“A main source of the economic crisis that started in 2007
lies in the iatrogenics of the attempt by Überfragilista Alan
Greenspan—certainly the top economic iatrogenist of all time—to iron out the
“boom-bust cycle” which caused risks to go hide under the carpet and accumulate
there until they blew up the economy. The most depressing part of the Greenspan
story is that the fellow was a libertarian and seemingly convinced of the idea
of leaving systems to their own devices; people can fool themselves endlessly…..These
attempts to eliminate the business cycle lead to the mother of all fragilities.
Just as a little bit of fire here and there gets rid of the flammable material
in a forest, a little bit of harm here and there in an economy weeds out the
vulnerable firms early enough to allow them to “fail early” (so they can start
again) and minimize the long-term damage to the system…An ethical problem
arises when someone is put in charge. Greenspan’s actions were harmful, but
even if he knew that, it would have taken a bit of heroic courage to justify
inaction in a democracy where the incentive is to always promise a better
outcome than the other guy, regardless of the actual, delayed cost.” –Nassim
Taleb, Antifragile
