The other day, I criticised a short programme slot about how the Chicago school of economics – to use that rather loose term – might have to carry some responsibility for the credit crisis. The programme was put together by the Channel 4 news programme. Anyway, someone at the show noticed my comments, and the journalist who put the programme together, Faisal Islam, was kind enough to comment at some length in an email to our editors. Here goes:
“Hello Johnathan,”
“I saw your comments on the piece on economics that aired on C4 News last month. I thank you for your understanding of the limitations of television. Even C4 News would be hard-pushed to do a piece on the history of economic thought. It was really meant to be the entree for a main course of red-blooded economic debate, but that didn’t quite come off. Anyway, clearly I would dispute the notion that it was ‘propaganda’. I think it’s a bit harsh when the main protagonist is a chicago professor who does a fairly good job of defending his position, yet also recognises that they did get some things wrong.”
“Likewise we ran almost unchallenged a piece featuring Jim Rogers’ Austrian-ish critique of Obama/ Brown’s global stimuli. so I’d like to think we are more eclectic than you seem to indicate.”
“Anyway, you’ll be interested to see the rest of the Robert Lucas interview. I put it on the blog as a balance to the Paul Krugman NY Times magazine article. It’s all here, I’m sure it might stimulate some debate on your excellent blog.”
Here is Faisal’s link.
Good for Channel 4 for its reponse to what was a fairly grumpy posting by me. I guess I should have mentioned its Jim Rogers interview. I actually did link to it a while ago on this site. Jim Rogers is great value.
Anyway, I think my original point still stands, although in the light of the reaction, I will be a bit easier on Mr Islam from now on. It is gratifying that we got a response, and that Mr Islam even understood the significance of why we are writing about this topic and get annoyed if schools of economic thought are presented in a seemingly unfair way. If parts of the MSM pick up on the idea that the credit crisis cannot be blamed on “greedy bankers” and derivatives – although these instruments can be aggravating factors – but has origins in erroneous ideas of printing money, “too big to fail” bailouts and the rest, then we might be making progress. By continuing to slog away at it, we can influence ideas that are held in the media/academy and even public affairs more broadly. And influencing a guy who presents economic and business news for a major UK news channel is a pretty big deal.
I think you might be feeling less generous to Mr Islam when you go and listen to the interview with Robert Lucas. Lucas does not come across well, Islam is flailing and confused throughout (confronting Lucas with re-heated precis of others people’s half understood ideas), and for some strange reason the interview is conducted in the corner of an outdoor balcony with construction noise – a setting that looks purposefully chosen to be not conducive to a sensible and thoughtful interview.
C4 and Faisal Islam will never consult Reisman (Link)on economics of the credit crisis.
I had always assumed that reference to Chicago Boys, ’till now, referred to Austrian-type old school (Hayek, et.al.) economists.
The problem is the new batch of “Chicago Boys” who evoke more of the Al Capone school of economics.
Billll – warning Paul Marks is about to go for some history of thought stuff (sounds of people screaming and fleeing before I can bore them to death).
There are at least three “Chicago Schools” in economics.
There is the old Chicago School (which peaked in the early 1930’s) there is the Chicago School of Becker, Stigler and Friedman (really 1950’s onwards) and there is the Rational Expectations people (Lucas and co).
All three schools actually have a lot in common – but there are differences.
As for the current crises – well people who would be called Chicago School are split. Some support the increase in credit money by the Federal Reserve and some do not. However, nearly all of the Chicago School people oppose the increase in government spending (which some of the Chicago School in the 1930’s did not oppose – I can feel people’s eyes shutting at this point, have no fear I am ending soon).
I am fond of saying that Austrian School people are united – we all oppose the increase in credit money by the Federal Reserve and the Bank of England (especially as it is going to buy both government debt and the debt of politicallly connected corporations) and we all oppose the increase in government spending.
However, (and this is where the history of thought comes back – although for the last time). I should say “those Austrian School people who look back via Ludwig Von Mises to Carl Menger and Bohm-Bawerk – I doubt that followers of Weiser and Meyer would oppose an increase in government spending (or any other form of statism). But we seem to have got rid of them somehow over the decaded (that they first supported the National Socialists and then the Soviets did not do much for the credibility of Meyer and co – although it is not a formal argument against their position in economics).
As for the interpretation of the writings of Mises on economics (I am ending, I really am) I tend to go along with the late Murry Rothbard – not because I like the man (I think he was a quite wrong on many political and historical questions), but because I believe he got the economics right.
Mr Islam.
From his letter he sound like a nice man.
No doubt his politics is of the left (he would not be working for C4 if they were not) and I doubt he understands any economics (that would rather change his politics and put him out of a job on C4 – so if he ever does come to understand economics I advise him to keep very quiet about it).
However, being a decent man is often more important than someone’s politics or their knowledge of economics.
Ouch! Did I write the last paragraph? I must be ill.
Nice dialogue. At least there is someone in Media that makes an effort.
JP,
You’re gonna be famous! Good,
“However, being a decent man is often more important than someone’s politics or their knowledge of economics.
Ouch! Did I write the last paragraph? I must be ill.”
Posted by Paul Marks
Paul, Churchill would have agreed with you. If he truly is a decent main, then he may be capable of being reasoned out of his delusional sstate. The fact that he even took the effort to write, and did write in a reasonable manner gives some basis for hope.
But it will take more than a few dinner discussions, I suspect to get the seed of doubt planted in his brain…