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.
Posts
There is one factor which all these proponents of philosophies, their followers and their critics alike forget-ETHICS. When Ayn Rand formulated her philosophy, men were more ethical. Now 50 years down the line, those philosophies are not entirely valid since men the society has detoriorated.
ReplyDeleteI believe this is the right time to reflect upon our society's moral degradation.
I don't think Greenie is entirely responsible for the current crisis. Even if he believed that his job was to maintain stable asset prices and that Rand's philosophy was wrong, the current crisis or a different crisis would have happened, thanks to the men's greed.
i don't think greenspan is at fault. like everybody else he contributed to it. the concept of paper money (paper value) did everybody in
ReplyDeleteYou have a great blog here; interesting, analytical and opinionated. It has a ' for crying out loud...' persuasiveness about it.Hoping to read more...
ReplyDeleteThanks for leaving a comment on my poem for my father.And what a coincidence- I received your comment on my father's 9th death anniversary day! Felt like he had a small hand in it:-)