Thank you for the opportunity to host a forum on Dean Baker’s book, “Plunder and Blunder: The Rise and Fall of the Bubble Economy.” As I’m sure that most readers of this blog know, Dean is an economist who has long been affiliated with the Center for Economic and Policy Research in Washington.
There’s a lot a material in Dean’s book that is covered much too briefly. In some ways it is an economic history of the postwar era. For those who aren’t economists and want a left-of-center perspective in a very few pages, this is a good place to start.
Unfortunately, a price is paid for such brevity. Issues on which there is considerable debate even among economists on the left are presented as if our understanding is clear and unambiguous. Also, they are almost always treated as if the connection to particular governmental policies is direct and causal.
But I don’t wish to dwell on my problems with Dean’s book because I would rather talk about what I like about it. The fact is that he got the Big One right; that is the roots of the current economic malaise. Chapters 5 and 6 offer a very clear and accessible discussion of how we got where we are today.
To those of you unfamiliar with Dean’s work, he was a very early and vocal critic of the policies that created the housing bubble. Central among these was the extraordinary power of one man: Alan Greenspan, chairman of the Federal Reserve from 1987 to 2006.
The only person I can think of in American history who comes close to Greenspan is J. Edgar Hoover, director of the FBI from 1924 to 1972. They are alike in that their power was so great that they were routinely reappointed to their positions by presidents of both parties for an amazingly long time. (more…)