The Next Michael Moore?

George Leef

The Chronicle Review has a scurrilous piece by one Charles Ferguson, who is a documentary film director. His targets are 1) Larry Summers; 2) academic economists generally; and 3) anything that suggests the virtue of laissez-faire economic thinking.

Ferguson would have you believe that large numbers of academic economists are cashing in on ties to businesses, ties that are enhanced by their advocacy of "deregulation." He claims that laissez-faire demonically took hold of American economic policy back in the 1980s, and blames people like Summers for allowing the recent economic debacle because of their self-interest in unfettered capitalism.

I am no fan of Larry Summers, but it's a hatchet job to suggest that he made policy decisions while serving in government because he calculated that they would put money in his pockets. It's also wildly mistaken to say that Summers or any of the other economists Ferguson attacks are laissez-faire advocates. (That's on a par with saying that Herbert Hoover was a laissez-faire advocate.) They have advocated minor deregulation in some aspects, but that is light years from a return to laissez-faire such as Murray Rothbard advocated.

Moreover, Ferguson focuses on a few tiny bits of deregulation while overlooking the elephant in the room: federal policies that vigorously promoted foolish lending. Most politicians wanted to push housing and crushed those who spoke up, such as officials at the Office of Federal Housing Enterprise Oversight who were threatened with budget cuts if they persisted in questioning the policies of Fannie Mae and Freddie Mac. No amount of government regulation was going to stop the housing expansion as long as it was paying political benefits.

Ferguson dislikes the fact that some professors (very few, but indeed some) make money by selling their expertise, but the irony is that the very laissez-faire he portrays as the villain is the antidote to that. In an economy where the government has no power to dispense favors to interest groups, there would be little or no money to be made in writing briefs and peddling influence.

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