Jan 28, 2009
The global crisis debate
Apparently, the UK government that will be hosting the next G20 summit wants to know what to do to fix the world economy. Don't know if listening to economists is a good idea or not, but that's what they decided to do. They asked Vox to moderate the debate between economists from all around the world! The global crisis debate is here!
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3 comments:
Surely listening to economists is a good thing for government. The question is do they actually hear what we are saying? We are sure that they hear what the special interest groups are saying (auto companies vs home owners, for example).
Richard Baldwin
I think that policymakers should listen to economists on matters around which there is a broad professional consensus (e.g., there is consensus on the fact that inflation is bad and monetary policy should be anti-inflationary). Tim Harford (The Undercover Economist) has an awesome story on how much money the British government made on UMTS frequencies auctions, thanks to smart auction design by a team of economists. There are also some matters where special interest politics is less relevant, monetary and (to a lesser extent), fiscal policy spring to mind. Unfortunately, trade policy is captured by special interest politics.
I am not economist and therefore apologize beforehand if this sounds stupid or obvious.
But, oh yea wise economists, is there really a "global crisis" of such proportions as is presented in the media? If I see another headline of CRISIS in red bold colours...
I mean really... Iceland at -10% of GDP is a bad case, but generally, is it that bad? Look at the OECD outlook: "Economic activity is expected to fall by an average of 0.4 percent in 2009, before rising slowly to 1.5 percent the following year". RISING as early as next year!!! And many countries expect the recovery to be quicker than in the recessions of the early 1980s and 1990s.
I just think if the media (and economists?) keep on building up this "crisis" as THE CRISIS, it will indeed become as grave/severe as they say it is. Is anyone going to put this thing in (historical, economic) perspective please?
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