Matt Yglesias starts but obviously I would go much further
Call this the foundational myth of modern central banking. Like all good myths, it doesn’t withstand even the tiniest amount of scrutiny. Consider Alan Greenspan, the most celebrated central banker of our era. To serve as a technocrat he must possess the techne, the knowledge of the discipline of economics that makes him credible as a High Priest of the economic order. And yet he is a man of flesh and blood. He cannot serenly segment his views of the monetary policy aspect of macroeconomics from his views of the rest. And he has a duty—a solumn duty—in his role as technocrat to do what’s right for the county. So in 2000 Greenspan tightens money, George W Bush wins the election, Greenspan explains that the budget surplus runs the risk of plunging the country into socialism and endorses the Bush tax cuts, in 2004 he maintains loose money, Bush wins again, and Bush sets about to try to privatize Social Security.
It would be scandalous to admit that such considerations entered into the mind of the Maestro, but it would be equally absurd for him to forget about them.
Ben Bernanke has said that he could not save Lehman because it would be have been in violation of the law. My response is that it is not his responsibility to enforce the law. It is his responsibility to safe guard the lives of millions of people.
When the Capitol Police haul him away in chains then his responsibility to prevent the Great Recession ends. Until that moment the choice not to act, is his choice alone.
The constitution is no shield.
8 comments
Comments feed for this article
Wednesday ~ February 22nd, 2012 at 8:12 am
Curt Doolittle
You err: Thus begins all violent ends.
Government consists of institutions.
People have the institutions that they choose to.
People deserve the consequences of those institutions.
People choose or choose not to alter institutions to prevent repeats of the past.
People deserve the consequences of choosing or not choosing to alter those institutions.
Political externalities are so vast, economic consequences are a trifle by comparison.
Politics is the exercise of power. Power is the ability to alter the probability of outcomes. It is the ability to transfer, or deny the transfer, of opportunities and rewards between groups.
Let’s see what you have done: 1- The scientistic error. 2 -The fallacy of goodwill. 3- The false consensus bias. 4-Fallacy of collective terms. 5-The denial of externalities. 6- The fallacy of the short run.
So you err. And in that error would open the door to far greater horrors than the one we suffer now. The west is unique: the competition between organizations with competing interests to enact rules which are used by ordinary people who run institutions to conduct the affairs of the polis. it is a ‘game’ form of government for a ‘game’ marketplace. It is the only instance of that model to survive.
So, Fix the laws. The rule of law is all we have. Without it, we cannot have a high trust society, and would quickly devolve into either india or south america.
Politics is more complex than economics. Political externalities have greater consequences than economic externalities. Scientistic hubris is legion.
Curt
Wednesday ~ February 22nd, 2012 at 5:20 pm
anon
Laws are made and enforced by humans – so they are as important and unimportant as other human considerations. There’s nothing special about them and there’s certainly absolutely no reason to give them any kind of moral preference.
You can be a law abiding monster just like you can be a law breaking saviour. Laws are human tools – just one of the many tools civilization uses.
Wednesday ~ February 22nd, 2012 at 9:46 am
fmtrading
“Ben Bernanke has said that he could not save Lehman because it would be have been in violation of the law. My response is that it is not his responsibility to enforce the law.”
Choosing not to break a law is not the same as enforcing the law, is it?
Wednesday ~ February 22nd, 2012 at 10:56 am
Exasperated
You are an evil man, who does not have the courage of his evil convictions. You are not to be feared, as you have no power, but you are to be pitied.
Wednesday ~ February 22nd, 2012 at 11:53 am
RickR
One of our primary responsibilities is to obey the laws of the society we live in. There are cases where disobeying the laws may be justified (a la Gandhi or King, or sit-ins at Woolworth lunch counters), but the general responsibility is to obey the law.
One of the purposes of the law is to rein in uses of power. It is all too easy to believe that my interests identical to the general interest – the “what is good for General Motors is good for the country” effect. It is better in the long run to tolerate a few bad decisions than institutionalize ignoring the law.
Wednesday ~ February 22nd, 2012 at 5:16 pm
anon
Karl, you could also say that Bernanke considered his likely successors if he broke the law – and decided that he is a better candidate than the others – saving more lives by staying in power and preventing a collapse of international trade than by stupidly sacrificing himself for Lehman (which was really just a symptom).
By conservative estimates the GD has killed 5-7 million Americans and up to 50 million people worldwide, not counting WWII. So Bernanke had a legitimate worry and might have validly decided that a GD expert staying in power was of paramount importance.
Friday ~ February 24th, 2012 at 6:58 pm
Ernie Bornheimer
Sorry, non-economist here. What’s “GD”?
Wednesday ~ February 22nd, 2012 at 5:18 pm
Lord
He read his responsibility as forcing the rest of government to act which he was successful in doing. His real responsibility was preventing bad lending in the first place since that is key to regulating the value thereof and the decline of ngdp following that. Had he been successful in that, Lehman may have still gone bankrupt but it would not have been the crisis it was, but by the time of Lehman all was lost. There was no possibility of preventing bad debt from coming due.