Monetary Policy

Bill Gates, the Chauncey Gardiner of the Great Decession?

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Michael Shermer, the libertarian-leaning skeptic and critical thinker who is as formidable and illustrious as he is implacable and indefatigable, lets his hair down in a paean to Bill Gates that is so fulsome I suspect it's a joke.

Not since Thomas Jefferson dined alone…

Describing a TED-related dinner organized last week in Long Beach by John Brockman, Shermer describes how the multibillionaire Microsoft founder wowed everybody at his table. (Imagine a man so brilliant he makes John Cusack seem like a minor league penseur by comparison.)

I understand—believe me I really understand—how wealth or success or hotness can make even the most trivial expulsions seem like nuggets of pangalactic genius. But while Gates' pronouncements on the economy offer something to please enemies of the ARRA stimulus package and plenty to infuriate enemies of the bank bailout, what unites his comments is their sheer heard-it-a-million-times-before banality:

I asked Gates "Isn't it a myth that some companies are 'too big to fail'? What would have happened if the government just let AIG and the others collapse." Gates' answer: "Apocalypse." He then expanded on that, explaining that after talking to his "good friend Warren" (Buffet), he came to the conclusion that the consequences down the line of not bailing out these giant banks would have left the entire world economy in tatters.

Arianna Huffington asked Gates about Obama's various jobs programs to stimulate the economy. Gates answered: "Let me tell you about what leads companies to create more jobs: demand for their products. My friend Warren owns the world's largest carpet manufacturing company. Their business has dried up because the demand for carpets has declined dramatically due to the drop off in the construction of new homes and office buildings. If you want to create more jobs you need to create more demand for products that the jobs are created to fulfill. You can't just make up jobs without a real demand for them." I believe that was the last thing Arianna said for the evening.

This led me to ask Gates this: "If the market is so good at determining jobs and wages and prices, why not let the market determine the price of money? Why do we need the Fed?" Gates responded: "You sound like Ron Paul! We need the Fed to steer the economy away from extremes of inflation and deflation." He then schooled us with a mini-lecture on the history of economics (again, probably gleaned from Timothy Taylor's marvelous course for the Teaching Company on the economy history of the United States) to demonstrate what happens when fluctuations in the price of money (interest rates, etc) swing too wildly. I believe that was the last question I asked Gates for the evening!

It's like that acid trip where you were just centimeters away from figuring out the whole universe! As noted above, I suspect this is all just a wheeze by Shermer, and if so I apologize for stepping on his joke. But in the interest of everybody who thinks Planet Earth would have survived if Goldman Sachs had been allowed to go out of business (and for reasons I'm happy to go into at greater length, Goldman Sachs would not have gone out of business even under the worst-case scenario), I'd like to point out something to Bill Gates:

It's 2010 now. If you're still trying to justify Hank Paulson's miserable experiment in lemon socialism, you're gonna need more synonyms for "apocalypse," "chaos," "meltdown" and "armageddon." They're definitely out there: I looked them up using Microsoft Word's thesaurus function.

Ladies and gentlemen, Chauncey Gardiner: