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The Silent Revolution in Economic Policy

15 days ago

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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The Fall and Rise of Public Heroism

August 21, 2019

The value of heroism is again on the rise, especially in countries where undemocratic regimes can no longer be relied on to deliver economic prosperity. The future may well lie not with politicians and diplomats, but with those men – and women – who are willing to die.

LONDON – Recently I watched The Man Who Was Too Free, a moving documentary about the Russian dissident politician Boris Nemtsov, who was gunned down in front of the Kremlin in 2015. A young, handsome rising political star in the 1990s, Nemtsov later refused to bend to Russian President Vladimir Putin’s authoritarianism and went into opposition, where he was harassed, imprisoned, and finally killed. The film left me thinking about the

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The Case for a Guaranteed Job

August 16, 2019

A government’s job is to protect its people from misfortune, in particular want of work, and one that abandons this duty of care to the market deserves to be cast out. This is the best argument for giving a government job-guarantee program a fair trial.

LONDON – “Any government,” writes the economist and hedge fund manager Warren Mosler, “can achieve full employment by offering a public service job to anyone who wants one at a fixed wage.” Versions of this idea have received powerful endorsements from prominent Democratic politicians in the US, including presidential candidate Bernie Sanders and Rep. Alexandria Ocasio-Cortez, who has linked a government job guarantee to a Green New Deal. Moreover,

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The Fall of the Economists’ Empire

July 22, 2019

The goal of economics is to replace the particular languages that obstruct the discovery of general laws with the universal language of mathematics. This is the apotheosis of a Western conceit that can no longer be sustained by Western power.

LONDON – The historian Norman Stone, who died in June, always insisted that history students learn foreign languages. Language gives access to a people’s culture, and culture to its history. Its history tells us how it sees itself and others. Knowledge of languages should thus be an essential component of a historian’s technical equipment. It is the key to understanding the past and future of international relations.
Is Politics Getting to the

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From Versailles to the Euro

June 20, 2019

The agreement that ended World War I, signed in June 1919, imposed a ruinous debt burden on Germany. A century later, Germany has assumed the role of the eurozone’s self-righteous creditor, fretting about “moral hazard” and ignoring the destabilizing, contagious effects of making debtor countries poorer.

LONDON – This month marks the centenary of the Treaty of Versailles, one of the agreements that brought World War I to a close. In a sense, the tables have turned. Whereas the treaty imposed huge reparations on Germany, today’s Germany has taken the lead in imposing a large debt obligation on its fellow eurozone member Greece.
Facebook’s Libra Must Be Stopped

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Has Austerity Been Vindicated?

May 22, 2019

A correlation between fiscal retrenchment and economic growth tells us nothing about the underlying relationship between the two. This should be borne in mind in light of new research suggesting that austerity may well be the right policy in a recession.

LONDON – Harvard University Professor Alberto Alesina has returned to the debate on budget deficits, austerity, and growth. Back in 2010, Alesina told European finance ministers that “many even sharp reductions of budget deficits have been accompanied and immediately followed by sustained growth rather than recessions even in the very short run” (my italics). Now, with fellow economists Carlo Favero and Francesco Giavazzi, Alesina has written

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The Good Life After Work

April 16, 2019

In order to manage the latest wave of automation, we must have ends that are more compelling than merely wanting more products and services. Without an intelligent definition of wellbeing, we will simply create more and more monsters that feed on our humanity.

LONDON – Almost all “robots are coming” stories follow a tried-and-true pattern. “Shop Direct puts 2,000 UK jobs at risk,” screams a typical headline. Then, quoting from authoritative reports from prestigious institutes and think tanks, the article in question usually alarms audiences with extravagant estimates of “jobs at risk” – that is, percentages of workers whose livelihoods are threatened by high-tech automation. To quote another representative example:

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No Choice and No Exit for the UK

March 18, 2019

The outcome of the simple binary choice given to UK voters in the June 2016 Brexit referendum has proved almost impossible to implement. The main obstacle is not the complications of negotiating new treaties, but rather the judgment by those in charge of Britain’s political life that the costs of an emphatic withdrawal are too great.

LONDON – The United Kingdom’s protracted attempt to leave the European Union has upended the two illusions by which the world has lived since the end of the Cold War: national sovereignty and economic integration, the twin end points of history, according to Francis Fukuyama’s celebrated 1989 essay.

Jose Luis Pelaez Inc/Getty Images

Wojtek Radwanski/AFP/Getty

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The AI Road to Serfdom?

February 21, 2019

Estimates of job losses in the near future due to automation range from 9% to 47%, and jobs themselves are becoming ever more precarious. Should we trust the conventional economic narrative according to which machines inevitably raise workers’ living standards?

LONDON – Surveys from round the world show that people want secure jobs. At the same time, they have always dreamed of a life free from toil. The “rise of the robots” has made the tension between these impulses palpable.

Wojtek Radwanski/AFP/Getty Images

Photographer is my life/Getty Images

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Estimates of job losses in the near future

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Rhymes from Central Europe

January 15, 2019

The rise – or better, the return – of “illiberal democracy” in parts of Europe today surprises us, because it refutes the established narrative of progress. But what is odd is not the reappearance of ancient faiths and prejudices, but rather the liberal belief that they could so easily be overcome.

LONDON – On December 3, 2018, the Central European University announced that from September 2019 it would relocate most of its teaching from Budapest to Vienna. Hungarian Prime Minister Viktor Orbán’s government had, in effect, closed down the CEU, founded by Orbán’s favourite bogeyman, George Soros. “Arbitrary eviction of a reputable university is a flagrant violation of academic freedom,” declared the university’s rector, Michael

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The Continuing Agony of Brexit

December 17, 2018

Those who are calling for a second referendum on the United Kingdom’s withdrawal from the European Union overlook an inconvenient truth: Leavers detest the EU more intensely than Remainers love it. So we must hope that Prime Minister Theresa May gets her amicable divorce when Parliament finally votes on it in January.

LONDON – So British Prime Minister Theresa May lives to fight another day. The Conservative Party in the House of Commons reaffirmed its confidence in her leadership by a far-from-resounding 200-117 vote. It is hard to think of another British prime minister whose leadership has been in such continuous crisis. Not so much an iron lady as a stubborn and dogged one, May has begun another round of effort to extract a

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