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Schneier on Security: Control Fraud quoting a PDF by William K. Black.
White-collar criminology findings falsify several neo-classical economic theories. This paper discusses the predictive failures of the efficient markets hypothesis, the efficient contracts hypothesis and the law & economics theory of corporate law. The paper argues that neo-classical economists' reliance on these flawed models leads them to recommend policies that optimize a criminogenic environment for control fraud. Fortunately, these policies are not routinely adopted in full. When they are, they produce recurrent crises because they eviscerate the institutions and mores vital to make markets and governments more efficient in preventing waves of control fraud. Criminological theories have demonstrated superior predictive and explanatory behavior with regard to perverse economic behavior. This paper discusses two realms of perverse behavior the role of waves of control fraud in producing economic crises and the role that endemic control fraud plays in producing economic stagnation.

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Mon Apr 25th, 2011 at 05:03:09 AM EST
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