Monday, May 3, 2010

The demi-god Greenspan

From HuffPost:
Greenspan Wanted Housing-Bubble Dissent Kept Secret
Ryan Grim
3 May 2010
As top Federal Reserve officials debated whether there was a housing bubble and what to do about it, then-Chairman Alan Greenspan argued that the dissent should be kept secret so that the Fed wouldn't lose control of the debate to people less well-informed than themselves.

"We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand," Greenspan said, according to the transcripts of a March 2004 meeting.

[emphasis added]
Can you say hubris???... and DANGEROUS hubris to boot: yes - let's restrict debate to the folks in this room - it woud be a bad thing to let any other ideas or opinions influence our unquestioning and unquestioned superhuman understanding.

Treatises have been written about this phenomenon - it's called GroupThink.
It is ALWAYS dangerous, and frequently disastrous (see, e.g., Bay of Pigs).

Note to policy-makers: if your boss EVER suggests stifling debate because only YOU are sufficiently well-informed to hold a valid opinion... well, that's when it's time to run to your nearest friendly reporter - even if you risk 'compromising' national security.
[I put 'compromising' in quotes because in reality it's the GroupThink bunker mentality that is the real threat to national security, NOT open debate!]

Snide aside: I don't think the demigod Greenspan knows what the term "fully understand" really means!

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