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February 24, 2008
An exercise in interpretation
Square this statement: Democracy is reasonably good at some things: pushing scoundrels out of office, checking their worst excesses by requiring openness, and simply giving large numbers of people the feeling of having a voice. Democracy is not nearly as good at others: holding politicians accountable for their economic promises or translating the preferences of intellectuals into public policy. with this statement from the same author: we live in 2008 and our ability to monitor and control central banks is unparalleled. I’m not playing “gotcha” here: I really would like to know if there is a plausible way of interpreting these statements that makes them not inconsistent. Comments are open. Posted by Lawrence H. White at 06:09 PM in Economics
Comments
Perhaps the disconnect might rely on the Fed being unchecked, directly, by the populace. Granted the president appoints the Chairman, but this isn't exactly the same as a democratic check. I'll admit there is an apparent discontinuity, however. Financial markets are the monitor, not voters (for the most part, though of course there is voter dislike of inflation). This argument has been known for a long time, no? Posted by: Tyler Cowen at February 28, 2008 07:41 AMThanks, Tyler. That clears up who "we" are in the second quotation. And yes, with that substitution the argument is now familiar. I was thrown off because "we" suggested "we voters" in the context of "should one push the button to replace the Fed with a gold standard?". It didn't occur to me that "we" meant "we financial markets". Posted by: Lawrence H. White at February 28, 2008 10:10 AM |
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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