- Paul Krugman: Economics and Elections
- 'Back to Cranks'
- 'Time US Leadership Woke Up To the New Economic Era'
- Links for 04-06-15
Posted: 06 Apr 2015 01:47 AM PDT
Why don't voters penalize politicians for poor economic decisions?:
Economics and Elections, by Paul Krugman, Commentary, NY Times: Britain's economic performance since the financial crisis struck has been startlingly bad. ... Yet as Britain prepares to go to the polls, the leaders of the coalition government that has ruled the country since 2010 are posing as the guardians of prosperity, the people who really know how to run the economy. And they are, by and large, getting away with it. ... Voters have fairly short memories, and they judge economic policy ... by recent growth. Over five years, the coalition's record looks terrible. But over the past couple of quarters it looks pretty good, and that's what matters politically. ...
This is ... a distressing result, because it says that there is little or no political reward for good policy. ... In fact, the evidence suggests that the politically smart thing might well be to impose a pointless depression on your country for much of your time in office, solely to leave room for a roaring recovery just before voters go to the polls.
Actually, that's a pretty good description of what the current British government has done, although it's not clear that it was deliberate.
The point, then, is that elections — which are supposed to hold politicians accountable — don't seem to fulfill that function very well when it comes to economic policy. But can anything be done about this weakness?
One possible answer ... might be to remove economic policy making from the political sphere and turn it over to nonpartisan elite commissions. This presumes, however, that elites know what they are doing... After all, American elites spent years in the thrall of Bowles-Simpsonism, a completely misplaced obsession over budget deficits. European elites, with their commitment to punitive austerity, have been even worse.
A better, more democratic answer would be to seek a better-informed electorate. ... So reporting on economic issues could and should be vastly better. But political scientists would surely scoff at the idea that this would make much difference...
What, then, should those of us who study economic policy and care about real-world outcomes do? The answer, surely, is that we should do our jobs: Try to get it right, and explain our answers as clearly as we can. Realistically, the political impact will usually be marginal at best. Bad things will happen to good ideas, and vice versa. So be it. Elections determine who has the power, not who has the truth.
Posted: 06 Apr 2015 01:24 AM PDT
Posted: 06 Apr 2015 01:24 AM PDT
Time US leadership woke up to new economic era: This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system. ... This failure of strategy and tactics was a long time coming, and it should lead to a comprehensive review of the US approach to global economics. ...
Largely because of resistance from the right, the US stands alone in the world in failing to approve the International Monetary Fund governance reforms that Washington itself pushed for in 2009. ...
Meanwhile, pressures from the left have led to pervasive restrictions on infrastructure projects financed through existing development banks, which consequently have receded as funders, even as many developing countries now see infrastructure finance as their principle external funding need.
With US commitments unhonoured and US-backed policies blocking the kinds of finance other countries want to provide or receive through the existing institutions, the way was clear for China to establish the Asian Infrastructure Investment Bank. There is room for argument about the tactical approach that should have been taken once the initiative was put forward. But the larger question now is one of strategy. ...
What is crucial is that the events of the past month will be seen by future historians not as the end of an era, but as a salutary wake up call.
Posted: 06 Apr 2015 12:06 AM PDT
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