Saturday, October 25, 2008

Thinking about Mr. Greenspan

“Oops, I guess I was mistaken,” says Mr. Greenspan.
“Excuse me? You didn’t know that giving bankers and investment managers the freedom to do whatever they wanted, and then not monitoring them, would lead eventually to a debacle? Really, you didn’t know that?”
The recent collapse, followed by statements by economists and other wizards, should convince everyone the world over that: a) economics is not a science; and b) unfettered anything that concerns human beings is generally a bad idea.
During the 1972 recession—the Nixon Recession—Alan Greenspan and other wizards said that you couldn’t have a recession and inflation at the same time. Yet, there it was – a recession and inflation at the very same time. Mr. Greenspan, during that very same recession, spoke to a group of welfare workers and welfare mothers in an auditorium at the Department of Health and Human Services. He said to that assemblage, “well, you want to know who is being really hurt by this recession? The stock brokers.” Yeah, he really said that.
Economists seem passing good at statistical extrapolation. They can take some numbers, construct a trend, and then predict that, all things being equal as they like to say, this is where we will be sometime later. That’s it. Economics is statistics dressed up as science, but there’s no real science there at all. So, we need to be careful asking economists to explain things to us, or to construct solutions. If War is too important to be left to Generals, then surely World Finance is too important to be left to Economists.
Now, exactly who constructed this theory that an unregulated financial system was a good idea? I know that Mr. Greenspan subscribed to it, but it seems, on its face, such a crazy idea, that it is difficult to believe that anyone followed it. Apparently, our politicians, being general doofuses on any subject that involves math beyond the point where they can count on their fingers and toes, allowed economists to dictate on this subject. Turns out that’s a really bad idea. But it’s not just a bad idea in finance. It’s a bad idea more broadly.
This country was founded on the idea of checks and balances. We don’t want anyone to have too much power, and nobody should have unchecked power. Our Founding Fathers were clever that way, or maybe they simply observed monarchies and concluded they were a bad idea (except for the monarchs of course).
So, let’s get back to the system envisioned when we constructed this Republic of ours. Let’s start again paying attention to our Constitution, and let’s start paying attention to this checks and balance approach. Hey, George and Dick, we got rid of monarchs here a long time ago. It’s your turn to go.
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