Economists generally set out to be value-neutral, but many of their theories are implicitly pro-rich, or at least not pro-poor. Pope Francis is no economist, but his teachings on poverty could improve the profession. Politicians and billionaires could also benefit.
The first is that PM Enrico Letta will push through reforms now Silvio Berlusconi has been kicked out of parliament. If not, Matteo Renzi – who is expected to become the Democrats’ leader on Sunday – should force elections and show he is as radical in deed as he is in words.
The web currency delights right-wing, anti-government economists. But private-sector money is a fantasy. Currencies need political authority; money matters are naturally the state’s responsibility. Bitcoin’s appeal has a lot to do with governments being bad monetary managers.
A few shares popular with foreign investors are surging; the rest of the market isn’t. Will the tide of hot money reverse, or lift all boats? Rising U.S. interest rates and a sagging economy suggest the former, but investors don’t want to miss a possible change of government.
Bottom-fishing for Greek banking assets gives the country a double opportunity: lenders can use it to clean up their balance sheets by selling non-performing loans; and the state can privatise its stakes in the banks. Both should grab the opportunity while it lasts.
Current policies do very little to promote job creation, except in finance. The problem is that the forces of job destruction are too powerful. To counter them, policymakers should accept that labour market inefficiency can be good, and help the tax system reward employment.
The government hasn’t done enough to root out vested interests. Meanwhile, it could collapse if the troika forces it to impose more austerity. Its best bet is to try to persuade its lenders that it’s so serious about structural change that more cuts and taxes aren’t required.
Mark Carney is wrong to say a vibrant financial sector brings substantial benefits. Finance is a cost, not a component, of prosperity – so less is usually better than more. The new Bank of England governor would be wiser to call for a more efficient sector.
With the euro near a two-year high, the unemployment rate at 12.2 pct and inflation at 0.7 pct, the case for looser monetary policy should be clear. The question is what tools to use: lower interest rates, another LTRO or the ECB’s first dose of QE. A mixture is the answer.
The latest Nobel prize rewarded researchers who have pondered whether investors can outperform the market. The game may be fun, but too much attention has been paid to the economically pointless effort to gain an elusive and basically unethical edge.