My son is a second-year economics major at an American university. His sophomore "macro" text, like his freshman "micro" text, was written by Paul Krugman, one of those rare bi-lingual economists, meaning he can speak English as well as Economic Jargon.For this among other reasons, the New York Times hired him as a columnist. Here's his take on the current situation:http://www.nytimes.com/2008/09/26/opinion/26krugman.html?emHe agrees with Tom Gardner about the equity position, but adds much more emphasis on blocking the original power-grab by the Treasury Secretary.What I find impressive about the debate Tom's email has engendered on this and other TMF boards is the quantity of preconceived baggage most of us bring to this debate.Some of us think the titans of industry, particularly the financial industry, are all crooks, engaged in a massive, sophisticated bilking of the rest of us, the latest bailout proposal being only the most recent chapter.Some of us think the elected leaders of our country, the politicians, are all fetid hypocrites and grandstanders. We will support nothing that they do and, in fact, would prefer they just go away and leave us to our own free market devices.Some of us have deep-seated suspicions about banks and bankers. Some of us think any action by the government with relation to the economy smacks of <gasp> socialism.Some of us think the current problem was produced by financial deregulation, allowing our villains of choice, the greedy capitalists, to profit from these sophisticated, hollow financial instruments that now threaten to poison the water for all of us.Some of us think the current problem was produced by government meddling in lending standards, making our villains of choice, the venal politicians, the worst possible choice to solve the problem.Much of this is ideological baggage that doesn't help address the current problem -- a semi-frozen credit market. The rest is simple, personal preconception in an area where many Americans' level of actual knowledge is near zero. My favorite example of this latter list of grievances is the reader comment on one of the many commentaries:i think banks have too many branches -- you go all over the place and all you see is branches, branches and more branches???Here's the unfortunate truth for most of us: We don't know enough about either economics or the current situation on the ground to know whether the current "crisis" is as bad as we are being told it is. We don't have much choice but to listen to the "experts" and assign credibility based on reason, logic and the presence or absence of obvious vested interests. I think it is fair to say a great many of us have trouble assigning credibility at this point to either politicians or Wall Street insiders (including the Treasury Secretary).So, personally, I have elected to lean on the expertise of the author of my son's economics text, a disinterested (not uninterested) academic. You should feel free to choose your own. I realize Krugman will have little credibility with many TMF subscribers simply because he is a political liberal. That's fine. Choose a bi-lingual economist who is a political conservative. Just don't choose a nutjob who wants to talk about the gold standard.I don't know if there's any way to reduce the amount of ideological baggage being brought to this debate. It is oddly similar to religious debate -- full of unyielding prejudgment -- and perhaps for a reason. We have about as much actual knowledge of economics as we do of existence. Where knowledge is lacking, preconception is king.
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