Economics

Seven More Years of Hard Times?

Sep 20, 2010 Robert J. Shiller

It is not true that if you break a mirror, you will have seven years’ bad luck. But if you allow a financial market to spin wildly until it breaks down, it really does seem - based on historical patterns - that you run the risk of years of economic malaise.

NEW HAVEN – Much of the talk emerging from the August 2010 Jackson Hole Economic Symposium, attended by many of the world’s central bankers and economists, has been about a paper presented there that gave a dire long-runassessment of the future of the world’s economies.

The paper, “After the Fall,” was written by economists Carmen Reinhart and Vincent Reinhart. Their work draws upon a recent book that Carmen Reinhart co-authored with Kenneth Rogoff, entitled This Time Is Different: Eight Centuries of Financial Folly.

According to the Reinharts’ paper, when compared to the decade that precedes financial crises like the one that started three years ago, “GDP growth and housing prices are significantly lower and unemployment higher” in the subsequent “ten-year window.” Thus, one might infer that we face another seven years or so of bad times.

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Anthony Botsman Oct 15, 2012

With genuine respect for Messrs Shiller Rogoff Friedman Mandelbaum and their peers I am waiting for some examination of the last unmeasured sector as a root cause of the current malaise. I refer to governments world wide which in my view simply consume/ absorb an inordinate proportion of GDP without adding to national output or productivity. Consider the case of the UK goverment which raises around Stg 46 billion from road and fuel taxes and re invests just 4 billion in this sector ; the inference is that government 'overheads' in this instance are as high as 90%, not a good number and one which goes unmeasured across the globe. My case is for the establishment of standardised metrics which compare the efficiency and efficacy of governments so as to produce a league table of effective, efficient governments , capital will follow well managed economies and nations and less efficient governments will have a model to follow. The current debates which focus on symptoms albeit oft repeated must shift to root causes including governments unaccountable except at election time via deeply flawed and cumbersome political process all too susceptible to 'pork barrelling' with promises which are largely undeliverable and which will do nothing for broadly based national prosperity if they are. "Can't measure can't manage" must apply to goverments if we are to lighten the grip of bureaucracy and allow the entrepreneurial class to reinvigorate economies as only they can. Tony Botsman, Figeac SW France
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