Brad De Long on Henry Simons’ standing as a liberal
February 7, 2012
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Aften finishing my own paper on Henry Simons’ classic “Rules versus Authorities”, I read this interesting article by Brad De Long tonight. He defends Simons’ standing as a true libertarian against the view of Ronald Coase that Simons views were mixed and that he was very much an “interventionist”. But de Long argues that Simons understood the need for regulations and interventions to provide the boundaries for competition. So his sometimes radical solutions should be interpreted as necessary steps to get to the “free society”.
My interest in Simons is particulary related to his proposals for “the good financial society”. He wanted to limit short term borrowing and do away with regular banks since these institutions propagated pro cyclical instability. Therefore, he also supported the proposal by Irving Fisher for 100% reserve banks, although he saw that proposal as the first step towards a more stable financial system based only on cash, equity and long term loans.