Monthly Archives: July 2012

Was Alan Greenspan a founding member of ‘Occupy’?

Posted on by

This morning, through one of those chains of mental connections that would take too long to explain, I picked up Alan Greenspan’s 2007 book [amazon_link id=”0713999829″ target=”_blank” ]The Age of Turbulence[/amazon_link]. I was expecting to mock his triumphalism and complacency, not having read it since it was published. It was a surprise to find, along with a confidence about the lasting effects of new technologies on productivity growth, a real sense of the fragility of the globalized, financialised economy of which he had been an important architect:

“The impact that fixing our school system would have on our future level of economic activity may not be easy to measure, but unless we do so and begin to reverse a quarter century of increases in income inequality, the cultural ties that bond our society could become undone. Disaffection, breakdowns of authority, even large-scale violence could ensue.” (Extraordinary, this one – Alan Greenspan as a founder member of the Occupy movement!)

“The dysfunctional state of American Politics does not give me great confidence.”

“History has not dealt kindly with the aftermath of protracted periods of low-risk premiums….. Value is what people perceive it to be. Hence liquidity can come and go with the appearance of a new idea or fear.” … A financial crisis was “brewing”, he wrote.

“Markets have become too huge, complex and fast-moving to be subject to 20th century supervision and regulation…. For over 18 years my Board colleagues and I presided over much of this process at the Fed. Only belatedly did I … come to realize that the power to regulate administratively was fading.”

His conclusion remained, in mid-2007, that markets would therefore best be left to regulate themselves. The overall tone of the book is very firmly that of the Alan Greenspan we all have in mind – pro-market and anti-intervention, optimistic about globalisation and technology, far more concerned about inflation than deflation. But reading the introduction and conclusions again with the benefit of hindsight, those notes of caution are intriguing.

[amazon_image id=”0713999829″ link=”true” target=”_blank” size=”medium” ]The Age of Turbulence: Adventures in a New World[/amazon_image]

Darwin, prose and persuasion

Posted on by

It’s been a busy few days in my other job, so for relaxation I’ve been reading [amazon_link id=”0199608431″ target=”_blank” ]Darwin The Writer [/amazon_link]by George Levine. Its argument is that Darwin’s [amazon_link id=”0199219222″ target=”_blank” ]On The Origin of Species[/amazon_link] of 1859 is the most important work of English literature of the 19th century. I’m easily persuaded it’s one of the most important books of its day, less so about its standing in the world of literature compared to, say, [amazon_link id=”1853262374″ target=”_blank” ]Middlemarch[/amazon_link] or [amazon_link id=”0141441143″ target=”_blank” ]Jane Eyre[/amazon_link]. If anything, I’d nominate [amazon_link id=”014043268X” target=”_blank” ]The Voyage of the Beagle[/amazon_link] for the literature category; it’s a terrific read.

However, it is a very interesting read about the part Darwin’s clarity of prose and typical style of argument played in making the intellectual case, setting out the characteristic pattern of a description of some puzzle or extraordinary feature of nature or geology, a detailed explanation of the chain of causation, and a reaffirmation of the wondrous intricacy of the phenomenon. The ultimate message is that it is our mind, not nature, that creates order. Nature is, in Dennett’s description, a mindless algorithm.

[amazon_image id=”0199219222″ link=”true” target=”_blank” size=”medium” ]On the Origin of Species (Oxford World’s Classics)[/amazon_image]

I do have a complaint about the book, which is that it is written in the kind of florid academic style that tends to obscure rather than clarify meaning – one sentence that I struggled with ran over ten lines – somewhat ironic given the subject matter. However, the question of the part rhetoric per se plays in making an argument or creating an intellectual framework is fascinating. I’ve always firmly believed that the ability to write clearly about something is a test of whether you truly understand it. But clarity of writing is only one aspect of an extended argument; the structure of the argument, the linking of one thought to another, is just as important. Deirdre McCloskey has skewered conventional economic modes of argument in [amazon_link id=”0299158144″ target=”_blank” ]The Rhetoric of Economics[/amazon_link]. Economists typically combine academic style with a strong inclination to use jargon, although the spread of blog-writing is improving matters.

[amazon_image id=”0199608431″ link=”true” target=”_blank” size=”medium” ]Darwin the Writer[/amazon_image]

Orwellian economics and the liberal elite

Posted on by

I’ve finished Paul Ormerod’s very enjoyable new book [amazon_link id=”0571279201″ target=”_blank” ]Positive Linking: How Networks Can Revolutionise The World[/amazon_link]. As I’ll be reviewing it for the next issue of The Business Economist, I’m not going to write a full review here. But here are two rather interesting points Paul makes, more or less in passing.

One concerns the ‘Orwellian’ use of words (as in [amazon_link id=”014118776X” target=”_blank” ]1984[/amazon_link], and the ‘how not to write’ examples in his essay [amazon_link id=”1849028362″ target=”_blank” ]Politics and The English Language[/amazon_link]) in mainstream economics:

“The ‘real’ of Real Business Cycle Theory signifies that recessions are caused by ‘real’ factors such as productivity and rational behaviour by agents. ‘Real’ is juxtaposed to ‘nominal’, nominal factors being such obviously irrelevant concepts as money, credit and debt!” (p115)

This is both a slightly low blow, because we all know the difference between technical and normal usage, and also at the same time gave me (and the dog…) pause for thought.

The dog is an active social networker

The second point is a section about how ideas spread, the evidence suggesting that the media have only a mild influence on public opinion. Paul writes:

“For many sociologists and media studies academics, the idea that the mass media lack this power is unacceptable, regardless of the fact that the empirical evidence points towards it…..How can it be possible that people in general do not subscribe to the views of the liberal elite, which are so self-evidently correct? They must obviously have been brainwashed.” (p186)

That made me laugh. (For the avoidance of doubt, that last bit should have been printed in my proposed new type face, ‘ironics’, which will slope backwards, as italics slopes forwards.)

[amazon_image id=”0571279201″ link=”true” target=”_blank” size=”medium” ]Positive Linking: How Networks Can Revolutionise the World[/amazon_image]