“I guess we should nationalize the banks after all”, said Greenspan. “Recent events have been very interesting and unexpected. They’ve certainly surprised me, but of course, if you know what the answers are going to be, you don’t need to do the experiment.”
“I’m reminded of a story about Thomas Edison’s early attempts to come up with the lightbulb”, he went on. “Edison had tried a thousand different elements, and all had failed. A colleague asked him if he felt his time had been wasted, since he had discovered nothing. ‘Hardly,’ Edison answered. ‘I have discovered a thousand things that don’t work.’ ”
“So Jeffrey Sachs does one experiment in Russia and finds one thing that doesn’t work, and Domingo Cavallo does another experiment in Argentina and finds another thing that doesn’t work, and the Mont Pelerin Society does another experiment in Iceland and finds yet another thing that doesn’t work, and it’s all good! We’re all contributing to the same research program. It’s just part of the march of science.”
“If we’re allowed to continue our work, without interference from Luddites and know-nothings, sooner or later we’ll certainly find something that works. There’s never been a better time to be an economist than right now!”
Trollblog 
February 19, 2009 at 11:29 am
Well, if you read the FT piece you’ll see that what he is really concerned about is protecting the rich bondholders, the most privileged creditors. If what it takes is nationalization – sure, why not. Nothing surprising here.
February 19, 2009 at 11:37 am
Money – to gain power, power – to protect the money, as they say.
February 19, 2009 at 2:29 pm
I dunno. I think it’s nice to see Greenspan suck it up and try to play a constructive role for a change. Certainly Greenspan wants to protect some of the bondholders – and yes, those folks are rich – but they’re part of a system, and it’s heresy for a libertarian to acknowledge the existence of a systemic problem that government can constructively address.
If we’re going to cast Greenspan a heedless experimenter who is indifferent to the impact of his research program, well, that too is an improvement for a guy who used to be a crazy Republican ideologue uninterested in the impact of his ideology. This is the same guy who, in the service of Bush’s tax cuts for the wealthy, went before Congress to say that a balanced budget is a bad thing.
Let us not forget that the cavemen are still out there, and in fact still dominate the Republican Party. If the money guys decide that rational self-interest means cutting lose the crazies, well, maybe there’s a little hope for sanity to prevail.
But then again, I also think it was nice of McNamara to come clean, and especially nice for him to speak out against the Iraq war. So maybe this is just me.
February 19, 2009 at 2:54 pm
PF, when I start recruiting my host of Cossack auditors to reconcile accounts with blood and iron, don’t even think of applying.
In general I frown on experiments with human subjects which end up doubling the poverty rate and increasing the mortality rate of entire nations. Unfortunately, my frown doesn’t have much throw weight at this point.
February 19, 2009 at 3:33 pm
But he doesn’t even suggests nationalization in the normal sense. He suggests that the government briefly takes over, saves the creditors who matter, assumes the liabilities, and privatizes them right back.
Call the plumber to clean up the toilet, then keep flushing the same garbage into it. Yes, he does realize that the toilet probably won’t fix itself, but otherwise it’s the same MO.
February 19, 2009 at 8:07 pm
By the final paragraph, I was convinced this was a put-on. “If we’re allowed to continue our work, without interference from Luddites and know-nothings”?! I mean, Greespan’s always been a horrible, arrogant human being, but….
What does Andrea see in him?
May 17, 2009 at 6:17 pm
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