August 26, 2009
Second Opinion
Russ Roberts (buy his superb The Price of Everything for your favorite lefty college student who doesn't know any better than to be collectivist) is not quite as sanguine on the Bernanke pick as Professor Mankiw:
Worst of all, Bernanke, Paulson and Timothy Geithner have continued the disastrous policy of sustaining bondholders and creditors of reckless financial institutions. Capitalism is a profit-and-loss system. The profits encourage risk-taking. The losses encourage prudence. The bondholders and creditors are the single most important check on imprudence. They care only about one thing: solvency. By making them whole, their incentive to restrain recklessness has been greatly weakened. This sows the seeds of the next financial crisis.I feel sorry for Bernanke. In one sense, as the world's greatest living authority on the Great Depression, he is the best man for the job. But because he is the world's greatest living authority on the Great Depression, another catastrophic economic debacle of a similar magnitude would be particularly embarrassing were it to occur on his watch. I believe he has gone too far in the other direction.
Hat-tip: Jimmy P
Roberts -- like brother br -- fails to consider FOMC Chairwoman Maya Angelou, but he makes several good and persuasive points. I'm certainly up for a little backtracking.