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The Perils of Paradigm Economics

As the world seeks to recover from the COVID-19 crisis, simplistic political and economic ideologies that serve as identity markers will not lead to effective policymaking. But something in human psychology makes many crave them nonetheless.

LONDON – “The era of big government is over,” then-US President Bill Clinton proclaimed in 1996. But President Joe Biden’s multi-trillion-dollar spending plans are suggesting precisely the opposite. Behind the politicians stand the policy gurus, eager to put their names on – as the fashionable phrase goes – a new “policy paradigm.”

Paradigm-peddlers have not yet settled on a single label for the post-pandemic era, but frothy ideas abound. Countries should “build back better,” but only after a “great reset.” Economic growth used to be a pretty good thing on its own; these days, it is unmentionable in polite company unless it is “inclusive, equitable, and sustainable.” (I can see why, but must all three adjectives always be strung together?)

True, the pandemic revealed plenty of social and economic weaknesses that governments should have been busy fixing a long time ago. Weak state capacities, grossly insufficient health infrastructure, threadbare social safety nets, and malfunctioning labor markets – the list is long, and it applies to most developing economies and a surprising number of rich countries, too. There is nothing like a crisis to rouse slumbering policymakers and shove aside veto players who impede change.

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