Financial crisis narratives

Stories matter. We tell ourselves and one another stories all the time. They are the lenses through which we see the world.

So, along that line, I found this post from libertarian Arnold Kling interesting. He lays out a breakdown of the big stories – narratives – that are being told about the economic crisis.

As for me, I’m definitely in the outsider camp, but I fall somewhere in the middle on Kling’s left-right scale. I want firms to be able to fail, but I want there to be appropriate regulation so that the entire economy doesn’t crash as a result. I don’t think we should focus so much on housing policy (instead we should focus on wages), but I also want banks to carry their risks more directly.

Also, I don’t think he accurately represents what Simon Johnson and James Kwak say over at the Baseline Scenario. I don’t think they’re interested in simply resuscitating the old system, but with more regulation.

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