John Locke’s message
Unintended market consequences
If only Alan Greenspan had read John Locke more attentively. The 17th-century philosopher, who doubled as a brilliant economist, was among the earliest exponents of the law of unintended consequences.
If only Alan Greenspan had read John Locke more attentively. The 17th-century philosopher, who doubled as a brilliant economist, was among the earliest exponents of the law of unintended consequences. It is one of the most powerful lessons economics has to teach, yet one the former US Federal Reserve chairman conspicuously failed to heed.
To understand why hedge-fund whizz-kids have spent the past few weeks tearing their hair out, and why Greenspan is largely to blame, let us take a trip back to 1692. That year, Locke wrote with passion against a parliamentary bill that proposed to cut interest rates. Its supporters wanted to help the poor; but Locke realised that government intervention would be worse than doing nothing. Paradoxically, he argued, it would hurt hardest those it sought to help — ‘widows, orphans and all those who have their estates in money’ — by curtailing the supply of credit.
More articles from: Allister Heath | this section
Post this entry to: del.icio.us | Digg | Newsvine | NowPublic | Reddit
Advertisement
A fatal crash for Porsche and Volkswagen?
Matthew LynnMatthew Lynn unravels the three-generation feud behind the crisis that has overtaken two of the mightiest names in German car-making and threatens to ruin both of them
Like rabbits caught in the headlights
Scott PaytonHumility, honesty and simplicity are what traumatised investors want from wealth managers, says Scott Payton
Trying to pick winners is a losers’ game
Charlotte MooreCharlotte Moore says wise investors ride the market via tracker funds, rather than trying to outsmart it
A new bank from a very old stable
Christopher FildesThe family firm of Weatherbys has been at the heart of British racing since the 18th century, says Christopher Fildes, and its recent venture into the troubled field of private banking looks like a safe bet
Any Other Business
Martin Vander WeyerEddie was a model public servant: that’s why Gordon was so rude to him
Health’n’safety everywhere — except in the banking system
David YoungDavid Young was the first minister for deregulation, 25 years ago. What we need now, he says, is stronger regulation of banks combined with a bonfire of red tape for business
Latest blog posts
sponsored links
BIG SAND STEEL BAND
IF YOU ARE PLANNING A CHAMPAGNE RECEPTION and looking for some light entertainment, you can now hire London's busiest steel
BOSC LEBAT, Tarn et Garonne.
BOSC LEBAT, SW France. Only 45 minutes from Toulouse Airport with daily flights from most provincial airports avoiding the horrors
ROME CENTRE
PORTA METRONIA, ROME Standing high on the top of one of the seven hills of Rome- the Coelian- this unique
Spectator Business | Apollo Magazine
Corporate | Advertising | Privacy | Terms
Spectator, 22 Old Queen Street, London, SW1H 9HP
All Articles and Content Copyright ©2008 by The Spectator | All Rights Reserved