tag:blogger.com,1999:blog-2546602206734889307.post4771833872472008548..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: A political economy argument for economic policy delegationMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-2546602206734889307.post-65534955157687444132012-10-28T04:32:27.720+00:002012-10-28T04:32:27.720+00:00Set things up to be automatic. Politicians do noth...Set things up to be automatic. Politicians do nothing better than doing nothing. ;)<br /><br />Apparently, in the US, the most effective stimulus was unemployment insurance, which was set up long before the crisis. As the austerity hysteria indicates, human psychology may tend to be pro-cyclical. However, counter-cyclical policy is not such a hard sell. Recent events have shown that we do not have enough automatic stabilizers on the down side, and time and again events have shown that we do not have enough on the upside. You do not want to have a framework that is too rigid. You want it to be something that legislators can amend. But here is the key. They will not get much flak from their constituents for letting things take their course. Let inertia be our friend. :)Minnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-68202614989796814672012-10-27T15:51:29.921+00:002012-10-27T15:51:29.921+00:00Professor Wren-Lewis,
What do you think of this f...Professor Wren-Lewis,<br /><br />What do you think of this forthcoming book? <br /><br />http://www.voxeu.org/article/how-should-macroeconomics-be-taught-undergraduates-post-crisis-era-concrete-proposalAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-24608465569293534372012-10-27T15:27:52.396+00:002012-10-27T15:27:52.396+00:00I agree with Neil Wilson for five reasons.
1) Dem...I agree with Neil Wilson for five reasons.<br /><br />1) Democratic controls are already very weak. For example, during the 2010 UK election campaign, all of the main political parties agreed that spending cuts would be required, but none of them would specify what cuts they would make. Hence, the electorate had no means of making a rational voting decision, and the current government has no mandate for any specific cuts. Further delegation of decision making to expert groups would weaken democratic controls even further.<br /><br />2) I don’t agree with the Italian decision to send experts to prison for misinforming the public about earthquakes, but there must be some accountability. How would we hold experts to account when they got things wrong?<br /><br /><br />3) When different aspects of policy are delegated to different groups, these groups blame each other when things go wrong. The public then has no way of knowing the truth. Surely, that is one of the lessons we should have learned from the current crisis with respect to financial regulation. This problem would also apply to further delegation of economic policy setting,<br /><br />4) Who would select the experts, and which experts would be selected? How would political bias be avoided in the selection process? How would political bias be avoided in subsequent economic decision making, particularly when the (perceived) bias was different to that of the elected government of the day? <br /><br />5) Given that the mainstream macroeconomics profession was blind-sighted by the current crisis, why should the public trust these same economic ‘experts’ going forward? <br /><br />If academic economists want greater control of economic decision making then they should set up an empirical economics party and stand for election. <br /><br />I have a further, related point. One of the most interesting aspects of reading economics blogs, such as this one, is how rarely they discuss the quality of education in economics. For example, according to a recent poll (mentioned on The Daily Politics), most people in the UK don’t know the difference between ‘debt’ and ‘deficit’ and, as a result, think that the current government is reducing national debt. This is an indictment of politicians, the media and the economics profession. In a democracy, one of the best ways to get effective economic decision making is to have a better educated, and better informed, electorate. Why do academic economists not speak out about this and why do they not put forward proposals for improving this situation? Perhaps we should delegate responsibility for economics education to someone else.<br />Jamienoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-54341590014860744432012-10-26T15:01:12.088+00:002012-10-26T15:01:12.088+00:00Delegation is a very bad idea, because it avoids r...Delegation is a very bad idea, because it avoids responsibility.<br /><br />The decision on the amount of money that government can be permitted to access is a matter for parliament to decide. They are the elected representatives of the people and the people elected them to take the hard decisions.<br /><br />The level of government spending should be decided by parliament - taking advice from the so called experts (who are just as subject to lobbying, bias, and bandwagon following as any other human being - hence the disaster in 2008).<br /><br />Then if they get it wrong, we the people can vote them out. Too many of the MPC are still in their posts despite a right royal screw up of immense proportions.<br /><br />I find this argument that 'policians spend too much' annoying. The people elected them and the people are entitled to elect politicians that spend too much and wreck the economy. <br /><br />That is the price you pay for representative democracy.<br /><br />The last four years of gloom has been the price we've paid for dabbling in technical autocracy.<br /><br />Experts should advice. Parliamentarians should decide. NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-20375723411417202202012-10-26T11:03:33.108+00:002012-10-26T11:03:33.108+00:00Politicians cannot be trusted to do the right thin...Politicians cannot be trusted to do the right thing in economic downturns. Politicians do not act in a timely manner or with appropriate level of response. One solution is to push as much policy as possible into automatic stabilizers. This is already done to an extent with Unemployment Insurance, Workman's Comp, Food Stamps and EITC in the US. Ideas of an "Infrastructure Bank" that would kick in to deficit spend on pre-vetted and necessary investments could have an important role as automatic stabilizer. Additional stabilizers could be added. <br /><br />The problem for the latest recession (in my view) is not enough attention paid to regulatory policy and too little use of regulation to address asset bubbles. Regulators protected the short term profits from asset bubbles rather than protecting the longer term economy.<br /><br />jonny bakhoAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-13900668093831943142012-10-26T10:47:33.915+00:002012-10-26T10:47:33.915+00:00Would there be a difference between the economists...Would there be a difference between the economists asked to staff the central bank and economists who staff the fiscal council?<br /><br />Osborne was hinting loudly that the MPC should ease policy earlier in 2011 (around August/September) than they actually did, so yes on that count. Similarly Darling has implied that he wanted to (correctly) ease monetary policy earlier in 2008.<br /><br />The point is really about accountability. When you elevate technocrats to positions of power with wide policy discretion they lose democratic accountability. Even when they fail, the MPC are able to claim absolute success, and few people have really tried to tell the difference.<br /><br />The inflation target does not excuse ineptness, since it allows the MPC such wide discretion in practice. If the MPC thought they were constrained from acting "correctly" by the inflation target they could just say that; it seems clear to me they do not think that.Britmousehttp://uneconomical.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-29210394860935651662012-10-26T10:14:06.224+00:002012-10-26T10:14:06.224+00:00Actually I said I once thought of giving some fisc...Actually I said I once thought of giving some fiscal power to central banks, but now think otherwise. Contrast the way the central bank (and the government) thinks about austerity in the Netherlands with the much more sensible CPB.<br /><br />We can all agree that central banks could be doing a lot better. But take the UK case. The MPC sees its job as hitting an inflation target set by the government. The government has the power to change that target to a NGDP target - but has not even hinted that it has the slightest interest in doing so. Do you really think if Osborne was in charge of monetary policy he would be doing any better?Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-29347554565805126312012-10-26T09:32:07.767+00:002012-10-26T09:32:07.767+00:00FDR ended the devastation of Fed policy in the 193...FDR ended the devastation of Fed policy in the 1930s by returning power over the price level to the government.<br /><br />The Bank of Japan resides over decades over stagnation due to its obsession with absolute price stability.<br /><br />The fiercely independent ECB is causing untold human misery in the Eurozone by its rigid application of price stability.<br /><br />The Bank of England doggedly targets low inflation during our own five year "little depression".<br /><br />And you want to give MORE power over demand policy to these central banker types, these unelected technocrats? As if they have not done enough harm already?<br /><br />Epic fail, sir.Britmousehttp://uneconomical.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-90949536967169164072012-10-26T09:24:01.229+00:002012-10-26T09:24:01.229+00:00I worked in the Finance sector for 44 years and ha...I worked in the Finance sector for 44 years and half of those as a manager. I believe British management is mediocre at best and one of the reasons is that they do not take the advice of those who know the situation best (their workers) they believe as managers they know best. It is the same with politicians they will chose the advice that fits their own prejudice. The idea above is a good one it will not be welcomed by politicians RJShttps://www.blogger.com/profile/07096007413193350470noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-88480118658260737202012-10-26T09:15:47.722+00:002012-10-26T09:15:47.722+00:00Unfortunately, a very good example of how this kin...Unfortunately, a very good example of how this kind of approach can fail is provided by the Nutt-sack affair. Professor Nutt was the duly appointed head of an independent agency specifically charged with evidentiary, apolitical policy exploration in a given sphere (drug policy). He carried out this mandate exceptionally well, and in the process provided an answer which was politically unacceptable; so he was promptly sacked for not lying for the Establishment.<br /><br />I see no reason to believe that economists would be protected from an equivalent kind of censure.John Q. Publicanhttp://johnqpublican.wordpress.comnoreply@blogger.com