Why, many Europeans are wondering nowadays, do their politicians fail to see the abyss that yawns before them, and come together to resolve the euro crisis once and for all?But, if leaders in Europe (and America) appear short-sighted and indecisive, the fault may lie with us, the public, for not listening to the worrywarts.
CHICAGO – On a recent visit to Europe, I found economists, journalists, and business people thoroughly frustrated with their politicians. Why, they ask, can’t politicians see the abyss that yawns before them, and come together to resolve the euro crisis once and for all?
Even if there is no consensus on what a solution might be, can’t they meet and thrash out a plan that goes beyond their repeated half-measures? It is only because of the European Central Bank’s bold decision to lend long term to banks that we have seen some respite recently, or so their argument goes. Politicians, in contrast, are failing Europe by being forever behind the curve. Why do they find it so hard to lead?
One answer that can be easily dismissed is that politicians simply don’t understand the gravity of the situation. Political leaders need not be economic geniuses to understand the advice that they hear, and many are both intelligent and well-read.
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From semiconductors to electric vehicles, governments are identifying the strategic industries of the future and intervening to support them – abandoning decades of neoliberal orthodoxy in the process. Are industrial policies the key to tackling twenty-first-century economic challenges or a recipe for market distortions and lower efficiency?
From breakthroughs in behavioral economics to mounting evidence in the real world, there is good reason to think that the economic orthodoxy of the past 50 years now has one foot in the grave. The question is whether the mainstream economics profession has gotten the memo.
looks back on 50 years of neoclassical economic orthodoxy and the damage it has wrought.
For decades, US policymakers have preferred piecemeal tactical actions, while the Chinese government has consistently taken a more strategic approach. This mismatch is the reason why Huawei, to the shock of sanctions-focused American officials, was able to make a processor breakthrough in its flagship smartphone.
warns that short-termism will never be enough to offset the long-term benefits of strategic thinking.
CHICAGO – On a recent visit to Europe, I found economists, journalists, and business people thoroughly frustrated with their politicians. Why, they ask, can’t politicians see the abyss that yawns before them, and come together to resolve the euro crisis once and for all?
Even if there is no consensus on what a solution might be, can’t they meet and thrash out a plan that goes beyond their repeated half-measures? It is only because of the European Central Bank’s bold decision to lend long term to banks that we have seen some respite recently, or so their argument goes. Politicians, in contrast, are failing Europe by being forever behind the curve. Why do they find it so hard to lead?
One answer that can be easily dismissed is that politicians simply don’t understand the gravity of the situation. Political leaders need not be economic geniuses to understand the advice that they hear, and many are both intelligent and well-read.
To continue reading, register now.
Subscribe now for unlimited access to everything PS has to offer.
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