Quote of the Week: Adam Posen
"Some would like to turn the debunking of the fiscal event horizon claim into a cautionary tale about macroeconomic policy advice in general. They would throw up their hands, saying macroeconomic analyses either inherently depend upon too little data to have reliable results, or inevitably will be selectively picked up by ideologues and opportunistic politicians to suit their purposes.
Perhaps both: there will always be some willing economist who can play with the data to provide credible-seeming study to support any given politically influential point of view. This, however, is far too defeatist, if not craven, a conclusion to draw."
Adam Posen – President of the Peterson Institute for International Economics.
You can almost feel the intensifying and clangorous clash of two economic policy paradigms. The question is: what is the best policy response to high indebtedness by countries especially after the global financial crash of 2008? Some economists say stimulate the economy now even if it means taking on more debt, pursue growth and then deal with deficits once the economy is robust. Others say you have to deal with deficits now by imposing serious, often crippling austerity programs. The bloodless phrase for this: fiscal consolidation. Who is right and who is wrong? Unfortunately for many citizens, this is not an argument that can be settled in a science lab, perhaps by testing the theories on some unfortunate rats or monkeys. Entire countries are the laboratories for the testing of these rival policy paradigms.
"Many people come here and they think my apartment is a poor relative to my name. But you cannot be radical and have money, it’s impossible."
"As the old joke about economics examinations has it, the questions do not change – only the answers do."
Does the state of public opinion on a public policy issue create obligations for political leaders, obligations they ignore at their peril? This is an issue being debated in the United States right now about a specific public policy controversy – gun control – but the core issue applies everywhere. In the specific case of the United States, many readers will know that there was an attempt to pass legislation requiring background checks before you can buy guns online or at gun shows. The legislation was blocked in the US Senate in spite of the fact that opinion polls say again and again that 90 per cent of Americans polled support the measure. So, the question is being asked and debated: how can 90% of the people support a measure and it does not become law? Very often the question is asked with real heat. Now, we are not going to get into the Byzantine complexities of American politics. What I am interested in is bringing to your attention what professional political scientists who blog have been saying about the core, universally relevant issue: does the state of public opinion create unavoidable obligations for political leaders?
“I know that there are some technocratic advisers who tell us what the perfect model to respond to a situation is, but when we ask how we implement it, they say: ‘That is not my business.’ We need to have a policy that is right. At the same time we need to have…acceptance, political and social.”
A few weeks ago, I attended an internal seminar here at the World Bank. Topic: the governance challenges in a big, complex, not -aid -dependent, and deeply corrupt country. The team working on governance in the country wanted to present ideas to the broader community in the Bank and receive feedback. It was a good and lively discussion, and you will forgive me for not going into the details. But something happened that I wanted to bring to broader attention. After the country team had presented the work they were doing, one of those asked to lead the comments was my esteemed colleague, Nick Manning, one of the most experienced public sector governance advisers anywhere.
“We are exquisitely sensitive to environment. We are just like rats – energy misers and cognitive misers. If there is a shortcut, we will take it.”
Did you know that Brazil is now exporting political campaign strategists? According to a fascinating profile published in the