God knows, if it weren’t for intellectual flexibility, we’d probably all still be the mindless statists we were trained to be in the government schools. The career of former Fed Chairman Alan Greenspan illustrated this starkly (and in the wrong direction) in the eyes of anyone familiar with his 1966 essay advocating a gold standard. But those aware of “path dependancy” realize that Greenspan would have fared no better in attaining his eventual eminence than the other gold bugs had he not recanted the wisdom of his youth.
Out of the east now comes a new economist-bureaucrat to go him one better not only in scope (the World Bank), but in a history of intellectual change. The story of Justin Yifu Lin could give you whiplash just from the reading. It’s here in the Economist.
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Thanks for posting this Joseph, I now have another dangerous bureaucrat to watch out for. Advocating more govt. interference in markets whilst pretending to support free markets, oh no!! Greenspan has a son!!
People at the blog are “down” on Greenspan especially because he seems to have forsaken his convictions (stated 1966) in favor of gold. Yet he has, relatively recently (1996 is when I think I read it) affirmed his earlier belief (with emphatic words such as “as much or more today than ever”).
Maybe, with a somewhat different set of principles, he would have simply turned down the job offer. Who can tell? But it’s unfair to single him out for opprobrium simply because he doesn’t claim to have a magic solution to the problem: the plain fact is that neither does anyone else. And that includes LvM, Rothbard, and everyone else of Austrian persuasion. All have offered various solutions (and I include here among the Austrians–because he is certainly among the most orthodox with only one exception (the “Real Bills Doctrine”)–the good professor ably championed on this blog by Mike Sproul). And, of course, to this list must be added the name of Dr. Paul.
All basically offer one or another variant of the set of recommendations covered many years ago by Mises in several passages (notably those in HUMAN ACTION) dealing with monetary reconstruction.
Let me digress for just a moment and remind that a very frequent observation of those of us on the “conservative” side are words to the effect that “insanity ” can be defined as the belief that one can achieve a different (successful) outcome by repeating the measures that have brought failure in past (repeated) experience. Whether it’s true in every case is not the point.
The point is the entirety of recommendations (so far) from our side of the economic divide basically boil down to re-doing what has been done at least several times in the past–a past that has led, inexorably, to the present state of affairs. Were Mises alive today to discuss the matter, I am confident that he would not quibble over my characterization of the historical facts. At very best, he would express the hope that we could foster re-institution of sound money while avoiding certain mistaken policies bound, eventually, to erode such soundness. The entire rationality of the various similar plans for a sound money share this common trait: a hope founded on the shifting sands of public education, understanding, and awareness (and faced with the universally constant threat of both political hegemony and private profit opportunity inextricably linked to the money authority).
I do not actually fault Mises (nor the others mentioned) for this seeming inconsistency.. They may all be right–that the best way forward is to rebuild the sand castle–maybe with more protection from the waves.
But I don’t think so. Better ideas are needed than have so far been proposed.
gene berman –
Good ideas are cheap. Many of the ideas so far proposed are better than the present reality. What is needed is the mass intellectual power to bring about or even approach one of them, and to realize how poor the present one and the ideas (fallacies) behind it are.
Joe:
I do not mean to be condescending in explaining to you that the gist of my previous post was to point out that all of the present ‘sound money” proposals, especially those centered around reintroduction of a gold standard are similarly flawed. In fact, they are not “better than the present reality” precisely because they ARE the present reality insofar as they and previous similar regimes led, in each instance, to similar, politically-inspired deterioration. You might not be quite as sanguine about the prospect of a reintroduction of the gold standard if you realized, that in addition to the massive reeducation of the general public that would be required in order to bring about political support for such reintroduction, that the most likely outcome would be that, after some time (at most a generation or three), similar policies would come into effect as formerly and which led to the present situation.
If you wish to insist that now we know how to do it better, have at it; I disagree. If, rather, you’d like to insist that an infinite series of gold-standard introductions followed by some years of stability yielding to gradual,
Fed-managed fiat inflations is the best that can be hoped for and that the time to restart is now–I could understand that, too, though I disagree (since I believe better is possible and within reach at this point in history).
Gold has been money for a long time. It is money now and, most likely, irreplaceable
in its role. The “standard” is the culprit. Chew that over for awhile (starting with the very good explanation by Mises) and you may begin to see things as I do. Likely quicker, too–it took me over 25 years.
You’re Lysenko’s alter ego – we incessantly regress to a mean somewhere close to zero.
I certainly agree that “we” (everyone who ever “was” on it) are and ever since have been on a gold standard. Various governments that presume to issue “our” “money” have been on it and off it, but it has remained there ever since its adoption (not to say that it is eternal or anything).
I’ve thought way past wanting a gold standard (you apparently assumed I did want it) long since. All I want is government to get out of the production of money AND of its definition (legal tender laws). Maybe that takes away the “standard” you find so culpable.
Meantime . . . ignorance is a renewable resource.
“But Mr Lin also says government has a second duty. As an economy develops, the state should coax firms into more sophisticated industries. This prodding may be needed for several reasons. To cite one: firms may not know which industries are viable, and which are not. So the government should subsidise pioneers who break a path for others.” Spoken like a true Chigaco man!
As far as I can tell (from your most recent), you’re on the right track; sorry I couldn’t divine that from the earlier.
I agree with Joseph–we need to get off the ‘government standard’ for currency.
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