Friday, July 15, 2011

Economic Amnesia

This morning I found myself reading Clive James’ ramblings about British television (under the deceptive headline that he would have something substantive to say about the current troubles of Rupert Murdoch) in his column for the London Telegraph, which then led to my adding to the fray of comments of strong opinions on James, both positive and negative.  I came down on the negative side, primarily as a result of hearing James talk about his book Cultural Amnesia on Book TV.  Reading his column reminded me that the best part of James’ book was his title, which is probably why the title of the book is the only thing that remains in my memory.

Ironically, that memory was almost immediately triggered as I read a Viewpoint piece on the BBC News Website, whose title touched on one of my favorite topics:

I’ll say this for the BBC, creating a section called “Viewpoint” certainly makes for truth in advertising.  The author of this piece turned out to be Julie Meyer, Chief Executive of Ariadne Capital;  so the historically-informed reader could probably predict what her point of view would be.

I have to give her credit, though.  The dangerous magic words did not pop up until well into her article:

If I have to predict what is different this time around and who will prosper, I would say the camp that organises the most inclusive set of economics in its ecosystem - that is offering the best incentives to consumers and developers to use their platform - will win.

Now I happen to have a knee-jerk reaction to that phrase “different this time around;”  and it is a memory-based reaction.  The memory happens to be of another Book TV program, which featured Carmen Reinhart and Kenneth Rogoff talking about their book This Time Is Different: Eight Centuries of Financial Folly, published by Princeton University Press on September 11, 2009 (another little dose of irony).  The publisher’s blurb for the book provides an excellent delivery of the punch line:

While countries do weather their financial storms, Reinhart and Rogoff prove that short memories make it all too easy for crises to recur.

The argumentation leading up to that conclusion not only validates the need for economic history as a serious intellectual discipline but also serves as a model for how such historical study should be practiced.

Needless to say, Meyer has nothing to say about this book.  One wonders whether or not she ever took the time to read it.  She thus establishes herself as a perfect example of why I continue to find the phrase “cultural amnesia” so relevant and significant.  Do I really want to see large quantities of money managed by someone who cannot put the lessons of history into proper perspective before coming to conclusions?  Of course the whole idea behind Viewpoint is that everyone is entitled to an opinion.  My own opinion is that anyone hooked on this-time-its-different thinking is inviting the next economic crisis to set in before we have extricated ourselves from the current one.

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