the visible hand

it is the theory which decides what can be observed – einstein

no more false choices

Posted by ecoshift on November 3, 2008

Here’s another interesting read from the NYT. Robert Rubin and Jared Bernstein look at ways that false dichotomies have hobbled our ability to act pragmatically to maintain a healthy economy. I know there is an election going on, but if you listen carefully you can hear a new rationale emerging to guide our economic policy making. Our slavish devotion to market fundamentalism as a rationale for public policy is moderating.  Functioning markets have always included elements of regulation and, of course, free market principals have been somewhat selectively applied to the real economy (agricultural subsidies come to mind).  Yet the recent crisis makes it clear: unfettered deregulated markets do not auto-magically create growth and well-being for the economy, it’s consumers or — most importantly — for it’s citizens.

In the wake of the recent and ongoing debacle in financial markets — and in response to the growing awareness that the impact on the real economy is just beginning — the effort to articulate a moderated rationale for economic policy is underway. The next 90 days is an important time to contribute to that conversation. Be prepared to justify your recommendations with pragmatism rather than ideology.  This is a test.

Op-Ed Contributors – No More Economic False Choices –
No More Economic False Choices

Published: November 3, 2008

AS economists and policy advisers try to sort out where we are, how we got here and where we must go for both the short term and the longer term, we are surrounded by polarizing dichotomies: Fiscal recklessness versus fiscal rectitude; capital versus labor; free trade versus protectionism.

The next president, the prevailing wisdom goes, will have to choose between these polarities. But how real are these differences? Our view — and we come from pretty different analytical perspectives — is that in many important ways, they are false, and serve as more of a distraction than a map…

Fiscal rectitude versus stimulus and public investment…

Capital versus labor…

Free markets versus regulation and protection…

The objective ought to be to optimize the balance between increasing consumer protection and reducing systemic risk on the one hand, and preserving the benefits of a market-based system on the other….

False choices, grounded in ideology, have kept us from effectively addressing all these issues. The next president must do his utmost to avoid being drawn into these Potemkin battles. At this critical juncture, we face both the most significant economic upheaval since the Depression and the long-term challenge of successfully competing in the global economy. We have no choice but to move beyond such false dichotomies and toward a balanced pragmatism whose goal is broadly shared prosperity and increased economic security.

Robert E. Rubin, Treasury secretary from 1995 to 1999, is a director of Citigroup. Jared Bernstein is a senior economist at the Economic Policy Institute…

Read the full article – now is the time


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