The Wall Street Journal has an interview with Nouriel Roubini on nationalizing the banks where he makes some interesting remarks about Alan Greenspan.
"The two things that Greenspan got totally wrong were his beliefs that, one, markets self-regulate, and two, that there's no market failure. At some level it's good to have a framework to think about the world, in which you emphasize the role of incentives and market economics . . . fair enough! But I think it led to an excessive ideological belief that there are no market failures, and no issues of distortions on incentives. Also, central banks were created to provide financial stability. Greenspan forgot this, and that was a mistake. I think there were ideological blinders, taking Ayn Rand's view of the world to an extreme."
I think Nouriel is right in attributing Greenspan's mistakes to his naive belief in Ayn Rand's philosophy and how they apply to capitalism.
"The two things that Greenspan got totally wrong were his beliefs that, one, markets self-regulate, and two, that there's no market failure. At some level it's good to have a framework to think about the world, in which you emphasize the role of incentives and market economics . . . fair enough! But I think it led to an excessive ideological belief that there are no market failures, and no issues of distortions on incentives. Also, central banks were created to provide financial stability. Greenspan forgot this, and that was a mistake. I think there were ideological blinders, taking Ayn Rand's view of the world to an extreme."
I think Nouriel is right in attributing Greenspan's mistakes to his naive belief in Ayn Rand's philosophy and how they apply to capitalism.
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