Compromise on backloading and inflation as best-of-worst (Romer NYT, Rogoff)
Prioritize central-government-law in Europe (Rogoff and me here)
Prioritize the business perspective (Johnson here, here, here)
Other well-known priorities for which I haven’t got internet references to hand:
Raise retirement ages automatically in line with life expectancy
Mandatory private retirement and medical insurance (or emulate Australia)
Tax simplification (flat tax or elimination of differentiation/deductions)
Public money on Schumpeterian technological/scientific R&D
Public money on the few natural monopoly areas of economic infrastructure
Reinstate structural adjustment (orthodox) conditionality for IMF rescues
Deregulate labour markets
First, do no harm
The lists lose differences between countries and the nuance in policy, and leave many factors out. But you get the idea. Growth is endogenous to economies, not a product of government spending. Choose policies that will be equally useful now (to restore dynamism) and later (to sustain growth), which won’t need to be reversed later, and which send clear signals about permanent commitments of government to balanced budgets and market freedom.
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The most important list is “the principles”. So here it is again:
Crisis-policy-principles:
1. Consider no policy during recession that would not be equally useful during prosperity.
2. Consider no policy whose intention is to evade or cushion the crisis.
3. Consider no policy that is not intended to be permanent.
Addendum: A useful post today by David Henderson about the regulatory burden on small business in the U.S.A. Imagine how much worse in most of Europe. Don't know why I forgot to even mention the word 'regulation' given it's such a crucial factor in recession entry and exit. Luke Johnson's business perspective was the intended substitute I hasten to add!
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Donald Trump's return to the White House will almost certainly trigger an unmanaged decoupling of the world’s most important geopolitical relationship, increasing the risk of global economic disruption and crisis. After all, Chinese leaders will be far less conciliatory than they were during his first term.
thinks Xi Jinping's government will be less accommodative of the “Tariff Man's” demands this time around.
No matter how committed Donald Trump and his oligarch cronies are to a tax cut, the laws of arithmetic cannot be repealed. If only a handful of Republican lawmakers keep their promise not to increase the US budget deficit, there is no way that the incoming administration can enact its economic agenda and keep the government running.
points out that no amount of bluster or strong-arming can overcome the laws of arithmetic.
Three crisis policy principles:
These principles have implications-in-common:
Boundary rules by living authors:
Random selections from a newish “I Agree” file:
Other well-known priorities for which I haven’t got internet references to hand:
The lists lose differences between countries and the nuance in policy, and leave many factors out. But you get the idea. Growth is endogenous to economies, not a product of government spending. Choose policies that will be equally useful now (to restore dynamism) and later (to sustain growth), which won’t need to be reversed later, and which send clear signals about permanent commitments of government to balanced budgets and market freedom.
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At a time when democracy is under threat, there is an urgent need for incisive, informed analysis of the issues and questions driving the news – just what PS has always provided. Subscribe now and save $50 on a new subscription.
Subscribe Now
The most important list is “the principles”. So here it is again:
Crisis-policy-principles:
1. Consider no policy during recession that would not be equally useful during prosperity.
2. Consider no policy whose intention is to evade or cushion the crisis.
3. Consider no policy that is not intended to be permanent.
Addendum: A useful post today by David Henderson about the regulatory burden on small business in the U.S.A. Imagine how much worse in most of Europe. Don't know why I forgot to even mention the word 'regulation' given it's such a crucial factor in recession entry and exit. Luke Johnson's business perspective was the intended substitute I hasten to add!