Interview with Raghuram Rajan

Arnold Kling says,

I think that when you have bad government policy, "slowly disengage" is a recipe for perpetual crisis. When I was interviewed last night, the last question I was asked was about President Reagan. He defied those who argued for only "slowly" deregulating oil prices. The rapid deregulation worked much better.

Is this true for all cases? I think it depends. Some people says fast reform is like "ripping the band-aid off quickly, instead of slowly."

But many observers think that "shock therapy" in post-Soviet Russia is what soured them on capitalism. (And, boy, are they sour!) Sometimes, the order of reform is very important. For instance, in Iraq and Palestine, George W. Bush worked hard to get elections FAST. Palestine elected Hamas to rule Gaza and the imposition of elections in Iraq in 2005 did not stop the violence on the ground from getting worse. If they were slower on democracy and concentrated on simple security, things would have worked better.

Here's an example from America today. Consider illegal drugs. A pure and radical libertarian solution to the Drug War would be "End it tomorrow."

A more "Civil Societarian" solution would point out that we have, as a society, undermined the spontaneous order institutions (church, charity, family, stigma) that would deal with the "core" of the drug problem. They would say that, therefore, we cannot simply legalize drugs now. We should start with the least harmful drugs--that impose the fewest/smallest externalities--and simultaneously try to restore the civil society solutions/resources we previously relied on.

tl;dr: In short, I'm saying that FASTER ISN'T ALWAYS BETTER THAN SLOWER.