To What End

http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4350

Raghuram Rajan is an economist with the Federal Reserve. The link above is an interview with him. In the introduction the interviewer sasy:

In August 2005 at the Kansas City Fed’s annual symposium in Jackson Hole, Wyo., Raghuram Rajan presented a paper filled with caution. Answering the question “Has Financial Development Made the World Riskier?” the University of Chicago economist observed that financial innovation had delivered unquestioned benefits, but also had produced undeniable risks.

“It is possible these developments may create … a greater (albeit still small) probability of a catastrophic meltdown,” he told the assembled central bankers and academics. “If we want to avoid large adverse consequences, even when they are small probability, we might want to take precautions.”

Obviously Rajan is not part of the herd. Within the interview he says:

Let me put it this way. There is always some amount of regulatory capture. The people the regulators interact with are people they get to know. They see the world from their perspective, and, you know, they want to make sure they’re in their good books. And so it’s not surprising that across the world, you have a certain amount of the regulators acting in the interest of, and fighting for, the regulated.

This sounds like dairy.

Then Rajan says:

I’d even go one step further and say you don’t have to offer an explanation that relies on evil people or corrupt people. The entire crisis can be explained in terms of people who were doing the right things for their own organizations. You can even argue that it was not that they were misdirected by their own distorted compensation structures; they thought they were doing the right thing for their organization. But when you added it all up, it didn’t add up to doing good for society. And that’s where we have the problems. ...

There is the problem with dairy policy. Dairy policy should not be simply to benefit the few at the expense of the many. Much of rural America in traditional dairy areas look like war zones. Then when you look at the "new" dairy areas, until 2009, there is the upscale lifestyle of the owners surrounded by massive unemployment and poverty.

The discussion of dairy policy is muted to the point of inaudible because one side or another thinks their ox is being gored. I would suggest dairy needs to be a situation in which all are winners.