December 11, 2005
The interesting odysseys of Stanley Fischer

Formerly: MIT economics professor, US citizen. Now: Governor of the Bank of Israel, Israeli citizen. (In between: World Bank vice-president, IMF director, Citibank vice-chairman. Connections: member of Council on Foreign Relations, Trilateral Commission, Bilderberg Group.) Bio here.

Formerly: Keynesian, monetary policy discretionist. Now: Still Keynesian, but committed to a 1-3% target for the inflation rate.

Formerly: thought larger government needed to correct rampant market imperfections. Now: advocates free-market reforms, recognizes that government intervention is captured by protectionists and leads to stagnation. He tells a 2001 interviewer about the evolution of his views here.

Money quotes:

protectionism is the obvious way for people who haven't been trained to think. So as I started, I found all that very persuasive. [] I was not fully convinced of the virtues of [a] more market-[driven] approach when I was in the World Bank in the late '80s. [But] the more I saw of what countries were doing to themselves and to their citizens, the more I moved in the direction of markets.


When you're a professor or a student, you tend to get very tied up in the special cases and all the nice theoretical possibilities that are out there. And there is no question that there are many ways, in principle, of improving on markets by being clever, by regulating this, that, and the other. When you actually work with governments and watch the consequences of these attempts at very detailed intervention -- trying to help out there, and deal with an imperfection here, and an externality there -- you begin to get much more skeptical about the ability of social scientists to predict what's going to happen, and then their inability to understand some of the political economy of what happens.

Posted by Lawrence H. White at 01:33 PM in Economics  ·  TrackBack (0)

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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