The supervisors who gathered last weekend in Wyoming were seen as saviours, or as possible destroyers, of a fragile financial system. That elevated status is an undeserved prize. As Keynes noted, economists are more like dentists. But central bankers lack the dentist’s toolkit.
The world’s central bankers are discussing “labour market dynamics” at this week’s annual Jackson Hole conference. A good place to start is with the most widely-used monitor, the unemployment rate. It is well past its sell-by date. A “bad job index” would serve a better purpose.
The majority of voters in Russia, Turkey and Hungary have all endorsed governments run by charismatic and bullying strongmen. China seems to be getting more authoritarian too. The economic problems with these arrangements are large. But that doesn’t mean the systems are doomed.
Previous governments have been fixated on capital markets. But it’s unreformed employment laws that have stunted productivity gains. Now Narendra Modi is cutting the red tape that discourages hiring. If he succeeds, the economy’s potential growth will be higher.
The summer parlor game from Wall Street to K Street to Meadow Lane in the Hamptons is guessing where the former U.S. House majority leader will work after decamping from Congress. It’s easy to imagine how a recruiter might try to put his experience to good – and lucrative – use.
Reducing GDP growth forecasts has become an annual ritual. The main problem isn’t bad monetary and fiscal policy, as the secular stagnation theory claims. Blame the stifling effect of excessive debt and asymmetric modern labour practices. The best cure is to focus on jobs.
Ideology and intellectual laziness have led politicians and regulators to think of banks solely as profit-maximising institutions which only pretend to care about the future. History, solid analysis and the thriving of state investment banks tell quite a different story.
That almost no one knows ol’ so-and-so is good for shareholders. How he handles the mega-insurer’s likely designation as a systemic threat could change that. A Jamie Dimon-style fight would be foolish. Better to speak softly and keep the name Steve Kandarian out of headlines.
The euro zone is suffering from stagnation, “lowflation,” unemployment and debt. It’s not well placed to weather shocks, such as a further deterioration of relations with Russia. A pact to boost inflation and ramp up structural reform is the best way to insure against disaster.
Has the global growth rate slowed? The debate is hot and not very illuminating. Reported numbers prove nothing and historical analysis is often confused. As more material desires are met, there is less room for big leaps forward. But don’t write off the human imagination.