Robert Skidelsky praises John Maynard Keynes. There are many missing facts, facts that don't line up, and logic that isn't.
The chairman of the Federal Reserve is a regulator. Skidelsky should not be "astonish"ed to find a regulator who decries the failure of deregulation.
The story says "the regime of deregulation he oversaw" and links to an article. The article, however, doesn't speak to a single deregulation which could be laid at Greenspan's feet.
It doesn't logically follow that legislation is the regulation necessary to make inefficient markets efficient. Perhaps there are other solutions?
Soros is right -- the problem was intrinsic to the financial system -- which cannot in any sense be described as unregulated, deregulated, or less regulated. The best description of it is "highly regulated". I've read the financial filings that go with an IPO, cover to cover. Would anyone describe an IPO as having been a part of "extensive financial deregulation"?
Skidelsky could name a deregulation, and then compare it in magnitude to the effects of Sarbanes-Oxley, which is a new regulation. Then we could decide whether the amount of regulation has increased or decreased. If you only count deregulations and never reregulations, then you must eventually conclude that there are no regulations left. That doesn't describe financial markets.
I grant that it's possible that there really are fewer regulations, but Skidelsky hasn't made that case and doesn't deserve to be granted it "for argument's sake".
Talking about "deregulation" without naming the deregulations makes it impossible to refute.
Similarly, laying blame at the feet of any one or more deregulations, and then claiming that all deregulation is bad, is like finding a bug in one line of code, and then claiming that all lines of code are equally bad. It just doesn't follow.
Similarly, if you deregulate the predators, while keeping the victims regulated, you have created, not solved a problem. When the wolves are freed, and the sheep left penned, you know mutton is on the menu.
Skidelsky doesn't name any of the "economists who believes that all uncertainty could be reduced to measurable risk." I can't name any either.
"Most economists", again, not named. There are multiple schools of thought about the nature of money. To which ones does Skidelsky refer? Without knowing to whom he refers, it's impossible to judge whether his summary of their ideas is accurate.
"It is this flight into cash that makes interest-rate policy such an uncertain agent of recovery." Let's assume this is a true statement. The fact that Keynes held to one thing that was true lends no credence to any other things he may have said.
"Spend on pyramids, spend on hospitals, but spend it must. (sic)" Keynes felt that non-productive spending was as useful as productive spending. The problem is that this is exactly the Broken Window Fallacy.
Greenspan being wrong doesn't make Keynes right. It's possible that a third theory is more correct.
Someone who has written a biography on Keynes is emotionally and financially invested in the ascendancy of Keynes' ideas. This article is just one stop on a book tour. True, it's not evidence that Keynes is wrong, but I never expect anyone to speak for the truth against the interests of their wallet. They might do it, but I'm surprised when it happens. Here, it hasn't.
posted at: 04:02 | path: /economics | permanent link to this entry