Tuesday, April 28, 2009

Simple-minded about venality

Tim Fernholz writes about Simon Johnson (via DeLong), and quotes some alarmingly naive Johnson critics:
Like another Johnson critic, Harvard's Dani Rodrik, has argued, [Martin] Wolf believes that free-market ideology, rather than the power of moneyed interests, plays a major role in the problem. While conceding that interest group politics is important, both Rodrik and Wolf cite John Maynard Keynes, who famously said that "practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist," to argue that the aggressively laissez-faire policies of the last three decades were driven not just by profit, but by an honestly acquired, if damaging, worldview.

"It really isn't true that Chicago economists and Alan Greenspan and all of these people had the ideas they had about the world because they were venal," Rodrik says. "They didn't do it because they were bought by anybody. They made these policy choices … because they had certain ideas about the way the world works."
Let us concede, arguendo, the good faith of Greenspan and the Chicago economists and their ilk.

Now, how did those people come to be in positions of power?

Because politicians and financiers genuinely respected the purity of their "ideas about how the world works," and decided to heed their advice and put them in power, irrespective of their own political and financial benefit?

Apparently the answer of Wolf and Rodrik is "yes." Good heavens.

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