed climate risk mitigation and the intellectual actors behind them. Two key questions follow: What do we learn from the management of finance and climate risks, broadly, about structures of risk protection and their deficits? And, given that matters of risk regulation are not merely esoteric policy issues or aspects of technocratic governance but are directly related to and consequential for the well-being of millions, what do their deficits imply for popular democracy?
Selected publications
Kus, Başak. 2024. Disembedded: Regulation, Crisis, and Democracy in the Age of Finance. Oxford University Press.
Kus, Başak. 2020. “Relief, Recovery, Reform: A Retrospective on the US Policy Responses to the Great Recession.” Intereconomics: Review of European Economic Policy 55 (4): 257–65.
Kus, Başak. 2013. “Consumer Welfare and Redistributive Politics: The Effect of Credit and China.” International Journal of Comparative Sociology 54 (3): 187–204.
Kus, Başak. 2012. “Financialization and Income Inequality in OECD Countries: 1995–2007.” The Economic and Social Review 43 (4): 477–95.