Now here’s an interesting development in the Greenspan
Wars. Brad DeLong, Greenspan’s apologist-in-chief, spends
884 words essentially saying "well, it’s not Greenspan’s fault he’s
a political hack". Since Paul Krugman’s chief complaint about Greenspan
is that he (Greenspan) turned out to be a political hack, it seems that DeLong
and Krugman might not be quite as far apart on this issue as we thought.
DeLong first says that Krugman is asking a lot of a man who is, after all,
a Republican, and then constructs this astonishing imaginary dialogue between
Greenspan and James Baker, in the run-up to Greenspan’s nomination as Fed chairman:
Greenspan: Paul Volcker is a very good guy, but he regards
himself as a technocrat. He is not political, like you and I are.
He does his technocratic job. Carter appointed him. Yet the fact that his
monetary policies cost Jimmy Carter reelection was simply not something that
entered Vocker’s mind…
Baker: Volcker says that he had no choice, that he had to
act in 1979-1980…
Greenspan: There is always a choice. It would be a shame
if it came around to 1991, and somebody who did not understand the political
realities like you and I do were sitting in the Fed chair. My old teacher
Arthur Burns always understood political realities…
Baker: You make some interesting points. I think I understand
you…
With friends like these, Greenspan hardly needs enemies: DeLong is essentially
admitting that Greenspan allowed party-political considerations to drive his
behavior during the Bush 43 administration. (Although he was either too principled
or too green to allow those considerations to drive his behavior during the
Bush 41 administration.)
For the record: yes, both DeLong and Krugman can reasonably be considered
to be political hacks are political partisans themselves. But as far
as I know, no one has ever proposed that either of them join the board of governors
of the Federal Reserve, let alone chair it. Economists are more than welcome
to be political hacks. Central bankers, no.