Berkeley’s Idealism

by Kieran Healy on April 4, 2005

“Brad DeLong”: gets a mild case of “pundit’s fallacy”: as he reacts to the news that “Ben Bernanke will head the CEA”:,_i_rssPage=9d5b9ebe-c8bc-11d7-81c6-0820abe49a01.html:

bq. … the first thing that Ben should do is to make a stand on a technical-but-vital issue where the CEA should have made its stand: get the Bush administration to reduce the clawback real interest rate on its proposed private accounts from 3% plus inflation to a floating rate equal to the U.S. Treasury’s borrowing rate (or the borrowing rate minus a small margin). That would keep Bush’s private accounts from being a bad deal for the non-rich who opt for them.

He probably should. But one has to ask, how likely is it that _that’s_ going to happen? Bernanke certainly seems like a good guy, but the Bush Administration has a way of making sure that the good guys knuckle under. I see three ways this might happen. First, a pre-emptive effort to get him to publicly articulate the Apostolic Creed of the administration. (“I believe in one authority, the Executive almighty …”) Second, a straightforward smack on the wrist (or blow to the back of the head) as soon as Bernanke tries to assert a bit of intellectual independence. Third, a temptation on Bernanke’s part to make a Devil’s bargain: something like, “If I hold back for now, I’ll be in a _much_ stronger position to do the right thing when they appoint me Chairman of the Fed.” That way madness lies.



john c. halasz 04.04.05 at 10:38 pm

To be is to be perceived?


washerdreyer 04.05.05 at 12:49 am

I’d imagine students there hear jokes like the title far too often to be amused by them, but I thought it was clever. Also, I thought the paradigm of pundit’s fallacy was, “Joe Schmo should enact policy X because it will have good political results,” where the fallacy is that there’s no reason to think it will have those results, but the pundit likes the policy. This isn’t really like that, it’s just DeLong being optimistic.


Maynard Handley 04.05.05 at 2:57 pm

And so it starts. This is, of course, to test the guy out. If he’s willing to say any BS, fine, he follows Greenspan. And if he remains annoyingly sane, he gets left at the CEA, and pleasantly enough, he’s not at the fed and able to make trouble for Greenspan’s successor, who will, of course, be a bona fide Bush yes man — no pessimistic inflation fighting for him.


bob h 04.06.05 at 8:28 am

The size of the “clawback” is of course perfectly irrelevant since Bush’s “plan” is in such a hopeless condition that he is reduced to poking his head into file cabinets at the Bureau of Public Debt and proclaiming them full of worthless IOU’s.

What I wonder is how Bush makes the transition to giving up on SS without the public noticing too much. A major, discontinuous event like a national security crisis seems called for.


Elaine Supkis 04.07.05 at 9:16 am

Sort of like becoming the helmsman at the wheel of the Titanic?

“I am in control now! OH NO!”

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