Friday, October 24, 2008

Quote 'o' the Day

From Alan Greenspan, testifying before Congress:
“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

Mr. Waxman pressed the former Fed chair to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Mr. Waxman said.

“Absolutely, precisely,” Mr. Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”
Lord knows it's hard to admit you're wrong, particularly in the midst of an economic meltdown. It's hard to place love of truth ahead of ego and long-held ideology. So, kudos to Mr. Greenspan for his intellectual honesty. I suppose not everyone will be happy to accept his apologies, but at least they will set Ayn Rand spinning in her grave. Strange times...

3 comments:

Eugene said...

Heh. And I was just, the other day, trying to teach a raging rightwinger (he has a good heart though) about the difference between the Keynesian and the Friedman school of economics.

He said he get it, and then went on to rage about socialism. Sigh.

enjelani said...

Yeah, props to Greenspan for adjusting his stance to fit the evidence.

Hopefully a middle ground between the Keynesian and Friedman schools will emerge as the dominant ideology in the next several years. David Brooks calls it progressive conservatism: "using limited but energetic government to enhance social mobility." Wouldn't mind seeing the U.S. give that an honest try...

Tim said...

So, I really don't know jack about economics, but a friend who's in econ phd school tells me there's been a trend toward neo-Keynesianism in academia over the past 15 or so years. Perhaps that will spill over into economic policy...

I've always thought that markets are useful tools (no one really wants a centrally planned economy). But totally unregulated markets won't magically give you the social outcomes you want, so smart regulation and government policies are necessary. (But see first sentence above...)