Greenspan speaks

I’m no economist, and I won’t pretend to be. I hate dealing with money, and frankly I can’t imagine a scholarly profession that would be more boring. You work all your life on research papers and quantitative policy analysis, and then everyone throws your work in the garbage if it doesn’t fit their preconceived dogma.

Such as that shared by Invisible Hand worshipers. I hate “free market” types, because it never seems to be about the science to them, it’s about the gimmee-more-money. Invisihanders love to use phrases like “emergent complexity” and “self-organization” to describe the wonderful way their imaginary free market would work, while clearly having no earthly clue what such words mean.

This is frustrating, as someone who works in the earth sciences, because I know damn well what an emergent phenomenon is, and how self-organizing systems operate. Biological evolution is a self-organizing system, where derivative levels of emergent complexity can develop through the interaction of more fundamental laws operating on the molecular level. Physics begets chemistry begets biology begets sentience. It’s amazing, but evolution really works, and it’s not hard to imagine why, once you learn some basic science. With evolution we have lots of evidence from different sources that back each other up, we can run tests, we can make predictions. If the predictions work out, we nod and move on to the next research project… always trying to push forward the edge of knowledge.

Do the free-marketers do that? Not that I’ve noticed. To be more precise, I imagine that the research economists who work on macro problems might approach their issues in a rigorous way… but who listens to them? The only people I ever hear talking about free-market economics in the media are people without economic degrees but with a Cato Institute fanclub card. They go on and on about how the market knows all, the market sees all, and the market must operate without hindrance…. then, all would be a paradise.

So I’m curious to see what happens now that Alan Greenspan has gone before Congress and basically said, paraphrasingly, “I was wrong about that whole deregulation thing”. What I’d like to see happen is for GOP thundermouths to listen to the expert, even when the expert disagrees with their economic-religious ideology. Greenspan went before Congress and behaved as a true scientist should… when confronted with clear evidence that a working hypothesis is wrong, a true scientist acknowledges error. Deregulation doesn’t always work. Sometimes, some deregulation works, and other forms of deregulation might not work. The details matter. An economy of 300 million people simply cannot work as a free-for-all where anything goes. Sensible regulation is just that… sensible. No one wants to tell Nike how many shoes they can make in a year, but I do want the constellation of banks that maintain the economic infrastructure of my country to have reasonable and justifiable regulations in place to prevent sociopath CEOs from destroying the place.

But I realize that what I’d like to see and what will actually happen are two different things. What will probably actually happen is that the goppers on Capitol Hill will cry “heretic!” and try to find evidence that Dr. Greenspan has ties to terrorism. Perhaps his cousin’s brother’s son’s best friend’s neighbor was once in line for bagels with a guy who gave money to PETA one time. That should be enough to fan the incandescent rage of the Ayn Randians. Oh, by the way…. Greenspan used to be an Ayn Randian.


~ by Planetologist on October 24, 2008.

2 Responses to “Greenspan speaks”

  1. here. match up what greenspan says in this article he wrote before he threw away his “ideology”

    i sorta hope, and i sorta expect, that greenspan will confess the error of his ways before he passes on. the guilt may be too great. i don’t know. but i can only assume he completely forgot his principles that he so championed early in his life when he was given the opportunity to have the power to shape the market and culture it. this is the temptation of this kind of power.

  2. i hear ya man, but this what needs to be discussed.

    “Do the free-marketers do that? ”

    absolutely! you have to ask yourself? what is the economy? it is just as you describe! an emergent phenomena. now, you can’t jump from 6 billion people making multiple transactions everyday (money isn’t paper) to “free-for-all where anything goes”. this would defy all logic in human action.

    do you drive on the wrong side of the road? fly through red lights? no. of course not. why not? because most people with a brain know that this is counterproductive. why does a market work? what is it that is so important about free exchange? these are rhetorical questions, but the point can’t be stressed enough. especially now.

    instead of focusing on what greenspan claims to believe, let’s instead focus on what he does, or did. he was the chairman of the federal reserve. this is no free market institution. a monoploy on the production of money, fiat currency. this means there is no competition, i.e., free banking…there is artificial wealth being created for special interest, both corporations and government…and massive regulations that, so often, only serve to limit competition in favor of the big business. this can only happen with the strong arm of the government creating these conditions. it is not in the best of the people.

    this is a power that allows those in power to shape the world as they see fit. a very dangerous proposition. we’re talking about the world economy essentially. it’s one thing to establish and institute government for the sake of administering justice. it is a whole ‘nother ballgame when the power to control the economy of the world is handed over to both elected and many unelected bureaucrats.

    Greenspan’s position totally defies any semblance of a free market.

    it’s funny how people all across the nation can complain about big government and big business, yet when the destruction that occurs because of lack of administration of justice, massive special interest, loose monetary policy, etc, the answer everyone jumps to is to bailout the big business and not only to allow more infractions on civil liberties and more inflation (for the “good of the people” we are told, because it is a “crisis”) but to promote the very system that presided over this boondoggle.

    we have to keep in mind this is not “bush policies” this is long-term, well-established controls in the market for a long time. the US dollar is the world reserve “fiat” currency. this may be changing very soon. the geopolitics involved in this is no laughing matter. central banks have spread around the world and exert heavy influence in the economy. it is no accident that the nobel prize just given to krugman was awarded by a central bank.

    this is not the failure of the market. there are actors within the market that should be held liable for criminal behavior. but there is no justification for letting those in government off the hook for horrible policies. these people are blaming everyone but themselves. these institutions were the ones handing out essentially free cash. in a competitive market, businesses would be stupid not to take the piles of money created by the central banks. money guaranteed by governments. do you see where this is going?

    they are destroying the free market. the only solution they offer is more control. this is not good just on its face.

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