Thursday, October 16, 2008

Does this Scare You?

Here is Jeff Frieden of Harvard with his views on the financial crisis:

Now... are you scared?

Should you be scared?

I would say "no". Why? This guy is a professor of "government" at Harvard! What qualifications does he have to pontificate on "the crisis"?

This is typical of "big events". It brings all kinds of crazies out of the woodwork who suddenly puff themselves up and sagely give their "learned opinion" on the big event of the day. Typically they echo the mainstream opinion. There is no content. They have no special expertise. But the media quickly hand over the microphone to them and let them drown out the few real experts who have something useful to say.

Who perpetrated this talking head on us? Greg Mankiw. Bush's former head of the Council of Economic Advisors. I would say that Mankiw delights in passes out this "the world is falling" meme because he is a sock puppet of the rich and powerful. They are tickled pink to see the collapse of civilization as we know it because they simply get in their yachts and sail away.

So don't get caught up in stuffed shirts pontificating. Ignore them!


Richard said...

I don't understand the severity of the Professor's observations. Clearly the enormous cost of the various bailouts here and abroad will result in taxpayers keeping less of their income as the borrowing is satisfied with increased taxes. This will leave less for consumption and growth of GDP but it would seem that there would still be a growing GDP, albeit at a relatively lower rate. I can understand that such a condition will restrict programs to assist underdeveloped countries or even the less fortunate here in the USA as well as some belt tightening, as it were, among the middle class. But it seems that the Professor's observation anticipates a world with far more draconian effects than what I have described and it is that incremental effect that I don't follow. Can anyone help me here?

RYviewpoint said...

This guy is a professor, but not an expert in the relevant field, i.e. economics and/or finance.

He makes flagrant statements that spread fear and are unsubstantiated:

(1) Governments will undertake "austerity measures". False, Keynes taught that the government must act counter-cyclically, i.e. be the buyer of last resort to keep the economy from falling into a depression.

(2) This crisis will reverse economic advances. False, progress may be slowed but we won't go backwards.

(3) This crisis will set the world and the US back a decade or so. False, nobody knows the future, but it is likely this will be a bad recession but probably won't be as bad as the recessions of the 1970s/early 1980s because governments are being more proactive.

This guy is jumping on the Chicken Little theme of "the sky is falling". He provides no new information. He is simply fear mongering. I'm ashamed that Greg Mankiw would promote this guy as having anything worth listening to!