Against Simplicity

Most of the countries in Europe fell off the gold standard during World War I. When the war was over, they struggled mightily to get back on. Britain, for example, borrowed hundreds of millions of dollars to buy gold. Animating this behavior was an almost religious belief in the gold standard's power to stabilize the world's economy. Maynard Keynes disagreed. He called the gold standard a "barbarous relic."

The deregulatory fervour of the late 1990's was motivated by a similar conceptual devotion. Alan Greenspan, the high priest of this apolitical orthodoxy, was aided in his work by a wide range of politicians and bureaucrats. Together, they cast aside large pieces of a regulatory regime assembled piecemeal during the previous century.

Superficially, these events have little in common - the struggle to return to the gold standard is a conservative act and leveling the regulatory edifice is the opposite. But they resemble one another in the passion of their supporters and in the simplicity of the ideas championed. Also, in both cases, strong faith in a simple idea led smart people to make questionable decisions. It makes me wonder about the appeal of simple ideas and their capacity to inspire strong feelings in their supporters.