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 hasnÕt changed your view much.
Yes, I would say, letÕs not overdo it. Yes, there were certainly problems with the behavior of markets, especially in one particular area, but letÕs 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. TheyÕre 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 publicÕs biggest misconception of the economy?
The robustness. The dynamism of our economy. People donÕt realize that what makes us different from any other country in the world is that weÕre not afraid to change.
America wasnÕt 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 Õ30s.
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 isnÕt shaped as an economist. ItÕs shaped by my being a student of ÒThe Godfather.Ó
J. Patrick Coolican can be reached at 259-8814 or at patrick.coolican@lasvegassun.com.
Copyright 2009 Las Vegas Sun
