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Please read this fine Megan McArdle post:

The passion is certainly real, and understandable.  But the attachment to Glass-Steagall is not. Of the hundreds of times I’ve seen this, in all but two or three cases it’s been absolutely clear that the person advocating this could not describe the content of Glass-Steagall (presumably the one passed in 1933), nor the multi-decade unraveling of its major provisions.  If anyone makes any of the obvious criticisms–“Really?  You want to bring back Regulation Q?”–they’re not even particularly sheepish about admitting that well, of course, they’re not exactly familiar with the whole thing, but . . .

What follows is usually a defense of the one provision they are familiar with: the enforced separation of commercial banking and investment banking activities.  But when asked how this would have helped, when it was the pure play investment banks created by Glass-Steagall that had the most trouble, I’ve never seen any of Glass-Steagall’s fans provide a convincing explanation; indeed, it’s often been quite clear that they weren’t aware of this fairly well-known fact.

So how did they fixate on Glass-Steagall?

She goes on to give  a charitable interpretation of why people adhere to such stories. You may get some mileage out of it, but I suspect you’ll get more from your thoughts. I have my own preferred interpretation. In any case, I love her recommendation (not sure my students would):

Why, then, are the ignorant not merely so much more passionate, but so much more certain? It is a great mystery.  But I think we could vastly improve the policy discussion by requiring everyone to write 100-word essays on what their preferred policy actually is, before they are allowed to talk about it.

Would this be a brand of paternalism I’d support? Imagine giving someone the power to enforce this? Yuck.

3 Responses to “What Exactly Is It That I Want Anyway?”

  1. chuck martel says:

    Come on, she’s just repeating the line from the beginning of the piece, tongue firmly tucked in cheek. However, it’s pretty difficult to dismiss her basic premise, which is that people that are ignorant of the details of certain legislation and regulation can be the most emphatic supporters of it. That’s why bills have names like the “USA Patriot Act”. What more do you need to know? It’s the Patriot Act. If you’re opposed, you’re not a patriot, no details needed, even if strip searches are involved. “Cash for Clunkers”, another great one. Nothing like alliteration for effective government policy.

    Complex business regulation, including taxes, is fertile ground for this sort of thing. The average ignoramus isn’t going to delve into the minutiae of the tax code. He can’t. The legislators that sign off on it don’t even understand it. He feels that “the government” has constructed it for the purpose of raising money for essential services and as a way to temper the rapacity of the free market. Any loosening of the bonds must be inspired by greed and lead to abuse.

  2. Harry says:

    Boiling down a good idea to 100 words is difficult, but a worthy exercise, and I would love to be there when one of Wintercow’s students chokes when challenged with the task.

    I do think she takes a cheap shot at people, like me, who might argue that the tax rates/revenue line is not straight, as many armchair economists/writers/politicians think. You have to have your head in the sand to think that. Furthermore, one does not need to have read the collected scholarly works of Laffer, Friedman, or Lord Keynes to participate in arguments about the tax code. (It would be helpful to have read all of Milton Friedman, but not necessary.)

  3. Harry says:

    As far as Regulation Q is concerned, I have never seen it explained convincingly in 100 words. A long time ago a banker told me the reason I was limited to five checks a month from a savings account was because of Regulation Q, and I asked him who dreamed that one up, some moron?

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