Notebook

November 15, 2011 1:34 am

Greek lessons in the financial crisis

Papademos’s required reading in Harvard was crisis fodder but was he letting students off lightly, writes John McDermott

There’s an old surgeon saying, “watch one, do one, teach one”. Lucas Papademos, Greece’s new prime minister, has jumbled the mantra. After eight years as an understudy to Jean-Claude Trichet at the European Central Bank, Mr Papademos took a visiting professorship at Harvard’s John F. Kennedy School of Government, the holding area for star bureaucrats.

Last semester, Mr Papademos taught a course entitled The Global Financial Crisis: Policy Responses and Challenges. Mr Papademos was a “great professor: quiet, measured and confident”, a student told me. But he was a boffin to the end. “Even his jokes were very high level.”

The required reading was crisis fodder – Reinhart, Rogoff, Krugman, and Bernanke. But the prerequisites could double as job descriptions for Europe’s new technocratic administrations: “Principles of economics and macroeconomics at the intermediate level would be useful but are not required.” Or, for that matter, as guides for life.

I wonder if Larry Summers felt Mr Papademos was letting students off lightly. The former US Treasury secretary taught a similar course, only his reading list was three times longer. Perhaps Mr Summers was keen to equip students for his renowned pedagogy, which one student described as “less Socratic method. More trial of Socrates”.

Rhetoric of reaction

About the same time Socrates was asking questions, sophists travelled from town to town, teaching rhetoric and debate. A couple of millennia later, the eight candidates for the Republican presidential nomination travelled to Rochester, Michigan, to answer questions from CNBC.

Banx cartoon

The debate began with a question on Italy: “It is the world’s seventh largest economy. As president, what will you do to make sure their problems do not take down the US financial system?” Herman Cain, former head of Godfather’s Pizza, answered first. “This administration has done nothing but put stuff in the caboose, and it’s not moving the economy,” said Mr Cain, who is tied for first in the polls with Mitt Romney. Rival Jon Huntsman, former ambassador to China, responded: “We find that the yield curve with respect to Italy is up, and prices are down ... You are seeing the metastasy effect of the banking sector.” Mr Huntsman’s rhetoric has seen his support rise from 0 per cent to 1 per cent.

This small bump may also be down to the sudden popularity of Mr Huntsman’s three 20-something daughters – Liddy, Abby, and Mary Anne – who Vogue described as “telegenic”. The trio frequently appear on TV and the sisters’ twittersphere joshing of Mr Romney has grabbed attention. One tweet, however, got campaign staff asking if the diplomat’s sinology was being adequately showcased: “How does Romney know anything about China? He’s only been there once and that was for the Olympics. Panda Express doesn’t count.”

Invisible class

Mr Romney’s economic adviser, Greg Mankiw, as it happens, is a Harvard professor. Recently about 70 students sympathetic to the Occupy Wall Street movement walked out of his Economic 10 class. In an open letter, they expressed “discontent with the bias inherent in this ... course”, adding that “there is no justification for presenting Adam Smith’s theories as more fundamental [than] Keynesian theory”.

Smith taught that while the invisible hand is the surest guide to economic behaviour, we can still develop compassion and pity for others in the face of self-interest. By coincidence, that week’s Economic 10 class was on income inequality.

Keepin’ it real

Sean Carter, otherwise known as Jay-Z, appeared to support the narrow interpretation of Adam Smith in his dealings with Occupy Wall Street. Rocawear, his clothing label, launched a T-shirt sporting the slogan “Occupy All Streets”. Rocawear said the T-shirt was created “in support” of the OWS movement. But protesters were angry to learn that none of the $22 price tag would be donated to their cause. Rocawear suspended the sale.

Disappointed fans can still hear Mr Carter rap tracks such as Money Ain’t a Thang on his joint tour with fellow hip-hop artist Kanye West. All dates are sold out, but front-row seats are still available to Citigroup Private Pass members.

john.mcdermott@ft.com

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