DERIVATIVES ARE A FUNCTION OF A ROOMFULL OF SMART PEOPLE:

Bill Kristol: Reagan Revolution Isn't Over: The leading neoconservative talks about the GOP, Obama, the financial meltdown, and why it pays to be a contrarian in politics and the market (Maria Bartiromo , 10/28/08, Business Week)

In a recent column in The Wall Street Journal, former Reagan speechwriter Peggy Noonan attacked Sarah Palin, saying that, among other things, she is a symptom of the vulgarization of American politics. You fired back with a Times column saying most of the recent mistakes of American public policy were brought to us by highly educated and sophisticated elites. What were those mistakes, and would you include the invasion of Iraq as one of them?

No on Iraq, but the mistakes include all kinds of policies that were pushed by faculties at Harvard and Yale and that turned out not to be so good for the country. But the thing I had most in mind was the financial crisis. I mean, an awful lot of incredibly smart and well-educated people invented very fancy financial instruments that they didn't fully understand, and that put a lot of ordinary people's savings at risk. It wasn't Main Street that invented mortgage-backed securities or decided that financial firms could be leveraged at 50 to 1. The public isn't always as knowledgeable as it could be, but generally speaking, the American public has a pretty good track record of using common sense. And I would say intellectuals and elites have a less good track record because they fall in love with various fads.

It's interesting that Barack Obama keeps talking about spreading the wealth, and yet sometimes he comes across as an elitist.

He is very much a product of Harvard Law School…and that's fine. But I do think he believes that if he gets the really smart guys in a room in Washington or New York, they can sort of retool the American economy. I don't think he has that fundamental, I would call it a Hayekian belief—after Friedrich Hayek, the great Austrian economist—in the limits of central planning, the limits of very smart people's abilities to figure things out. I do think Obama is instinctively very much a government-knows-best guy.

Who has ever advocated government "spreading the wealth" besides intellectual elites?

Posted by Orrin Judd at October 28, 2008 5:06 PM