Tag Archives: Economic policy

“Nicht-Wissen kann schützen (Knowing Less Protects),” FuW, 2018

Finanz und Wirtschaft, November 24, 2018. PDF. Ökonomenstimme, November 26, 2018. HTML.

  • European firms dealing with Iran face U.S. “secondary sanctions.”
  • European counter measures (including a blocking statute) prove toothless.
  • Even central banks in the European Union surrender to U.S. pressure, as does SWIFT.
  • Ignorance is bliss: For a sovereign, the best protection against foreign states pressuring to monitor domestic citizens and businesses may be to know as little as possible.

Neoliberalism—Narrow and Broad

In the Boston Review, Dani Rodrik discusses neoliberalism and argues that

mainstream economics shades too easily into ideology, constraining the choices that we appear to have and providing cookie-cutter solutions.

Rodrik emphasizes that sound economics implies context specific policy recommendations.

And therein lies the central conceit, and the fatal flaw, of neoliberalism: the belief that first-order economic principles map onto a unique set of policies, approximated by a Thatcher–Reagan-style agenda.

But he also stresses that the

principles [of economics] are not entirely content free. China, and indeed all countries that managed to develop rapidly, demonstrate their utility once they are properly adapted to local context. Conversely, too many economies have been driven to ruin courtesy of political leaders who chose to violate them.

In Rodrik’s view

[e]conomists tend to be very good at making maps, but not good enough at choosing the one most suited to the task at hand.

I have argued elsewhere that the main job of economists is to create maps, not to choose among them. See also the earlier post on Ariel Rubinstein’s excellent discussion of Rodrik’s recent book.