Heretics and Heroes
by digby
Lambert links to this Krugman blog post and a Wall Street Journal article revisiting a meeting of economists back in 2005.
Krugman:
Two things are really striking here. First is the obsequiousness toward Alan Greenspan. To be fair, the 2005 Jackson Hole event was a sort of Greenspan celebration; still, it does come across as excessive — dangerously close to saying that if the Great Greenspan says something, it must be so. Second is the extreme condescension toward Rajan — a pretty serious guy — for having the temerity to suggest that maybe markets don’t always work to our advantage. Larry Summers, I’m sorry to say, comes off particularly badly. Only my colleague Alan Blinder, defending Rajan “against the unremitting attack he is getting here for not being a sufficiently good Chicago economist”, emerges with honor.
As Lambert points out, the words condescension and obsequious are perfect descriptors for a whole range of village behaviors on any number of issues.
Greenspan is, of course, an uber-villager, married to one of the most important beltway media mavens and who, for the past two decades, was considered a living example of the the non-partisan wise man. Except,of course, he was actually an Ayn Rand extremist who grubbed around in politics with as much glee as any Louisiana congressman. But you couldn't say that. In fact, during the 2000 election we came close to having him legally declared a living God --- a Pharoah of Finance, who could not be questioned lest the sun turn cold.
Why anyone ever thought that a man who openly followed a creed which literally claims that captains of industry can do no wrong because capitalism is a moral system based upon self-interest was anything but a fool is beyond me, but they didn't. He was in a state of "shocked disbelief" when that turned out not to be true:
"I have found a flaw," said Greenspan, referring to his economic philosophy. "I don't know how significant or permanent it is. But I have been very distressed by that fact."
"I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms.
I wouldn't have believed that anyone but the most starry eyed 17 year old John Galt fanboy could be that naive. But he was and most of the Greenspan groupies and sycophants never questioned it. But everyone should have known it --- it's a fundamental Ayn Rand tenet, which holds a puerile, romantic view of human nature that nobody but a fool would take seriously. And yet, for two decades the man was the national financial genius who could not be opposed or lest one risked expulsion from the village.
He is one of the reasons I no longer have any trust at all in the great man theory. I know that people need heroes, but in our celebrity worshiping culture we take it to such ridiculous extremes that it turns dissent and questions into heresy. I no longer find it particularly useful to think in those terms much at all.
Greenspan may be one who stands out considering the horrifying ramifications, but there are many of these elders whose "reputations" have led us straight into disaster. (Colin Powell comes to mind.) Maybe it's time America gives the hero/wise man/guru concept a rest.
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