"I'M more important! Me!
and Death to America!"
Posted on 10/04/2015 2:13:49 PM PDT by SunkenCiv
When David Lipton, a promising economist, was finishing his graduate work at Harvard in the early 1980s, he faced one of those potentially life-changing choices. He had one job offer from the International Monetary Fund in Washington, the multinational institution that for 70 years has served as a lender of last resort and dispenser of orthodox economic advice to countries that get into financial trouble. There was also an offer of a teaching job from the University of Virginia. Unsure of which path to take, he turned for advice to an intellectually restless and charismatic assistant professor, a Frenchman named Olivier Blanchard.
Blanchard's terse advice: "David, if you go to the IMF, you'll be throwing your career away."
Life, however, takes unexpected turns. On Oct. 1, the same intellectually restless and charismatic Blanchard stepped down as the IMF's top economist after seven tumultuous years that included the worst financial crisis in a generation, a global recession, a three-act Greek tragedy and the near-collapse of the euro. Over his two terms, Blanchard helped wean the Fund off its obsessions with low inflation, fiscal austerity and unregulated flows of capital, resurrecting the economics of John Maynard Keynes at an institution that the great British economist had helped to create but where more recently he had fallen out of favor.
As one colleague put it, Blanchard "changed the way the Fund looked at the world and the way the world looked at the Fund." In the process, he helped the IMF pull the global economy back from the brink of another Great Depression.
"He was exactly what the world needed at a crucial moment," George Akerlof, a Nobel laureate, said of Blanchard's tenure at the IMF.
(Excerpt) Read more at washingtonpost.com ...
This should be fun, or as 2ndDivisionVet sez, "have at it".
"I'M more important! Me!
and Death to America!"
With the IMF providing much of the economic analysis, leaders of the major economies set aside their previous concern about budget deficits — one that had also become a fixation of the IMF — and committed to increase government borrowing and spending to prevent a global depression. It was exactly the advice Keynes had given to skeptical world leaders in the 1930s.
Apply that economic policy on a small scale. It cannot work. No one staves off bankruptcy by borrowing more and spending more. The only reason unworkable Keynesian policies seem to work on a large scale is because the system is so big, and not all parts of the system are subjected to Keynesian "policies." Those parts that have a rational, mathematically supportable basis end up being bled to support the Keynesian parts of the system.
The comments after that article are distressing. I'll bet not a single commenter expressing love for socialist/Keynesian "economics" runs his or her household on Keynesian policies.
Well, yes. The world needs more and more intrusion from central planners. And if for any reason that intrusion is not successful, it's because the planning wasn't central enough, or intrusive enough.
At least that's what "progressives" tell me.
This article seems to suggest that the IMF solved our economic crises. Odd? I don’t remember it that way.
He solved the IMF’s crisis, which is not the same thing. :’)
Big Goverment intrusion into free markets is the reason for the 2008 crisis. His solution? Bigger and more pervasive government intrusion. This man should be in jail, where all thieves belong. However, I a certain he will win a Nobel prize.
His forecasts - once frequent - were so consistently wrong that he stopped making them.
In fact, he would quote thus, ""The only function of economic forecasting is to make astrology look respectable." - John Kenneth Galbraith
But that was only with regard to his predictions.
I read the whole article. I learned there’s been some effort between the Keynes school and the Chicago school to find consensus, unlikely as that seems. And, that the two schools of thought have barely acknowledged each other over the years. It reminds me of politics.
The danger seems to be in static thought. Many of these economists are off the scale brilliant but admit to not being prepared for various crises because they didn’t grasp the human reactions to them until later. Nor could they forsee various governments needing to cope with their citizens panic or fear.
One thing Blanchard seemes to grasp is the need to keep an open mind, not to allow a cherished model to hold more weight than the facts as they are.
But, he sure does like Keynes.
I read somewhere (I think from a friend of his) that Keynes himself would have said his followers took it too far.
The danger seems to be in static thought.You can say that again.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
