Taking Hope in the Long View

If all goes well in China and India in the next generation – and if nothing goes catastrophically wrong in the North Atlantic core of the global economy – the next generation will reach a milestone. For the first time, more than half of the world's people will have enough food, shelter, clothing, and medical care that their chief concern will be avoiding boredom.

BERKELEY – In the United States, we sit in the midst of 10% unemployment. In some countries, fiscal policy is crippled by legitimate fears that more deficit spending will trigger government-debt crises. In many other countries, fiscal policy is crippled by confusion between short-term cyclical and long-term structural deficits.

Meanwhile, banking policy is crippled by populist reaction against more bailouts, and monetary policy by a strange mindset among central bankers that fears inflation even as wage growth continues to drop. As R.G. Hawtrey said of such people’s predecessors in the Great Depression, they are “crying ‘Fire! Fire!’ in Noah’s flood.”

It is time to calm down. And the best way to calm down is by taking the long view.

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