Paul Krugman | Alan Greenspan, Doing His Best to Make Things Worse

Steven Pearlstein, a columnist at The Washington Post, read Alan Greenspan’s new book, and discovered that the former Federal Reserve chairman believes that he bears no responsibility for all the bad things that happened on his watch – and that the solution to a financial crisis is, you guessed it, less government.

What Mr. Pearlstein didn’t mention in a recent column, but I think is important, is Mr. Greenspan’s amazing track record since leaving office – a record of being wrong about everything, and learning nothing therefrom. In particular, it has been more than three years since Mr. Greenspan warned that we were going to become Greece any day now, and declared the failure of inflation and soaring rates to have arrived already “regrettable.”

The thing is, Mr. Greenspan isn’t just being a bad economist, he’s being a bad person, refusing to accept responsibility for his errors in and out of office. And he’s still out there, doing his best to make the world a worse place.

Do You Know Who I Am?

One of the odd things about the debates we’ve been having over economic policy since the financial crisis is how many people on one side of these debates – the side I’m not on, as it happens – believe that they can win arguments by pulling rank. Critics are dismissed as just bloggers, which supposedly disqualifies them from pointing out errors and untrue statements; ideas are dismissed (wrongly, as it happens) as not part of what anyone has been teaching graduate students, as if this removes any possibility that the ideas might nonetheless be right.

Do I pull rank the same way? I’m sure that if you go over my writings with a fine-toothed comb, you’ll find some examples. But I try not to; I try to make arguments on the merits, and if I dismiss someone’s contribution, I try to do it based on what he says, not who he is.

What a lot of people – academics, I’m sorry to say, in particular – don’t seem to understand are the limits to what credentials get you, in principle and in practice. Basically, having a fancy named chair and maybe some prizes entitles you to a hearing – no more. It’s a great buzzing hive of commentary out there, so nobody can read everything that someone says. But if a famous intellectual makes a pronouncement, he both should and does get a listen much more easily than someone without the pre-existing reputation.

But academic credentials are neither a necessary nor a sufficient condition for having your ideas taken seriously. If a famous professor repeatedly says stupid things, then tries to claim he never said them, there’s no rule against calling him a mendacious idiot – and there are no special qualifications required to make that pronouncement other than doing your own homework.

Conversely, if someone without formal credentials consistently makes trenchant, insightful observations, he or she has earned the right to be taken seriously, regardless of background. One of the great things about the Internet is that it has made it possible for a number of people meeting that second condition to gain an audience. I don’t care whether they’re Ph.D.’s, professors, or just guys running blogs – it’s the work that matters.

Meanwhile, we knew long ago that many great and famous intellectuals are, in fact, fools. Some of them may always have been fools; some of them are hedgehogs, who know a lot about a narrow area but are ignorant elsewhere. And some of them have, for whatever reason, lost it – I can think offhand of several economists of whom it is common to say, “I can’t believe that guy wrote those papers.”

And let me add that believing that you can pull rank in this wide-open modern age is itself a demonstration of incompetence. Who exactly do you think cares? Not the readers, that’s for sure. True, it’s now a rough world for people who do sloppy work, and who are counting on their credentials to shield them from criticism. Somehow, though, I can’t seem to muster any sympathy.