In yesterday’s speech at Federal Hall National Memorial in NYC, George W. Bush anticipated tomorrow’s meeting of the G20 leaders in Washington by offering his take on the global economic crisis: what we need is less, not more, regulation.
On the other hand, economist James Galbraith places responsibility squarely on the shoulders of Bush policies that promote market deregulation. We need more, not less, regulation.
Bush argues that history clearly demonstrates that regulated economies fail and he points out that in the current situation, more heavily regulated countries are also suffering.
But the facts may support a different account. For example, Canada, a more highly regulated country, is currently enjoying more stability in the housing and auto sectors. The only reason Canada is suffering a slow-down is its dependence on U.S. as its largest trading partner. The U.S. is dragging Canada down.
Back and forth the arguments fly. After years of carrying on such arguments, you think we’d learn by now that they have no resolution. Yet we keep flinging them at one another in ways that are utterly predictable. I see two reasons for this:
1) Economics is a science the way weather is a science. It uses statistical models to describe the real world. However, just like weather reporters, economic forecasters are wrong often enough to remind us that these are, after all, only theoretical models, in constant need of revision, and are incapable of serving as perfectly reliable tools, either for description of the way things are, or for prediction of the way things might be.
2) Because of the inherent unreliability of economic thinking, it creates enough space to support any point of view, no matter how outrageous. As a consequence, the kind of debate that arises between men like Bush and men like Galbraith becomes a debate, not about economics, but about ideology. It acquires a prescriptive force that it was never meant to support.
Bush argues the case from history. I would ask him: whose history? Isn’t all history ideology? Our primary use of history is to reinforce our own sense of identity. And when we claim to speak for another country’s history, we have to be careful of our motives. When Bush alludes to the collapse of the Soviet Union as an example of a failed experiment in market regulation, we wonder what gives him the right to tell another people’s story? And what gives him the right to take a hundred years, millions of lives, and a land mass that straddles two continents, and reduce it to a single sentence? What allows him to privilege his take on history when it’s just as plausible to argue that America, in its current crisis, is a failed experiment in deregulation?
If, tomorrow, our leaders find themselves embroiled in an argument about the word “regulation,” why not move on to another word? Why not talk about “accountability” instead?
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Fri, Nov 14, 2008
Half-filtered