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What Killed Macroeconomics?

19 days ago

Mathematical refinement aside, economics is back to where it was a century ago: the study of the allocation of given resources, plus the quantity theory of money. Macroeconomics – the theory of output as a whole, which was invented by John Maynard Keynes – has virtually disappeared, despite the revival of key tools when crises erupt.

LONDON – The problem with quantitative easing (QE), quipped then-US Federal Reserve Chair Ben Bernanke in 2014 about the Fed’s bond-buying program, “is it works in practice but it doesn’t work in theory.” One could say the same about macroeconomic policy in general, in the sense that there is no robust theory behind it. Governments routinely “stimulate” the economy to “fight”

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More than Economists

23 days ago

Robert Skidelsky, a member of the British House of Lords, is Professor Emeritus of Political Economy at Warwick University. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

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The Case Against Economic Sanctions

October 19, 2021

It is highly doubtful whether the increasing use of economic sanctions in international politics is just, expedient, or effective. And when proponents of these punitive measures claim that commerce is possible only between civilized people, they ignore the civilizing effect of commerce itself.

LONDON – Earlier this month, US National Security Adviser Jake Sullivan accused Russia of using energy as a political weapon. In response, the Kremlin claimed that US sanctions threatened to exacerbate imbalances in the European energy market. This spat neatly highlights the increasing – and increasingly problematic – use or threat of economic sanctions in international politics.
The Statelessness

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Where Has All the Money Gone?

September 15, 2021

Quantitative easing risks generating its own boom-and-bust cycles, and can thus be seen as an example of state-created financial instability. Governments must now abandon the fiction that central banks create money independently from government, and must themselves spend the money created at their behest.

LONDON – Amid all the talk of when and how to end or reverse quantitative easing (QE), one question is almost never discussed: Why have central banks’ massive doses of bond purchases in Europe and the United States since 2009 had so little effect on the general price level?
Where Has All the Money Gone?

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Fail-Safe Failures

August 18, 2021

So much of our lives nowadays are determined by the smooth functioning of technologies of which we know little. Even if the risk of a global breakdown remains remote, we will increasingly find ourselves helpless and panic-stricken in the face of even mild upsets to “normal” life.

LONDON – The other day, my wife and I were leaving our apartment building. I pressed the button which automatically opens and shuts the door. Nothing happened. We could not leave the building, except perhaps by jumping through a window. Eventually, the concierge, who happened to be outside, managed to open the door manually. He explained that there had been a power cut. The fail-safe system, which also worked electronically, had failed as

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Should Central Banks Have a Green Mandate?

July 19, 2021

Involving central banks in allocating money on the basis of “greening” compels them to make political decisions for which governments should be held accountable. The UK government’s new climate remit for the Bank of England is thus a further step in its abdication of responsibility for ensuring a healthy, sustainable economy.

ATHENS – In his March budget, the United Kingdom’s chancellor of the exchequer, Rishi Sunak, enlarged the mandate of the Bank of England to include supporting the government’s target of achieving net-zero greenhouse-gas emissions by 2050. But in a June 8 letter to the Financial Times, Mervyn King, a former BOE governor, was sharply critical of the move. King warned that “an expansion of central

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The Gaps in Bidenomics

June 17, 2021

Policymakers seeking to stimulate the economy must pay more attention than past Keynesians did to avoiding inflation and ensuring that job creation at home is not offset by a drain of production capacity abroad. If the Biden administration is wise, it will adopt two radical policy proposals that address both issues.

LONDON – US President Joe Biden has set out to emulate Franklin D. Roosevelt by spending huge amounts of money, something that FDR avoided doing until World War II. This threatens to trigger the sort of inflation that wrecked Keynesian economic policies in the 1970s.
The Gaps in Bidenomics

Alex Wong/Getty Images

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The Central Banker’s New Clothes

May 18, 2021

The fact that fiscal policy is now driving monetary policy in the United Kingdom cannot be admitted, and not only to maintain the perception of central-bank independence. More fundamentally, admitting that the Bank of England is an agent of the Treasury would destroy the intellectual edifice of current macroeconomic theory.

LONDON – Since March 2020, the Bank of England (BOE) has bought £450 billion ($639 billion) of UK government debt through its so-called Asset Purchase Facility. Virtually all of this was new debt issued by the government since the start of the COVID-19 crisis. The BOE’s purchases look like a thinly veiled attempt to use quantitative easing (QE) to finance the government’s deficit and ensure low borrowing

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Britain’s Benefit Madness

April 16, 2021

Work is the ultimate escape from poverty. But the futile sort demanded by the United Kingdom’s income-support scheme puts many of society’s weakest members on a path to nowhere, because it reflects a welfare ideology that fails to distinguish fantasy from reality.

LONDON – Mahatma Gandhi probably never said, “The greatness of a nation can be judged by how it treats its weakest member.” But that doesn’t make it any less true. And nowadays, the United Kingdom is in danger of receiving a failing grade.

Build Back the State


Is Stagflation Coming?

Z. Wei/Getty Images

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Sequencing the Post-COVID Recovery

March 16, 2021

As countries emerge from the COVID-19 pandemic, John Maynard Keynes’s emphasis on the need to implement post-crisis economic policies in the right order is highly relevant. But sustainability considerations mean that the distinction between recovery and reform is less clear cut than it seemed in the 1930s.

LONDON – John Maynard Keynes was a staunch champion of US President Franklin D. Roosevelt’s New Deal. The road to a civilized future, he wrote, went through Washington, not Moscow – a direct rejoinder to those idealists, including some of his students, who put their faith in communism.

Why the Social Market Economy Succeeds

PS OnPoint

Kurt Rohwedder/picture alliance via

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The Silent Revolution in Economic Policy

February 16, 2021

With Western economies battered by COVID-19 and central banks running out of ammunition, fiscal policy is the only game in town. This should be openly acknowledged, and fiscal rules should be rewritten to allow for more active counter-cyclical policy and a much larger government role in allocating capital.

LONDON – Something extraordinary has happened to macroeconomic policymaking. Partly owing to the impact of COVID-19, the old orthodoxy has morphed into a new one – but without anyone acknowledging the implications of the shift, or indeed that there were any problems with previous convention.

Polish Democracy in the Crosshairs

Wojtek Radwanski/AFP via Getty Images

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History at the Barricades

January 22, 2021

US President-elect Joe Biden may have promised a “return to normalcy,” but the truth is that there is no going back. The world is changing in fundamental ways, and the actions the world takes in the next few years will be critical to lay the groundwork for a sustainable, secure, and prosperous future.
For more than 25 years, Project Syndicate has been guided by a simple credo: All people deserve access to a broad range of views by the world’s foremost leaders and thinkers on the issues, events, and forces shaping their lives. At a time of unprecedented uncertainty, that mission is more important than ever – and we remain committed to fulfilling it.
But there is no doubt that we, like so many other media organizations nowadays, are under growing strain. If you are in a

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Was Brexit Inevitable?

January 18, 2021

On one level, Brexit was simply the unintended outcome of the United Kingdom’s 2016 referendum on its European Union membership. But in retrospect, there was a whiff of inevitability about the UK’s separation – not from Europe, but from a particular institutional expression of it.

LONDON – On one level, the United Kingdom’s departure from the European Union was an unintended consequence of a too-clever political ploy by former Prime Minister David Cameron. In 2015, in order to undercut the appeal of Nigel Farage, the leader of the UK Independence Party movement, and secure a Conservative majority in the upcoming general election, Cameron promised a referendum on whether Britain should stay in the EU. He expected to

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The End of Efficiency

December 17, 2020

Economists have been strangely blind to the need to trade off efficiency for longer-term sustainability, largely because their equilibrium models regard the future as simply an extension of the present. But there is no reason to believe that what is efficient today will be efficient tomorrow and always.

LONDON – Economics is the study of economizing, or using the least amount of time and effort to produce the greatest amount of satisfaction. The more we can economize on the use of scarce resources, the more “efficient” we are said to be in getting what we want. Efficiency is a prized goal because it literally cheapens the cost of living. Cheapness in obtaining the goods and services we want is thus the key to a better life.

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Policing Truth in the Trump Era

October 14, 2020

Social-media companies’ only incentive to tackle the problem of fake news is to minimize the bad press that disseminating it has generated for them. But unless and until telling the truth serves the bottom line, it is futile to expect them to change course.

LONDON – On October 6, US President Donald Trump posted a tweet claiming that the common flu sometimes kills “over 100,000” Americans in a year. “Are we going to close down our Country?” he asked. “No, we have learned to live with it, just like we are learning to live with Covid, in most populations far less lethal!!!”

Overruling the Rule of Law

PS OnPoint

Susan Walsh/Pool/AFP via Getty Images

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International Law and Political Necessity

September 21, 2020

The UK government’s proposed “breach” of its Withdrawal Agreement with the European Union is purely a negotiating ploy. Critics of Prime Minister Boris Johnson’s tactics must argue their case on pragmatic rather than legal grounds.

LONDON – Whenever the great and the good unite in approval or condemnation of something, my impulse is to break ranks. So, I find it hard to join the chorus of moral indignation at the UK government’s recent decision to “break international law” by amending its Withdrawal Agreement (WA) with the European Union.

The Roots of American Misery

PS OnPoint

Brad Barket/Getty Images

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The Crowding-Out Myth

August 24, 2020

The argument that public investment invariably "crowds out" private capital is wrong both theoretically and empirically. States have always played a leading role in allocating capital, either through direct investments, or by deliberately encouraging certain types of private investment.

LONDON – Three economic effects of COVID-19 seem to be generally agreed upon. First, the developed world is on the brink of a severe recession. Second, there will be no automatic V-shaped recovery. And third, governments will therefore need to “support” national economies for an indefinite period. But, despite this consensus, little thought has been given to what private firms’ prolonged dependence on government support will mean for

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Economics and the Culture War

July 20, 2020

Some economists may prefer to concentrate on the current economic situation while standing apart from cultural questions, or to say that the current kerfuffle over "cancel culture" will recede when the economy improves. But this is to abdicate responsibility, and to choose the easy road under cover of their discipline’s neutrality.

LONDON – I have long criticized economics for its lack of realism, and for producing “models” of human behavior that are at best caricatures, and at worst parodies of the real thing. In my recent book What’s Wrong with Economics?, I argue that, in their attempt to establish universal laws, economists willfully ignored the particularities of histories and culture.

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Hong Kong’s Moment of Truth

June 15, 2020

China has waited 23 years for “its” security law to prevail in Hong Kong and is unlikely to back down now. That will force the city’s residents to make a choice they had long hoped to avoid: either knuckle under, or get out.

LONDON – There was always something illusory about the 1984 Sino-British Joint Declaration that guaranteed the continuation of Hong Kong’s capitalist system and basic freedoms for 50 years after the city’s return to Chinese sovereignty in 1997. The Joint Declaration had been made possible by Chinese leader Deng Xiaoping’s clever “one country, two systems” formula, which enabled the United Kingdom to withdraw, with face-saving grace, from a colonial position it could no longer defend.

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The Unspoken Reason for Lockdowns

May 18, 2020

Governments cannot openly admit that the "controlled easing” of COVID-19 lockdowns in fact means controlled progress toward so-called herd immunity to the virus. Much better, then, to pursue this objective silently, under a cloud of obfuscation, and hope that a vaccine will arrive before most of the population gets infected.

LONDON – The COVID-19 pandemic is the first major global crisis in human history to be treated as a mathematical problem, with governments regarding policy as the solution to a set of differential equations. Excluding a few outliers – including, of course, US President Donald Trump – most political leaders have slavishly deferred to “the science” in tackling the virus. The clearest example of

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Will COVID-19 Put Us Right with Nature?

April 16, 2020

The COVID-19 virus, as frightening as it now seems, may ultimately fail to jolt humanity out of its profligate habits. But instead of regarding the pandemic as merely another problem requiring a technical fix, the world should see it as an opportunity to rethink humanity’s relationship with the planet.

LONDON – One of the few things not in short supply in the COVID-19 era is commentary on the pandemic. Understandably enough, the virus has generated a non-stop flow of news about its spread, instructions on how to avoid and survive it, analysis of its causes and treatment, and conjecture about its impact on work habits, mental health, the economy, geopolitics, and much else.

A Post-COVID-19

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What Would Keynes Say Now?

March 20, 2020

One hopes that governments will not have to choose between higher prices and increased taxes to finance efforts to combat the COVID-19 pandemic. But it’s not too early for policymakers to start thinking about how to pay for this particular war.

LONDON – The United Kingdom’s new Chancellor of the Exchequer, Rishi Sunak, has done what Prime Minister Boris Johnson wanted him to do following the forced resignation of Sunak’s predecessor, Sajid Javid, in February. In his March 11 budget, Sunak turned on the spending taps by unveiling a stimulus package worth £200 billion ($235 billion) over five years.
The COVID Wake-Up Call

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PS Say More: Robert Skidelsky

March 17, 2020

This week, Project Syndicate catches up with Robert Skidelsky, a member of the British House of Lords and Professor Emeritus of Political Economy at Warwick University.

Project Syndicate: Just a couple of weeks after you predicted that UK Prime Minister Boris Johnson’s ousting of his chancellor of the exchequer, Sajid Javid, heralded a shift from monetary stimulus to fiscal expansion, the US Federal Reserve slashed its benchmark interest rate in response to the COVID-19 crisis. But, as you noted, whereas “fiscal policy might in principle be up to the task of economic stabilization, there is no chance that central banks will be.” That seems even truer now, as the pandemic has made a severe recession all but

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The Monetarist Fantasy Is Over

February 17, 2020

UK Prime Minister Boris Johnson, determined to overcome Treasury resistance to his vast spending ambitions, has ousted Chancellor of the Exchequer Sajid Javid. But Johnson’s latest coup also is indicative of a global shift from monetary to fiscal policy.

LONDON – The forced resignation of the United Kingdom’s Chancellor of the Exchequer, Sajid Javid, is the latest sign that macroeconomic policy is being upended, and not only in the UK. In addition to completing the ritual burial of the austerity policies pursued by UK governments since 2010, Javid’s departure on February 13 has broader significance.
The White Swans of 2020

Mikhail Svetlov/Getty Images

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The Terrorism Paradox

January 20, 2020

As the number of deaths from terrorism in Western Europe declines, public alarm about terrorist attacks grows. But citizens should stay calm and not give governments the tools they increasingly demand to win the “battle” against terrorism, crime, or any other technically avoidable misfortune that life throws up.

LONDON – There was, all too predictably, no shortage of political profiteering in the wake of November’s London Bridge terror attack, in which Usman Khan fatally stabbed two people before being shot dead by police. In particular, the United Kingdom’s prime minister, Boris Johnson, swiftly called for longer prison sentences and an end to “automatic early release” for convicted terrorists.
The Truth

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Economic Possibilities for Ourselves

December 20, 2019

Robert Skidelsky, a member of the British House of Lords, is Professor Emeritus of Political Economy at Warwick University. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

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A Post-Election Reckoning for British Politics

December 17, 2019

Leaving the European Union on January 31, 2020, will be UK Prime Minister Boris Johnson’s repayment of the debt he owes to the many Labour supporters who "lent" his Conservatives their votes. But "getting Brexit done" won’t be enough for the Tories to hold on to their parliamentary seats.

LONDON – Speaking outside No. 10 Downing Street following his emphatic election victory, British Prime Minister Boris Johnson thanked long-time Labour supporters for having “lent” his Conservative Party their votes. It was a curious phrase, whose meaning depended entirely on context. The Tories had breached Labour’s strongholds in the Midlands and North East England on the promise of “getting Brexit done.” Leaving the European

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China’s Quest for Legitimacy

December 3, 2019

The conventional Western view is that China faces the alternatives of integrating with the West, trying to destroy it, or succumbing to domestic violence and chaos. But the Chinese scholar Lanxin Xiang instead proposes a constitutional regime based on a modernized Confucianism.

LONDON – Liberal democracy faces a legitimacy crisis, or so we are repeatedly told. People distrust government by liberal elites, and increasingly believe that the democracy on offer is a sham. This sentiment is reflected in the success of populists in Europe and the United States, and in the authoritarian tilt of governments in Turkey, Brazil, the Philippines, and elsewhere. In fact, liberal democracy is not only being challenged in its

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#MeToo and Don Giovanni

November 1, 2019

The recent sexual-harassment allegations against renowned opera singer Plácido Domingo have rekindled the debate as to whether today’s ethical standards should apply across time and space. Differences of opinion on such matters often are both generational and geographical.

LONDON – In September, New York’s Metropolitan Opera announced that Plácido Domingo had withdrawn from all future engagements there, following allegations of sexual harassment made by several women, including a soprano who said he grabbed her bare breast. Domingo’s burnished tenor and acting ability have thrilled generations of opera lovers. At the age of 78, and after 51 consecutive years of performing at the Met, it was probably time for him to

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The Economic Consequences of Automation

September 18, 2019

Economic theory does not provide a clear answer regarding the overall impact of technological progress on jobs. And even if automation has traditionally been beneficial in the long run, policymakers should never ignore its disruptive short-term effects on workers.

LONDON – While Brexit captures the headlines in the United Kingdom and elsewhere, the silent march of automation continues. Most economists view this trend favorably: technology, they say, may destroy jobs in the short run, but it creates new and better jobs in the longer term.
The Meritocracy Muddle

PS OnPoint


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