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Brookings economist: Industries need to bolster their images

Saturday, Oct. 10, 2009 | 2 a.m.

Sam Morris

Clifford Winston, a senior fellow in economic studies at the Brookings Institution, says economists disagree less than most people probably think they do, and all recognize the positive power of market forces.

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Anyone who thinks the Brookings Institution is a lefty think tank need only talk to Clifford Winston, a senior fellow in economic studies. Winston was in town this week to deliver a lecture at Brookings-partner UNLV. He argued that government intervention and regulation rarely make economic sense.

You came here to address whether the Great Recession should change our view of government intervention in the economy. Evidently it hasn’t changed your view much.

Yes, I would say, let’s not overdo it. Yes, there were certainly problems with the behavior of markets, especially in one particular area, but let’s not jump to the wrong conclusions. More transparency in mortgages is called for. But the housing industry itself has an incentive to clean itself up. Reputation matters.

What about the financial industry?

Again, Wall Street is taking a hit. This is not good for them. And they know it. They’re going to work on their reputation. There will be industry incentives to work on transparency. The rating agencies that measure the risk of financial instruments seem to have their own cozy oligopoly and were uniformly ineffective, and maybe even had conflicts and incentives not to point things out.

Also, with the investment banks, we need more transparency: How much leverage do you really have? How exposed are you?

What is the public’s biggest misconception of the economy?

The robustness. The dynamism of our economy. People don’t realize that what makes us different from any other country in the world is that we’re not afraid to change.

America wasn’t very dynamic during the Great Depression. What has changed?

We were a different country, in terms of sophistication of understanding how to respond to economic shocks. Cutting the money supply, restricting trade — those are obvious things we look back now in horror that we did in the ’30s.

What is the greatest misconception about economists?

That they disagree more than they do. There are differences, like to what extent markets work and when government intervention makes sense, but I think all of us agree that the material well-being of this country is largely attributable to market forces and their dynamic effects.

As an economist, what do you think of Las Vegas, a city based on risk and chance?

My vision of Las Vegas isn’t shaped as an economist. It’s shaped by my being a student of “The Godfather.”

Discussion: 3 comments so far…

By wizardofOz

10/10/09 at 2:58 p.m.

Suggest removal

During the Great Depression, the Banking system had the same "Greedy Lameballs" at the top as we do now. They even had the same "Semi-Lame" political oddball types as we do now. And WE were just as resourceful, THEN, as we are now.

What they didn't have, and what we have now, were COMPUTERS to sweep it all under the rug. WHAT....? SWEEP IT UNDER THE RUG....? WITH COMPUTERS....? HOW....?

Here's how:

The handy-dandy modern Federal Reserve (quick, take a look at that $5 spot in your pocket, it says right there on top, FEDERAL RESERVE NOTE, and it DOES say "...NOTE"), has, with just a few simple computerized keystrokes on their fancy high-tech computer system, "created", er, I mean, "invented", er, I mean "materialized out of thin air", trillion$ and trillion$ and trillion$ of buck$. Isn't is JUST WONDERFUL...?

We've have been SAVED by Mr. Student-of-the-Depression Ben Bernanke's fingertips on a $15 dollar computer keyboard from China. By typing skills, in turn, Mr. Student 'o the Big "D" has used this "keystroke money" to "invest", er, "buy ", er I mean "hand over to blindly use" in the USA's covering of all the "toxic assets, er, "bad debt", er I mean "political and Wall St. gamblin' losses" in the form of TARP, TALF, AIG, GM, CHRYSLER, FANNIE MAE, FREDDIE MAC, FHA, (and all the other boondogle Wall St.'s financial, and government's political, bad gamblin' bets), AD NAUSEUM.

In essence (and in other words): THE FED FLOATED AN NSF CHECK TO COVER IT ALL.

Funny, isn't that ILLEGAL even HERE IN NEVADA...?

So, while we all appreciate the Economist's giving the SUN the time of day, we all know as SUN readers now, EXACTLY how the Watch was built.

...And as we can now all see, (as it differs from the Great Depression) the Watch is "hot".
By Planetearthcalling

10/10/09 at 10:17 p.m.

Suggest removal

Massive debt plus importing 70 percent of everything we consume makes our demise all but certain.
By DTJ

10/11/09 at 1:14 a.m.

Suggest removal

Free trade with true free traders. And the rest of the world should get locked out (of our markets) until they're ready to play ball.

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