Q&A with George Soros

The May 15, 2008, New York Review of Books had an interesting interview with financier George Soros. They covered financial regulation, currency, the housing crisis and the global economy. The interview even touches briefly on politics.

This interview is a great read to hear a highly educated opinion on all those subjects. For those who see the name “George Soros” and only think of the man who pumped tens of millions into the 2004 election to attempt and unseat Bush 43, this interview might open your eyes a bit.

He’s not Democratic ideologue. Maybe for a bit more market regulation than I prefer, but after these last few years beginning with the Enron debacle it’s hard to argue for a completely free market. And he’s certainly made a whole lot more money out of all the markets he discusses than I have — and most other people for that matter.

Here’s two samples from the interview.

… on the 2004 election:

Woodruff: A larger question on the campaign—you gave, I believe, something like $23 million in 2004 to various Democratic efforts: MoveOn.org and candidates. Far less than that so far this year—why the change?

Soros: Well, because I think that was a unique time when not having President Bush reelected would have made the situation of this country and of the world much better. I think now it’s less important. And, in any case, I don’t feel terribly comfortable being a partisan person because I look forward to being critical of the next Democratic administration.

… on his philosophy of market regulation:

Woodruff: What of your book and the philosophy that comes of it?

Soros: In human affairs, as distinguished from natural science, I argue that our understanding is imperfect. And our imperfect understanding introduces an element of uncertainty that’s not there in natural phenomena. So therefore you can’t predict human affairs in the same way as you can natural phenomena. And we have to come to terms with the implication of our own misunderstandings, that it’s very hard to make decisions when you know you may be wrong. You have to learn to recognize that we in fact may be wrong. And, even worse than that, it’s almost inevitable that all of our constructs will have some kind of a flaw in them. So when it comes to currencies, no currency system is perfect.

So you have to recognize that all of our constructions are imperfect. We have to improve them. But just because something is imperfect, the opposite is not perfect. So because of the failures of socialism, communism, we have come to believe in market fundamentalism, that markets are perfect; everything will be taken care of by markets. And markets are not perfect. And this time we have to recognize that, because we are facing a very serious economic disruption.

Now, we should not go back to a very highly regulated economy because the regulators are imperfect. They’re only human and what is worse, they are bureaucratic. So you have to find the right kind of balance between allowing the markets to do their work, while recognizing that they are imperfect. You need authorities that keep the market under scrutiny and some degree of control. That’s the message that I’m trying to get across.