by Joseph Stiglitz
Behind the debate over remaking U.S. financial policy will be a debate over who’s to blame. It’s crucial to get the history right, writes a Nobel-laureate economist, identifying five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion.
There will come a moment when the most urgent threats posed by the credit crisis have eased and the larger task before us will be to chart a direction for the economic steps ahead. This will be a dangerous moment. Behind the debates over future policy is a debate over history—a debate over the causes of our current situation. The battle for the past will determine the battle for the present. So it’s crucial to get the history straight.
What were the critical decisions that led to the crisis? Mistakes were made at every fork in the road—we had what engineers call a “system failure,” when not a single decision but a cascade of decisions produce a tragic result. Let’s look at five key moments.
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Maybe it is too early to start considering the history of the current financial crisis. But when you read the history, it makes Peacenik worried that Obama's team may not be the right people to fix the crisis. It makes Peacenik worried that it is not able to be fixed. And look at this quote by Alan Greenspan at recent congressional hearings: "Congressman Henry Waxman pushed him, responding, “In other words, you found that your view of the world, your ideology, was not right; it was not working.” “Absolutely, precisely,” Greenspan said." If the current ideology is wrong, what ideology is going to replace it? Socialism, Libertarianism, facism, communism, something new?
