Monday, January 16, 2012
Macro policies as experiments
Martin Wolf's January 3rd FT editorial "The 2012 recovery: handle with care" makes clear point that many of the policies that have been followed over the last decade are experiments. Some have failed and some have been successful but they are experiments nevertheless. Financial deregulation was an failure. Housing based recoveries were a failure. Driving rates to near zero pre-2008 was a failure. The injection of public money was a partial failure. The cuts in budgets to stem the sovereign budget deficits are not done. The re-regulation of banks is a work in progress. Currency union is not working well.
Policy failures should be expected. The issue is whether we accept these actions as experiments that may fail and require new options.