Thursday, October 8, 2009

Alan Greenspan doesn't get it quite right

Alan Greenspan was chairman of the Federal Reserve Board of the United States and thus effectively presided over the largest economy in the world for very nearly two decades. However controversial his monetary policies may have been, his words, on economics at least, are nevertheless worth listening to.

In an interview he gave to the BBC last month, Greenspan predicted that the economic crisis will occur again. All economic crises, according to him, have one common source, however much they may otherwise differ. The common source is "the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue."

I would like to suggest that there is a simpler common source that is common to economic crises - GREED. And since greed is part of human behaviour, and does not seem to have altered much through the ages, it will lead to another economic crisis, and then another.

That is why I have urged those in the field of neuroeconomics to turn their attention to the neurobiology of greed.

I do not pretend for one moment that learning about the neural basis of greed will produce a cure for economic crises, far from it. But it would provide us with an interesting picture.

And I make this prediction - that, when confronted with greed and the prospect of earning huge sums of money - large parts of the brain become de-activated.

Worth a try, isn't it?

1 comment:

Perceval said...

may be the reason GREED does not fit in Greenspan's conversation is that is runs counter to the life of the pillars he has helped to safeguard.

Imagine yourself as a $10s billionnaire, would you think of more on greed or how to get the elements of your money machine working well?