The Uses and Abuses of History

Following on from my post on Barry Eichengreen's book, click here to read a piece on the uses and abuses of history by the Economist's Buttonwood column. My book Banking in Crisis uses history to show the determinants of stable banking - shareholders have skin in the game or banks are constrained to investing in safe securities. It also uses history to show how severe the 2008 financial crisis was and why it happened. History is useful. However, history can also be abused. As Eichengreen recently quipped, 'societies cherry pick their histories'. Governments can use history to justify their policies even though the historical context and circumstances are totally different.