There is one lesson in this book: the danger of bad economics. I'd expect Mr Allison to concur, except that the lesson is not in the book; Mr Allison himself is the lesson.
03 March 2013
Mamas, Don't Let Your Babies Grow Up To Be Goldbugs
I spent some time this evening flipping through John Allison's The Financial Crisis And The Free Market Cure, his unconventional and contrarian take on the 2008 financial crisis. (That's an hour of my life I'll never get back.) It's not that I expected to agree with his views; I just didn't expect the book to read as if it were written by a child. Sample sentence: "We built too many houses, too large houses [sic], and houses in the wrong places." The general tone is that of a tantrum; Mr Allison rails against his imagined oppressors, and expects his audience to empathize with his tragic role as a lone voice of reason whose triumphs will be yours if you just listen but you won't because how could you when you've been brainwashed by Paul Samuelson! and Bernanke who's DEBASING the CURRENCY! and SOCIALISM! [trails off...]
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But Jonas, what are his bad economics, your rant simply negates his!
ReplyDeleteI'd dashed this post off in haste, so let me add a short list here.
ReplyDeleteFirst, Allison's belief in the wisdom of the Gold Standard (or, a 'market-based monetary standard').
The rest in no particular order:
'Money-printing' is the same thing as inflation.
The government budget must be in cyclical balance.
Fiscal policy is the same thing as deficit spending.
He also may think that the Federal Reserve controls the nominal minimum wage.
All of these and more combined with a misunderstanding of the Solow model (typical idea: resources must be diverted to investment to create growth).
Mind you, I'm giving him a huge pass on his weird opinions regarding established history, his non sequitur in defense of the atom bomb, and his assertion that a military unit could somehow suffer casualties greater than 100%.