Review: A better way of valuing the world
An Oscar Wilde play famously described a cynic as “someone who knows the price of everything and the value of nothing”. A quip that’s droll on stage loses its humour when it spreads too far into real life. Even Mark Carney thinks our obsession with market prices has gone too far. Fortunately, he is working on some solutions.
In “Value(s): Building a Better World For All” the former Goldman Sachs banker who went on to lead two major central banks dissects a trio of global crises to show all that market prices can fail to capture, to society’s detriment. He starts with an overview of economic history that traces how social and political priorities gradually became subsumed by the market. As Carney puts it, the “price of everything is becoming the value of everything”. This lays the foundations for a scathing critique of how policymakers and society can be led astray by excessive faith in the ability of markets to price risks accurately and deliver the best outcomes.
5 Priorities for the Financial Stability Oversight Council
The Financial Stability Oversight Council (FSOC) was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to identify and mitigate threats to the stability of the financial system, particularly those that develop outside the traditional banking sector. Although the United States is notable for having many financial regulatory agencies, before the 2008 financial crisis, no one regulator or regulatory body was responsible for looking out across the financial system and addressing systemic risks.
Financial regulators focused on their respective jurisdictions, while significant risks built up across jurisdictions and outside of any one regulator’s purview. Risky financial activities and products sprouted in the cracks of the financial regulatory infrastructure as regulatory arbitrage, intentionally exploiting its fragmentation. The FSOC was structured to mitigate some of these regulatory design flaws.