Liaquat Ahmed Likes Us!
From Liaquat Ahmed's review of The End of Influence:
Perhaps the best economists can achieve, therefore (in the present state of the discipline), is to be thought of as on par with psychologists. They are most useful when, like Reinhart and Rogoff or DeLong and Cohen, they contribute to our knowledge of how the world actually works. In the instances when those in the economics profession are called upon to tell us what we should do, like good clinical psychologists, they need to be modest about the cures they promise, recognizing that their advice is quite often mixed up with their own values and set of prejudices. They can be most helpful when, rather than lecturing us, they act as a sensible sounding board and give us the tools for thinking through our problems on our own...
Now have I said long enough and loud enough that I really liked Lords of Finance, his book about interwar central bankers? No, I haven't. Sigh.
Paul Krugman, however, has:
The curse of Montagu Normancom: Ben Bernanke, we’re told, is a great admirer of Liaquat Ahamed’s Lords of Finance; so am I...
What’s our gold standard?: I’ve just reread Eichengreen and Temin, The Gold Standard and the Great Depression, which does a great job of showing how the “gold mentality” — what they call mentalite, with an accent — paralyzed policymakers. (The longer-form version, with more personal color, is Liaquat Ahamad’s Lords of Finance.) What E&T show is that circa 1930 key decision-makers had spent so many years equating adherence to gold not just with prosperity, but with morality, decency, civilization itself, that they couldn’t even contemplate breaking with that orthodoxy — even in the face of total catastrophe. I think we’re more flexible now. But my sense is that the mystique of finance is playing a somewhat similar role. More on this when I’m not waiting for a delayed plan at O’Hare.
