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?

More on Alan Greenspan

Here are excerpts from an article in Slate about Alan Greenspans's growing recognition of the irrationality of human economic behavior. When will economists in general catch on and do a better job of factoring this irrationality into their economic models?

Greenspan seems to argue that since the case for capitalism is so overwhelmingly rational, the opposition to it must surely stem from very deep-seated, immutable characteristics. "And that carries me to the general conclusion that if you're going to model an economy, you have to do far better in understanding how the unit of the economy functions—i.e., the human being"...

Looking to human nature also helped Greenspan solve a perplexing economic mystery. Over the last 150 years, it seems that the maximum productivity growth the economy could achieve over a long period of time was 3 percent annually—despite a series of productivity-enhancing innovations, from the steam engine to the Internet. His conclusion? "What ultimately looks to be the case is that's the pace at which human beings operate," he said. People simply can't process new ideas more quickly. "The answer is that the human race, no matter how one defines it, is not smart enough to do better."

The ultimate rationalist seems to have concluded that fear, resistance to change, exuberance, and human limitations play a bigger role than expected in economic development. And he recognized that economists have proven so human—i.e., fallible—in their forecasting because the force actually driving the economy is humans who are prone to act on emotion rather than reason. The inability to account for exuberance and fear—"huge unknown variables"—is one reason why economists do poorly forecasting recessions and other economic reversals. "I've been forecasting for 50 years and I have not seen any improvement in our capability of forecasting," he said.

Alan Greenspan on 60 Minutes

I just finished watching Leslie Stahl interview Alan Greenspan on 60 Minutes. It sounds as though he is and always has been the stereotypical geek. An economics geek, if you will. He spent his honeymoon with his wife, writer and TV journalist Andrea Mitchell, at an economics conference. His idea of a fun and relaxing read is poring over reams of economic data.

My first thought was how terribly boring that must be. But it obviously isn't boring to him. He loves that stuff. If I loved anything as much as he loves economics, I'd probably be much happier and more successful than I am.

Some of the interesting things Greenspan said were that Richard Nixon's language was laced with so much profanity that he thought there must have been something "extraordinarily wrong" with the man; that Gerald Ford was an extremely decent, good, and moral man; that Ronald Reagan had an unusual kind of intelligence that uplifted the country at a time when it sorely needed it; that George Bush Sr. and he got along poorly in large part because Bush overstepped his bounds by publicly telling Greenspan what he and the Fed should do, such as lower interest rates; that Bill Clinton was the smartest and most "effective" president he served under; that Hillary Clinton is extremely intelligent and eminently capable of running the country even though he would prefer a Republican as president; that he does not approve of George Bush Jr's economic policies of debt-swelling tax cuts and other forms of profligate spending; and that he did not foresee the mortgage crisis but thinks this and the housing crisis will pass even as he anticipates some pretty gloomy economic times ahead, especially with respect to recession.

It was also interesting to learn that Greenspan was a promising young jazz saxophonist as a teenager and even toured for a time with a professional jazz band playing bebop. He also confessed to crafting his "Fedspeak" testimony before Congress as Federal Reserve Chairman to be as obtuse as possible so that when two newspapers published diametrically opposed headlines summarizing the gist of his testimony, he had accomplished precisely what he set out to do.

I did not expect Greenspan to come across as a particularly warm and friendly man, and he surely didn't. But I found his geekiness and straighforward demeanor charming and even inspiring in its own way.