Thursday, September 27, 2007

Paralysis of Opinion

I recently posted an entry and a follow-up comment saying that I was impressed and even inspired by Alan Greenspan after viewing a 60 Minutes interview with him. Then, a few days later, I encountered a Tom Tomorrow comic strip on Salon that made Greenspan sound like an "evil comedic genius" who is more worthy of being reviled, especially by those of my political persuasion, than admired.

The problem is, I'm so shockingly ignorant of the "dismal science" of economics and of Greenspan's history as chairman of the Fed that I don't know how accurate the comic strip in question happens to be, although I suspect that it's quite accurate. And I'm not sure I'd be able to reach a definitive opinion on the matter even if I had a Ph.D in economics, since I suspect that there are acclaimed economists who think Greenspan did a helluva good job and those who think he was a miserable failure.

This leads me to the issue of how one confidently reaches an opinion on any even moderately controversial issue much less on REALLY controversial ones such as global warming when there are so many "experts" on both sides. I often find this so frustrating that I don't even bother to study the issue in more depth and detail. I figure I'm going to end up just as uncertain at the end of it all as I was when I started. So, why bother?

Why do YOU bother?


Erg said...

The thing about Alan Greenspan is that when he was "in office" so to speak he never committed to any statement at all. This is easy to do as an economist, because in economsit no decision is wholely good or bad. Everything has benefits and trade offs.
And while economist have varied opinions on greenspan, generally their problems with him are different than Tom Tommorrow's. SO really you have four opinions on greenspan: Right wing ones, leftist ones, economists who like him and economists who don't. More complicated.

Erg said...

Oh yeah, and I bother because my one hat is dad/husband, my second is buddhsit, but my third is economics grad student. I love it.

Finding Fair Hope said...

It's virtually impossible to have an informed opinion on every subject. As you see, there are those who hang on Greenspan's every word -- as we all were forced to when he was in power -- and those who think he's a Wizard of Oz figure. He even admits that he created a way of talking that nobody could clearly understand, so as not to be "misunderstood." Therefore he was simply never understood at all but able to create an almost cult-like following.

No wonder you're confused!

Is he a good guy or a bad guy? I would say he's well intentioned, and he thinks he knows something. But he now says that the collapse of the real estate market was caused by his "not having the data" when he dropped interest rates on the theory that the economy would flourish if every American owned a home, whether or not he had to go into debt to pay for it. In other words he deliberately created the machinery to put the ignorant would-be homeowners in debt and by doing so caused the collapse of the housing market for who knows how long.

And he stands to make a lot of money from this book which tries to have it both ways, as he too has done for so long.

The media, with its quick, smart interviews and incessant soundbytes, tries to convince us that they are informing us. What they are doing, by presenting the parade of so-called experts in everything, is building a marketplace. Believe me, all the experts are trying to sell us something.

Nagarjuna said...

Whether it would be of THAT much help or not, I wish the mainstream media, including "60 Minutes," had done a better job of investigating and informing us about the nature and consequences of Greenspan's actions instead of doing little better than offering up softball interviews and fawning personality profiles of the man AFTER he left the Fed. But I suppose representatives of the media might reply that if they had tried to do this, no one would have watched because, like me, they were too cynical, lazy, or busy to bother.

And that's probably true.

Tom said...

I think these issues can be delved into and a solid opinion, governed by how you see the world, can be arrived at. This is not to say you have to be blind to any arguments you don't like.

I agree fully with erg [re well-meaning economic theory, at least]: Everything has benefits and trade offs.

But I think the Tom Tomorrow strip confuses some issues.

In the second panel, the penguin accuses Greenspan of inflating the housing bubble. That's bull. The tulipmania of runaway house prices was caused by overexuberance, something that Greenspan always warned against. Plus, it was caused by the unregulation of housing loans because of the creation of new market instuments that divorced loans from being strictly long-term, contained agreements between home owners and their banks. Business journalists and legislators should have been ontop of this mouldering crisis-in-the-making. Blame them.

As for the rest of the strip, Tom Tomorrow is failing to deal with the curious nature of the Social Security Trust Fund. It was creating lots of positive cashflow, while at the same time it is underfunded in the long term. Unless we break the agreement/nature of Social Security, that it acts as insurance, paid by workers, then we need to deal with both the short- and long-term effects. The penguin is suggesting that there should be direct contributiona to the Fund from general tax revenues. If we do that, it could open a Pandora's Box. But in any event, changing the nature of Social Security wasn't Greenspan's job.

While it is true that Greenspan's support of the Bush tax cut of 2001 was a huge mistake, it is mostly so in retrospect. At the time Greenspan was concerned about the huge budget surpluses that were projected into the future and the need to put the breaks to all that.

Greenspan was mostly a wonderful Fed Chairman: He kept the economy humming along. BUT, he put unemployment and inflation on opposite ends of the teeter-totter balancing act of macro-economics and is, thus, understandably and properly seen as not having enough compassion for the poor.

Erg said...

It will be interesting to see how Bernanke, who it appears fears inflation less than Greenspan, does.
Oh, and tv news is not.