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Ten Minutes with Niall Ferguson

Uncategorized | October 23, 2011

Ten minutes with Niall Ferguson….

 

O: Many of your colleagues in economics–Larry Summers comes to mind–have been very influential in Washington policy making circles, and I was struggling to think of a historian who has played such a major role since perhaps Arthur Schlesinger in the Kennedy White House.  Do you see a role for the history profession in policy making, or should historians stick to the Ivory Tower?

NF: The great British philosopher of history R.G. Collingwood said we should study history in order to understand the present and to have some guide to the various futures that we have to choose between.  I think one of the great defects of policymaking in the Western world over the last thirty years has been a lack of historical knowledge and an excess of reliance on social science and the like.  I think it would be very welcome if historians played a bigger role. If you look at national security advisers and secretaries of state since Kissinger, the lack of historical knowledge is the striking thing. I think this is a generally important point not only from the vantage point of foreign policy but also economic policy.  There was an excessive reliance on models and complete neglect of economic history in the run-up to the financial crisis.  I wish I could say there was evidence of a change in Washington, but it’s slow to come.

Occupy Wall Street has gotten a ton of media attention, but I think it’s unclear to many of us how historically significant the movement might be, or if they might actually achieve substantive changes.  Is it possible to know right now if this is a passing moment or might become a counterpart to the Tea Party, perhaps brining in a new progressive movement?

My view is that this sort of thing is strikingly ill focused.  Clearly there is a justifiable concern about widening inequality in the United States and clearly there is a legitimate feeling that not enough is being done to punish malefactors in Wall Street, so I’m not unsympathetic on those grounds, but it doesn’t really get us far to claim to speak for 99% of the income distribution. Indeed, my sense is that if anything, they’re likely to bring left-liberal positions into disrepute because they can’t resist behaving like it’s 1968, and I do detect a certain retro quality to this.  The Tea Party is the only movement that is serious about reducing debt and entitlements.  If those things aren’t reduced, your generation is going to be paying vastly higher taxes during your working lives. If you think rationally about the economic situation of young people, they should really all be in the Tea Party, and not occupying Wall Street.  Most of my students would rather be occupied by Wall Street.

What about the argument that the government should be serving us better?  The provision of social services is antithetical to the Tea Party position.

To talk about increasing the provision of benefits and services is fiscally crazy, even if you approved of the idea of increased public provisions of goods.  I sense in that a kind of inability on the part of Occupy Wall Street to understand the problems this country faces, which is a problem not just of financial regulation but a problem of financial, and particularly fiscal, sustainability.

Austerity, then, must be our future?

Whether you like it or not is the answer because there’s clearly no way of continuing on the present path.  I’ve never argued that we should inflict sweeping budget cuts in the middle of a recession, but clearly over a ten year time frame there has to be something done to stabilize the rapidly growing debt.  The burden of interest payments just keeps rising because the debt keeps growing by a trillion dollars a year.  Most people in the country, I think, are in some measure of denial about that.

Turning to your role as a teacher, as a mentor of students, have the limited opportunities of this economic climate affected the wisdom  you’re imparting to your students?

My view has long been that too many really bright people were simply being sucked into the investment banks without necessarily thinking hard about what they really wanted to do with their lives.  It was becoming a default setting to certain students.  In some ways the recession—the financial crisis—is rather welcomes because it has reduced that flow and has made it less of a default setting. Indeed, I have students coming to me saying I failed to get a job, and I say to them well that’s good because now you can concentrate on doing some academic work, which is actually the reason you were here.  This is the silver lining the cloud has.