Wednesday, December 17, 2014

Bureaucratic Moral Preening During a Crisis

Beware. When bureaucrats start taking moral positions about economic situations they don't approve of ... it's time to start running away faster.

My experience is that this is usually a sign that the bureaucrats 1) are worried about getting fired because things aren't going right, and 2) feel that their policy tools are not up to the task.

This tidbit was reported by on The Guardian's live blog of the ongoing Russian currency crisis on the morning of December 17th.
The Kremlin has been blaming yesterday’s currency turmoil on recklessness and manipulation; one adviser said the “bacchanalia” in the foreign exchange markets must end.
What's a bacchanalia? In ancient Rome this was a festival celebrating the god Bacchus. Bacchus was the god of wine.* A bacchanalia was basically an excuse to get drunk and licentious.

There's no tried and true rule on this, but it's been my experience with studying macroeconomic policy (for going on 35 years now) that this is a bad sign.

* Mind that you don't get all preachy about wine either. Before chlorination of water was introduced about a century ago, anyone who didn't drink wine or beer, or live in a specific geographic context ... ended up dead from fecal pollution.†

† As to the specific geographic context, there are zero historical cases where teetotalling was successful for more than a decade or two without 1) water flowing (downhill) at a high rate of speed, and 2) an absence of non-circulating water in ponds, lakes, or protected bays — basically deserts, mountains, or exposed and stormy coastlines.

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