Russell Roberts is pretty good at spreading free-market economic ideas into places where they might not ordinarily be appreciated -- namely, National Public Radio and the op-ed pages of The New York Times. A professor of economics at George Mason University, he is a frequent commentator on NPR's "Morning Edition" and "All Things Considered" and co-blogs at www.CafeHayek.com with his GMU econ department boss and Trib columnist Donald Boudreaux. Roberts has also written three "economic novels," including his latest, "The Price of Everything," which tells the story of how prosperity and growth are created.
I talked to Roberts Thursday by phone from his offices at George Mason.
Q: If you were writing a novel, how would you describe the global financial crisis?
A: Shakespearean. I guess that’s more of a play than a novel. It’s a big cast. We’ve got a lot of players. And what I find fascinating about it is that most commentators, pundits, academics, officials, pick one piece of the puzzle to complain about or hold up to ridicule or blame, when in fact it is a much more complicated situation. I’m a big fan of simplification, because the world is inherently complex to grasp, and to grasp it in any way, you have to simplify. But in this case I think simplification is leading us to confusion about what the cause was and how to get out of it.
Q: Is this a financial meltdown, a total world crisis?
A: The question I’ve gotten recently is, “Does this remind you of 1929?” -- which is a reference to the stock market crash. But what this reminds me of is 1932. In 1932 we had the feeling that we had to do something. The myth of 1932 is that Herbert Hoover did nothing but fortunately FDR realized that something had to be done because otherwise we’d wallow in crisis forever. That’s a myth.
Herbert Hoover actually was quite an activist in trying to turn the economy around. He failed, which is why he wasn’t re-elected. He ran large deficits. Then he tried a tax increase to get rid of the tax deficits. He signed a large tariff. And his Federal Reserve chair under him was aggressively contracting the money supply, which most people feel is the opposite of what he should have been doing.
Q: So they made a serious recession a depression?