Saturday, 31 July 2010

Niall Ferguson as ‘poseur’: the case for the prosecution from "Though Cowards Flinch"

Another interesting piece about the skills of Niall Ferguson's as an interpreter of economic history, this time from the Though Cowards Flinch website. It puts the debate between Paul Krugman and Ferguson into this context: If the Ferguson camp can make him into the leading public figure economist on both sides of the Atlantic, conservative fiscal policy will win the battle of economic policy, and the future will be grim for millions. It’s that serious.
The whole article titled Niall Ferguson as ‘poseur’: the case for the prosecution is worth the read. This particular extract follows nicely from my earlier post this week on the flexibility of the Ferguson views:
In the Los Angeles Times in October 2005, Ferguson stated:
‘Parties out of power usually tell themselves that sooner or later the incumbent will be tripped up by the economy. That was indeed the pattern throughout the 20th century. Yet this is to overlook four things.
First, economic volatility has declined markedly since the 1970s. In all the G7 industrialized countries, annual growth rates vary much less than they used to. So do inflation rates. Recessions are happening less often, and when they do, they are not too steep and not too protracted’ (my emphasis).
But here is what you said in Vanity Fair in January 2009 (yes, Vanity Fair), in an interview to publicise his new book, and in which he refer to a period very shortly after the appearance of Los Angeles Times article:
‘Well, I can say with a degree of self-satisfaction that it wasn’t luck. Two and a half years ago I decided to write this book, because I was sure that this financial crisis was going to happen, and the reason I was sure was because people kept coming up to me—whether it was investment bankers or hedge fund managers—telling me that volatility was dead that there would never be another recession. I just thought, ‘These people have completely disconnected from reality, and financial history is going to come back and bite them in the ass’ (my emphasis).
Like bollox he thought the financial crisis was going to happen! And that’s exactly why the book he refers to, ‘The Ascent of Money’, reads like one book praising to the heights the growth of financial innovation that led us to the mess we’re in, sandwiched between two hurriedly scribbled chapters telling us the story of what we already know.
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