Anna Schwartz (the Schwartz of Friedman & Schwartz) came out against the actions of the Fed and Treasury. Since the current chairman of the Fed praised her analysis of the Fed’s culpability for the Great Depression, you’d think that would carry some weight. Tyler Cowen disagrees, because why would a smart guy like Bernanke take such actions if they weren’t TRULY necessary? Cowen admits that there is little direct evidence, but that isn’t decisive for him. I think he is placing far too much weight on one person as a black box. His reason #3 that we just can’t afford not to DO SOMETHING sounds in the outside view like all the wrong claims for drastic action taken in the past. I quote an old paper by one of his colleagues:
But one of the main lessons of the history of totalitarianism is that moderation and inaction are underrated. Few problems turned out to be as “intolerable” as they seemed to people at the time, and many “problems” were better than the alternative. Countries that “did nothing” about poverty during the twentieth century frequently became rich through gradual economic growth. Countries that waged “total war” on poverty frequently not only choked off economic growth, but starved.
A number of MR commenters make reference to a recent drive to DO SOMETHING we couldn’t afford not to, which Tyler admits he got wrong. Hopefully Anonymous made this comparison a little while back.
I’d like to hear Tyler’s response to Kling.
VERY LATE UPDATE: Scott Sumner indicts Schwartz for “neo-Austrianism” and accuses her of promoting a view her Monetary History attacked.
October 21, 2008 at 2:25 pm
Larry Niven was once convined that we had to DO SOMETHING to prevent governments applying draconian punishments to even trivial crimes in order to harvest the organs of criminals.
Needless to say, he drastically underestimated the difficulties of organ transplants and the unwillingness of governments to publically harvest them from the criminal class.
October 21, 2008 at 4:46 pm
Niven was a novelist, right? I haven’t read his stuff. When was he saying that about organs? It reminds me of a scene from Monty Python’s Meaning of Life.
I think China harvests organs from prisoners. Iran is said to allow the selling of organs, so they don’t have the shortages and wait-lists that we do.
October 22, 2008 at 5:52 pm
“When was he saying that about organs?”
’60s, I think. Maybe early ’70s. He wrote a story with a dystopia centered around that premise, then spent a great deal of energy trying to convince people that it was a serious possibility and a real threat.
I should go dig up a copy of some of his essays and short stories I read some months ago… it was fascinating reading.
Niven reminds me a great deal of Yudkowsky… except Niven has greater self-awareness of his tendencies to be Chicken Little, and I believe him to have been completely sincere (though misguided) in his fears.
October 22, 2008 at 8:57 pm
self-awareness of his tendencies to be Chicken Little
Perhaps he thought that we underestimate the possibility of global catastrophic risk, so even if he overestimated it was ok.
October 24, 2008 at 6:41 pm
I don’t think Niven seriously thought governments were going to harvest prisoners for organs for trivial offenses anytime soon. It was more of an “if this goes on…” type extrapolation.
October 24, 2008 at 10:09 pm
Eugene Volokh has a paper on the mechanisms of a slipper slope here.