I warmly recommend listening to the debate on the above subject broadcast on Radio 4 yesterday and available to listen to here.
Duncan Weldon and Robert Skidelsky gave good, and amusing account of themselves for keynes. The Hayekians showed themselves in their usual light; as charmless people with no sense of empathy for the human race. As someone put it to me, chess players have more feeling for their pieces than these people seem to have for the people of the world.
One small example worth elaborating on: it seemed to be an obsession of those representing Hayek that those banks that were failing in September and October 2008 should have been allowed to go to the wall. The sheer downright stupidity of this desire indicates the complete lack of logic that underpins their thinking.
Suppose that both Royal Bank of Scotland and Lloyds had gone out of business in the space of a few days in October 2008. At least 50% of the U.K.'s population would have been left not only without bank accounts, but without access to cash. So too would a substantial number of the retailers in this country have been left without any mechanism for banking, whether to collect money electronically or to make payment of their suppliers. The consequence would have been all too obvious. There would have been a complete breakdown in the food supply chain of this country within days. There would have been mass rioting as people panicked about how to feed their families. Massive companies would have collapsed within days. Banking as we know it would have completely failed - because as we know banking is a system that works as a whole and is not a series of separate companies although the supporters of Hayek ( almost none of whom, I suspect, have ever actually worked in business) think otherwise. Cash itself, almost entirely electronic these days and represented by entries on computer ledgers, would have failed. For all practical purposes we could have been reduced to a barter economy, or a police state, and democracy could certainly have been at risk. But this is what the supporters of Hayek wanted. They actively say that this would have been the best outcome and the one they wanted.
Now you can describe this as mad, but that's just being too kind.
This is not mad; this is bad. This is malevolence, targeted at real people; the people of the UK, with intent to destroy the structure of society as we know it.
We have to recognise this malevolence for what it is. Democrats from left and right have to stand up against those who promote economics designed solely to serve the interests of a tiny minority in the UK, which has deliberate intent to oppress the vast majority. We have seen such politics blatantly at work in the USA now, and have seen the chaos that is capable of causing, and are beginning to comprehend the havoc that it will unleash on ordinary people. And we are beginning to realise that this is not politics as we have known it. This is not the politics of democracy. This is not the politics of reason. This is the politics of oppression and fanaticism.
Keynes, democracy, the welfare state, reason and empathy have to win this debate. The alternative is too bad to contemplate.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
“reason and empathy”
This is an important point. Too many on the left are conciliators willing to give people the benefit of the doubt, to argue on their terms to try to win people around.
In politics this has been a disaster. Trying to frame left wing arguements purely in terms of economic cost/benefit analysis is to cede the debating ground to the right.
We shouldn’t be afraid to argue that right wing politics all too often is driven by zero-empathy and a hatred of the great mass of humanity.
Of course not all right wing politics is like this, far from it, but there is a virulent strain of it, embodied by the Tea Party, The TaxPayer’s Alliance, the Adam Smith Institute that is willing to use ordinary people as the fulcrum for a rebalancing of the state in favour of corporate interests. And they need to be called out on it, not reconciled with.
I think you make a vital point – and I hope I did too
Of course not all right wing politics is like this. There’s a strong tradition of one nation Toryism for example which I know utterly rejects the ideas I refer to – and with which I might differ but am more than happy to respect
We have common ground with such Tories and many in the LDs who are also compassionate politicians in opposing the extremsim that is creeping into our politics from the right
Yes you did make the point, I am agree with you! 🙂
Perhaps the best approach would have been to wipe out the equity and convert all bondholders to equity, thus allowing shareholders to shoulder the losses. The banks could still operate as a going concern without the big bailouts. That would then provide a platform for reforming the banking system.
Next time, soon, maybe Raf
Good to see you here
Richard,
I just read your article in the Guardian today as well. You make some excellent points in that article but I think that Raf has identified a key issue, which is that creditors have more power, legally, than equity investors do. Equity is risky because we lose our investment or dividends if there is a loss. But creditors have the right to repossess property if there is a default. This is one of the major problems, rather an imbalance, in the modern economy. This is a legal issue. And then there is the moral hazard aspect of it.
The second problem is that money is able to earn interest. As a Muslim and as someone who has spent some time studying Islamic finance, I believe that money should not be allowed to earn interest. It is this ability of money ‘to grow’ that allows for trade in money to become so lucrative. Potentially, a loan can be discounted 5 times or repackaged, made increasingly more complex and difficult to price. Yet, every creditor buying the loan earns some return and is happy to be involved in this trade. It is interest that causes a divorce between returns in the real economy (which go up and down) and returns earned by lenders (which are pretty much legally guaranteed).
Until these two causes are eliminated, we will continue to see deep recessions caused by too much leveraging, followed by painful develeraging and the associated transfer of wealth to creditors. Credit is a force for good but not interest-based credit.
There is much merit to both arguments – which will be addressed in my forthcoming book
As Naomi Klein states in her book ‘ The Shock Doctrine ‘ Hayek was ‘so impressed by Augusto Pinochet and the Chicago Boys that he sat down and wrote a letter to his friend Margaret Thatcher… and urged her to use the South Amercian country [Chile] as a model for transforming Britain’s Keynesian economy’. Thatcher at the time ‘was far from convinced ‘ that this was possible or achievable in a democracy like the UK.
However it is clear that there are people who want to see this type of policy enacted in our country. The hacking scandal has revealed how power is wielded by the unelected. The feral elite are wrecking our country and we seem powerless to stop it but we must find a way.
Would those banks have just folded like that? More likely they would have gone into some other insolvency process and continued to trade surely?
They were utterly insolvent
How could they have traded?
That’s why they were bailed out – they’d have closed the cash points if they had not been
Get real
The banks were 3 hours away from shutting the system down, which would have led to total chaos. Within 12 hours there would be looting, within 24 hours rioting and within 72 hours complete social collapse. Sounds crazy but our just-in-time society skates on very thin ice.
The banks should have been nationalised, not bailed out!
Agreed
Ann Pettifor also has a good blog on this. I commented how disturbing it was to hear the predominant support for Hayek in the audience – these represented the next generation of economists who will have learned nothing from the current crisis, let alone the history of the 1930s.
I suspect that’s because many of them will have been schooled in what passes as economics in many universities nowadays, Carol – econometrics. Reducing everything to numbers and formulae allows theory – and thus economics generally – to be discussed without any reference to reality, which is exactly what Hayek did and why he’s so popular with that type of economist. You could hear the disjunction between theory and reality reflected in the debate, with the Hayekians not in the slightest bit interested in what the outcome of their theories might be for real people, only in whether the theory was ‘right’ or not. Hence they are able to talk about their theories supporting such concepts and ‘freedom’ without any reference to existing and underlying economic and social power structures. Bonkers!
Absolutely 100% agreed Ivan
Yeah or any reference to what “freedom” really means when you have absolutely no economic opportunity ahead of you.
[…] the economy to have been destroyed, as I explained would have happened if Labour had not acted here today – then first Labour had to bail out the banks and second bear the costs of the crash which […]
Excellent comment, Ivan.
I think the Hayekians are largely right in diagnosing the causes of the bubble boom – excessively low interest rates, misallocation of capital into asset bubbles in stocks and property, the exaltation of financial interests above all else.
Where they’re completely wrong is in their proposed remedies. OK, they have a point that a lot of the money “spent” has been hoarded by banks and is not being used in the economy; but, instead of demanding that it’s used to bolster aggregate demand as a Keynesian would, they want, instead, for those banks to have been liquidated, and the money to have been given to the “healthy” banks. How they correctly diagnose the insolvent banks from the illiquid banks is never explained, of course.
Their approach can be described as masochistic. Sure, they tap into a sort of populist “revenge” sentiment with their prescriptions for liquidating the banks, punishing the malinvestments – and some of that should have been done (“burning the bondholders”) in the interests of justice and morality, punishing some of the culprits rather than just pronouncing the banks as “too big to fail” and writing them blank cheques – but liquidating the entire financial system is cutting off one’s nose to spite one’s face. They are far too dogmatic on their theories, and much less pragmatic than Keynesianism, which looks to implement something that works, rather than blindly leave it all to the Magic Market. Some banks could have been liquidated – the classic example being Anglo Irish Bank in Ireland – but one would want to have been very brave to liquidate clearing banks.
My main reasons for rejecting Hayekianism is that they live in a sort of fantasy free market world. There is no such thing, really, as a free market; markets are always constrained by politics, ethics, morality and society. Otherwise, child labour would be legal; slavery would be legal; anyone could set up a bank, or practise medicine, or sell firearms to children; all these “restrictions” on these commerical activities make the Pure Market “unfree” – but can anyone seriously argue that they should be removed?
There is also no such thing, in the modern computerised world, as purity of market signals, which will guide all market participants perfectly, if only Government got out of the way! This completely ignores the entire history of the securitised sub-prime bubble in the US! AIG-FP sold all those bad CDSes, for those synthetic CDOs, precisely because they didn’t understand the pricing of these securities – very few people did. The revolution in mathematical financing completely blows up the rather 19th century Hayekian notion of pricing – it’s simply impossible for any market participant to understand and accurately gauge the prices of the myriad of CDOs, synthetic CDOs, CDSes, options and so on that make up the modern finance markets, let alone the quant mathematical models underlying most of them. Governments did exactly what Hayekians would wish, and did not regulate these markets – and they blew up. Therefore, in the interests of everyone, this cannot be allowed to recur – hence, strict regulation is required.
Hayekianism is a recipe for complete disaster where 21st century financial markets are concerned.
Finally, I concur with the assessment that there’s a certain cold, sociopathic view of humans underlying Hayekianism. We are not all selfish, self-seeking, autonomous market agents!
Congratulations on a very good Guardian article, btw, Richard; I shall certainly look to purchase your book.
Thanks Fergal – and I of course concur
But I really should take issue on one thing – they do think anyone should be allowed to practice medicine, children should be allowed to work, banking should be open to anyone and so on….some of them are that mad, or bad
Mark Pennington at Queen Mary Universioty London even argues law made by the state is not legitimate – only the market can make law
Blue skies thinking (!!!), Richard, a bit like Cameron’s advisor Steve Hilton. If he isn’t already one (and I don’t have time to Goggle him) I bet that’ll get him a professorship (chair). Anyway, to finish on a Keynesian note:
‘Instead of using their vastly increased material and technical resources to build a wonder city, the men of the 19th century built slums…[which] on the test of private enterprise, ‘paid’, whereas the wonder city would, they thought, have been an act of foolish extravagance, which would, in the imbecile idiom of the financial fashion have ‘mortgaged the future’…The same rule of self-destructive financial calculation governs every walk of life. We destroy the beauty of the countryside because the un-appropriated splendors of nature have no economic value. We are capable of shutting off the sun and the stars because they do not pay a dividend.’
Are you seriously telling me that there’s an academic who would argue that, say, if one wants to sell crack cocaine to primary school children, then the market, alone, should regulate that, and that any restrictions on such a market amount to State interference and over-regulation and are therefore, per se, immoral, inappropriate and damaging to both the public good, and to the public’s liberties?
Do Hayekians applaud the illegal drugs market, then, as a shining example of how a free market enhances our liberty and our well-being?
If state law is not legitimate I think that follows
I certainly would have to be an insensitive ogre if I had believed that insolvent banks should simply have been allowed to collapse, leaving all of their depositors in misery. But this is not the only alternative to bailouts, and it certainly isn’t what I was defending. The alternative I had in mind was nicely summarized last spring by Barry Ritholz in a blog referring to the situation then in Ireland:
In pretending that the only alternative to bailing out insolvent banks is one that must ruing millions of innocent depositors, you unwittingly play into the hands of irresponsible bankers, supporting handouts to them that ultimately hamper recovery, thereby ultimately making the very people with whom you claim to empathize worse off.
But this is a tiny part of the equation, as noted I think ny Fergal O’Shea above: you would simply in effect pass the money to another bank.
You do nothing as a result to stimulate demand.
You simply support banking in what you propose and reorder the deckchairs after the insolvency.
Thats far from good enough.
My comments remain valid as a result.
The problem with your approach, Mr Selgin, is that in the crisis at the time, nobody knew which were the “bad” banks, the zombies that should be liquidated, and which were the “good” banks, the virtuous that should be saved or restructured. This is because the market signals of the pricing mechanism in the shadow banking system had completely failed; no-one really understood the complex derivatives, nobody could be sure they were priced accurately, so nobody could therefore assess the risk of default of these assets, and, therefore, accurately assess whether any particular financial institution was solvent, or merely in a liquidity trap. This is borne out by the complete freezing of the inter-bank lending market; nobody could or would trust anybody, given that nobody could trust these deregulated securities (and with good reason! as Michael Lewis’ most excellent book The Big Short makes clear, there was a massive element of fraud in the creation of these securities).
(I will mention, in passing, that the shadow banking system was a Hayekian’s dream – a market without any state interference whatsoever – and it resulted in utter disaster).
It’s only been clear, in hindsight, which of the banks were zombies and which were worth saving. Adopting a Hayekian “Plague on all your houses” approach would have meant bank runs and a financial crisis akin to that of autumn 1931; and that did not turn out well, did it? Doing nothing, or trying to pick winners and losers, was simply not an option at the time.
The problem with what was done was not that the State underwrote the banks with a massive blank cheque; it’s that the State did not follow up its position of power to exert control over the banks: to force them to make cheap credit available to business as the price of survival; to abolish bonuses as utterly unjustified and heinously insulting to everybody else; to sack and prosecute those who caused the crisis by acts of mal and mis-feasance; in short, to step in and manage a restructuring of the financial system so that it serves the real economy, instead of the unholy alliance of bank shareholders and managers.
Why was this not done? “cui bono” would lead one to conclude it’s due to the capture of politics by the financial system. This is what needs to change; not applying some pure “free market” (as my comment above explains, there is and never has been, a Pure Free Market – and is unlikely ever to be, bar anarchies like Somalia) theories, as if the world is an economics laboratory.
The point is that the “other” (presumably solvent) banks are far more likely to lend their excess reserves than insolvent ones are. Thus the investment-stimulus effect of any given amount of quantitative easing is enhanced compared to what tend to happen (and what has indeed happened) when bailouts take the place of what Ritholz calls “planned” bankruptcy.
This isn’t a matter of merely “supporting banking.” It is a matter of having a sound banking system that supports lending and thereby contributes to the revival and maintenance of demand–and investment demand especially–needed to promote recovery. To draw on your “Titanic” comparison, when the U.S. bailed out insolvent banks instead of resolving them, they in essence forced passengers to stay on a leaking, immobilized, and otherwise un-seaworthy Titanic, instead of allowing more seaworthy vessels (e.g., BB&T bank in the U.S., which was among several relatively large U.S. banks that had steered clear of the sub-prime ice field) to take them on board.
But you entirely miss the point
Large corporations are already awash with cash on their balance sheets that they could use for investment, but do not
Banks claim that they do already have cash available to lend to small business, but they do not demand it.
That is because there is a shortage of demand in the economy, and the market is quite un-able to stimulate the demand that is needed to meet the needs of society, much of which will not in any event be paid for through a market mechanism because it is to meet social need.
You deny that demand is real simply because those who need those resources do not have the cash available to them to make payment for it.
I, and others of empathic disposition, realise that this is because of the fundamental flaw of the marketplace where predisposition of assets ensures that the vast majority will never have that resource that is necessary to ensure that their needs are met, whilst a few will have vastly excess resources that they will deny to the market by placing them out of its reach within the feral economy to ensure that their position is maintained.
Your position will never remedy this defect because you believe that the market is the only indicator of need.
That is where you are fundamentally mistaken.
All your remedy seeks to do this preserve the claims of the asset owners within the feral economy, protecting those owners in the process from the claims of bankers.
It takes no consideration of the needs of others.
This is why it is also fundamentally politically dangerous and inconsistent with democracy.
Ah well, I might insist that it is I who am arguing for letting banks fail–which is a way of not p”preserving the claims of asset owners within the feral economy,” whereas it is you who have taken me to task for my position. But is if it’s a matter of your believing that the whole market economy must be scrapped, then I must concede that there can be no hope of our coming to any agreement.
I did not and have never argued that – your present a straw man
But I sure as heck know Hayekians who argue there is no legitimacy for the state
Mont Pelerin has a lot to answer for
We’re not arguing that “the whole market economy must be scrapped.” We’re arguing that the “free market” flavour of market economics, whether of the Austrian or Chicago Schools, does not best serve the greater good of everyone, and are based on a number of crucial ideological flaws.
Viz. There is no such thing, in reality, as a Pure Free Market.
The free market view of humans as solely self-interested, selfish economic actors, motivated solely by profit and greed, is psychologically flawed and does not correspond to reality.
The free market view that maximising shareholder value is the best way to organise commercial business is not true for the other stakeholders in a business – its workers, its customers, society in general – and is, ultimately, not true for the business and its shareholders themselves e.g. the squandering by General Motors of its dominant economic position by pursuing financially mandated policies.
The free market view that all economic problems are caused, at least in part, by the State, and that all economic remedies should seek to reduce or eliminate the role of the State, is simplistic and demonstrably false.
And so on…
Spot on, Fergal. (and that’s all from me for today).
As I have said before, Keynesian economics has a proven history of success in the real world. Neo-liberalist and free market policies, on the other hand, are mostly based on theory and there is hardly an example of them actually working in the real world anywhere.
Keynesian policies sometimes came in for criticism by some leftists for helpig to “perpetuate state capitalism”.
It has to be said though, that Jeynesian economics gave ordinary people prosperity that hasn’t been experienced before or since!
That should obviously be “Keynesian economics”. D’oh! 🙂
Funy thing is, Stevo, if you rank countries from most to least free market, and then rank countries from most to least prosperous, those two lists are about the same. The fact that no country has ever been 100% free market is so obviously irreevant that I have to doubt the intellectual honesty of anyone who makes that point. Real comparisons here are relative, not absolute.
As for Keynesianism working, please supply data on timely and effective countercyclical fiscal policy. President Bush passed a timely fiscal stimulus that obviously did not work. President Obama passed a much larger fiscal stimulus (in 2009), the effects of which did not accelerate an already existing recovery in 2010. I could go on with more examples, but like I said, I have doubts about the intellectual honesty of those who begin with presonal insults and strawmen.
What are you using – the sort of stuff the Heritage Foundation produce?
Pull the other one if so
Stevo pushes his point, but only a little
You seem to utterly fail to comprehend Keynesianism and what it means
“I could go on with more examples, but like I said, I have doubts about the intellectual honesty of those who begin with presonal insults and strawmen.”
Dear oh dear……who’s rattled your cage?? 🙂
“As for Keynesianism working, please supply data on timely and effective countercyclical fiscal policy.”
I assume you mean recent examples? Well, in America and the UK address the off-shoring of manufacturing industry to other countries, notably China, demand economics is never going to be truly effective nowadays. Having said that, though the US is still in dire straits, the US might well be in a far more parlous state than it is now. Isn’t China an example of demand economics in action that has turned it into a virtual economic superpower? Also, the stimulus of QE in both the UK and the US was directed at the banks, rather than at the real economy where it would have done more good.
Older examples include:
* The US New Deal of the 1930s that lifted millions out of poverty and gave the US one of its best periods of economic growth it had ever seen.
* The British post-war consensus, that gave us the Welfare atate, free education and the NHS as well as the full employment of the 1950s and 1960s
* A period of growth that lasted from World War II to the mid-seventies, which has often been referred to as “the golden age of capitalism”.
* A long period of consumption, growth and relative prosperity in America, Britain and most of western Europe.
In contrast, despite having north sea oil wealth, the monetarist policies of Thatcher destroyed 25% of our manufacturing base, a base that has never really recovered. Much of our manufacturing capacity is now foreign owned. Since 1979, unemployment has rarely fell below the million mark. The value of pensions was destroyed when Thatcher decided to link pensions to inflation rather than prices, a spiteful con trick that no government since, to their eternal shame, has put right.
I still maintain, there are few examples, if any, where neo-liberalist or supply-side economics has actually worked. I notice you never supplied any examples either.
Even many the so-caled “tiger” economies of the far east in the late 80s-early 90s, often referred to as examples of free market economies actually started out on a protectionist basis, as have just about all developed economies.
I have a rule of thumb – listen to what free market advocates have to say and believe the complete opposite!
That should obviously be “Irrelevant”. D’oh!
Point taken Richard. I agree that we can’t allow the banking system to fall over. However how do we prevent a situation like Ireland, where the Irish government has been put into difficulties? And how do we prevent unscrupulous bankers and financiers taking advantage of a system don’t won’t allow the system to fall over, i.e. getting the taxpayers to bail them out? Furthermore, isn’t there a risk that people will then say “You bailed out the banks, why not XYZ corporation that employs 50,000 workers?” So in essence how do we prevent the abuse of a fail-safe mechanism?
Anthony
Good questions
a) We wipe out shareholders this time – and management with them – we nationalise
b) Bondholders will this time have to accept they may not be repaid
c) We bring most – maybe all banking for the moment – under the control of states
Radical? Sure, but come on – this is that serious (or worse)
Whilst I agree that Austrian economics and democracy are incompatible, you are in danger of falling into the following trap:
“Austrian economics may be right, but it’s not OK to let people go unemployed. Keynesian economics is nicer.”
Keynesian economics is not simply about ‘being nice’ to people – it is analytically superior.
Austrians cling to Say’s Law, something that is at its most basic level a tautology and at its most significant level clearly false – it was actually abandoned by Say himself after the panic of 1829.
They pay lip service to irreducible uncertainty but fail to incorporate it into their models, which effectively means their theory holds that, either on aggregate or individually, that people can predict the future . Hence the only reason bubbles form is a game theory framework; people are aware of the bubble. Seriously.
They also commit massive naturalistic fallacies; the ‘natural’ rate of interest (something that was obliterated by Kaldor, Sraffra, Keynes & Hicks in the 1930s), ‘steady’ money growth and so forth. Of course no such things exist – there is good policy and bad policy, and Austrianism is the latter.
(I am aware you probably don’t believe Keynesian economics is simply about being nice, but I’m just trying to clear some things up)
Richard,
You are operating on a false premise: that allowing the banks to fail automatically leads to Armageddon. Why that outcome above all others?
Other than assertions made by ‘serious’ (read neoliberal) politicians and economic commentators in the mainstream media, what proof do you have that the authorities would not take immediate steps to restore order so that the cash machines would still operate? If we can put a man on the moon, contriving and executing an emergency plan to keep the banks running by comparison is a piffling task. Food riots in the streets within 24 hours? I think not. That period of time would be more likely dedicated to firing senior executives, ripping up shareholder certificates and terminating bonus contracts all whilst the banking machinery hummed along not that much differently than the day before.
Three years since the crisis began, it must surely be a bankers dream come true that even progressive commentators such as yourself not only still believe such nonsense but propagate it. Sorry Richard, but you are venturing into credulous Evan Davies territory on this one.
Thankfully there are authoritative progressive economists who think otherwise e.g.
Steve Keen…
http://www.youtube.com/watch?v=3qo3t8EBNSg (especially 7 minute mark)
Dean Baker…
http://www.youtube.com/watch?v=UfR_gPzTMnk&feature=related
You’re wrong: I’m more than happy to wipe out shareholders – I said so today – bit to not then just pass the business over to other banks
a) Because it can’t work like that
b) Wipe out shareholders and the state will have a cost – which will require recompense – only nationalisation can deliver that gain
c) Because pass it over and the situation will recur – these markets are currently fundamentally flawed and until reformed will stay so
d) Because I want banks and their assets proactively engaged in the economy – and they have not been
So 1) I don’t be lieve you 2) You’ve set up a straw man 3) You see as far as the end of your nose, I prefer the horizon
Hayek would never concede that Keynesian policies are more compassionate or better for the average person. He argued that Keynesian policy simply traded less pain today for more pain tomorrow. Indeed, I’ve always been suspicious of Keynesian policy because it has a too-good-to-be-true quality to it. Keynes tells us what we want to hear: the problem with our economy is artificial. It can be solved by simply doing what we wanted to do anyway, i.e., giving lots of money to ourselves/people we like and feel sorry for.
That is the kind of rhetoric that politicians live for. “It’s not your fault. In fact, it’s someone else’s fault. And that person is evil!” But only politicians think this debate can be boiled down to good versus evil. The debate exists precisely because both sides honestly believe that their policies will result in more good for more people. Smearing Hayekians as malevolent might score points with the choir, but is completely unconvincing at the level of productive discourse.
Trouble is – I’ve never known an empathic person who can find a cent of sympathy for Hayek and Hayekians
I wonder why?
Could it be the attitude that the market knows best? When the slightest moment of consideration shows that to very obviously be absurd and bound to result in seriosuly flawed outcomes?