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The virtues that lead to recessions

Monday, July 20th, 2009

Dierdre McCloskey, professor at the University of Illinois-Chicago, is a Harvard-educated economist who taught at the University of Chicago before moving north to UIC. She is the author of a theological defense of capitalism, The Bourgeois Virtues: Ethics for an Age of Commerce. Self-described as “a postmodern free-market quantitative rhetorical Episcopalian feminist Aristotelian woman who was once a man” and an “iconoclastic” economist, her thoughts on the sources of the current recession appear in a compilation in the July 28, 2009, Christian Century (p. 24). Her perspective: That recessions don’t come from greed but, rather, from risk and daring undertaken by fallible humans; and without the economic growth that has resulted from such risk and daring, the world’s poor would be much less well off.

The recessions do not come from greed …. The recessions come from hope and courage, from venturing on building railways and then overbuilding them; from founding dot-com companies, and the overfounding them; from innovating in financial services and then overinnovating. We go too far, as imperfect creatures with imperfect knowledge of the future …. But in the meantime we get better railways, computers, banks. That’s why the recovery is always greater than the decline. The trend has been startlingly upward, the second most important event in human history.

The jagged rise of innovation has been disturbing, but on balance it has been immensely good for the poorest among us ….

This is a writer and thinker whom I need to get to know better.