One person’s enlightened stabiliser is another’s wrong-headed sop

In my previous post I identified the vortex caused by responding to perceived grievance  with a policy sop  that is wrong headed and subsequently gives ground for further grievance and another round of misdiagnosis by the electorate.

Of course it remains a further difficulty for the chance of good outcomes to prevail that those who think they know – or are at least paid to – often disagree about whether a policy is wrongheaded or enlightened.

For example, the mainstream economics and finance establishment view the steps taken in financial regulation since the financial crisis of 2008 as an enlightened response to the risks in the system that previously were not fully apprehended. However, those with less faith in public intervention – John Cochrane being a notable example – often write about the new legislation and public trespassing in private financial markets as if this is a wrongheaded policy sop  responding to  a perceived grievance in a way that  will inevitably lead to further crises.

Relatedly  I had the honour of  a  bashing from Wolfgang Munchau  who accuses me of arrogance for pronouncing Brexit  to be a bad idea  that would not help those who voted for it.

Obviously,  and having campaigned as part of the economics Remain  effort,  I don’t agree that there is any doubt that the many  likely Brexit outcomes  will harm.  But  the piece does make, along the way, the general point that there is still debate to be had about what rational policy is and that no one expert could claim unchallengeable authority on the question.

It is somewhat ironic, however, that this point is made in the context of an article that explains something of the awful  protracted nature of the exit process and agreeing new terms of trade!

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1 Response to One person’s enlightened stabiliser is another’s wrong-headed sop

  1. am says:

    The profession is shocked by the Brexit vote partly because the forecasts about the long-term impact of Brexit will eventually be tested against reality. It was meant as a scare story only. And it will reduce the profession’s reputation among non-economists further.
    Above is Munchau’s conclusion in the last paragraph of his post. I wouldn’t go so far as he does in the last sentence. But I do think that Project Fear has now hit remain economists meaning that their projections are very much in the spotlight and they are a bit afraid of the result. However bygones should be made bygones and people should bat for Britain instead of looking like bitter losers. Francis Coppola had an excellent post on the subject and showed feeling and a touch of class.

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