The FP Survey: Follow the Money
What's wrong with the world economy? We asked top experts to fill in the blanks -- and they had a lot to tell us.
THE BIGGEST THREAT TO THE GLOBAL ECONOMY IS …
THE BIGGEST THREAT TO THE GLOBAL ECONOMY IS …
Politics. —Daron Acemoglu • Economic stagnation in wealthy countries. —Tyler Cowen • In the short run, a trifecta: the euro, the gridlock in the U.S. Congress, and the slowdown in China. —Daniel Bradlow • Anti-market bias. —Bryan Caplan • Procrastination. —Peter Diamond • Short-term thinking. —Esther Dyson • A euro meltdown. —Dean Baker • Ideology- and myopia-driven austerity as a response to recession. —Vincent Crawford • Tax-cut fanatics. —Jeffrey Frankel • The bond market. —Andy Sumner • Overconfidence in technocrats. —Arnold Kling
MY OUT-OF-THE-BOX SUGGESTION TO REVIVE THE GLOBAL ECONOMY IS …
Have the Fed guarantee the debt of Greece, Italy, and other debt-troubled countries in the eurozone. —Dean Baker • A global fund for small cash transfers to the world’s poorest billion people. —Andy Sumner • Wipe out debts. —Daron Acemoglu • Require candidates for national office to pass ninth-grade tests on arithmetic, history, and geography. —Jeffrey Frankel • Double down on science. —Tyler Cowen • A government lottery where winners have mortgages, student loans, or other debt paid off. —Mark Thoma • We don’t need “out-of-the-box” solutions; we need “head-out-of-the-sand” ones. —Adam Hersh • Pray. —David Smick
BARACK OBAMA’S BIGGEST ECONOMIC MISTAKE HAS BEEN …
Letting Larry Summers go. —Gary Hufbauer • Not dealing with the housing market by restructuring mortgage debt. —Daron Acemoglu • Not reorganizing the big banks. —David Smick • Trying too hard to find common ground with an opposition that won’t compromise on any terms. —Vincent Crawford • His entire fiscal policy. —Tyler Cowen • Bringing Romneycare to the entire country. —Bryan Caplan • Appointing Timothy Geithner as Treasury secretary. —Daniel Bradlow • Assuming office in January 2009. —Jeffrey Frankel
OCCUPY WALL STREET IS …
A collective howl of pain and rage against the grotesquely wealthy and the failures of governance in rich countries. —Daniel Bradlow • A hopeful sign that we are ready for out-of-the-box solutions. —Esther Dyson • A misdirected tantrum. —Philip Levy • Driven by real economic angst, but plagued by confusion. —David Beckworth • Mostly on target and surprisingly effective. —Vincent Crawford • A harmless pastime for unemployed youth. —Gary Hufbauer • Reasonable complaints about crony capitalism plus self-righteous economic illiteracy. —Bryan Caplan • An incoherent jumble, a policy Tower of Babel. —Irwin Stelzer • A necessary convulsion. —Abhijit Banerjee • A fad. —Andy Sumner
BY ELECTION DAY 2012, THE U.S. ECONOMY WILL BE …
Doing better, at least in a short-run sense. —Abhijit Banerjee • Improving, but leaving many people behind. —Arnold Kling • Limping along, with unemployment declining but still around 8 percent. —Daron Acemoglu • Only slightly healthier than now. —Valerie Ramey • As weak as it is today. —Dean Baker • Stronger — and more unequal — than most voters realize. —Adam Hersh • At best no better than it is now and at worst in another recession following the collapse of the eurozone. —David Beckworth • Blamed for the outcome. —Jeffrey Frankel
ECONOMISTS SHOULD BE PAYING MORE ATTENTION TO …
How political barriers against better policies can be overcome. —Daron Acemoglu • How people actually behave rather than how they are idealized to behave. —Abhijit Banerjee • The shortcomings of the central banks. —David Beckworth • The massive benefits of open borders. —Bryan Caplan • Corporate governance. —Peter Diamond • The fact that macroeconomic theory went up a blind alley some 20 years ago. —Jeffrey Frankel • The importance of women for strong economies. —Adam Hersh • Trade in medical services. —Dean Baker • Creeping protectionism across the global economy. —Gary Hufbauer • The possibility that America and Europe could suffer a prolonged, Japanese-style post-bubble stagnation. —Philippe Legrain • The impediments to job creation for young people. —Valerie Ramey • China’s vulnerable shadow financial system. —David Smick • Reality. —James D. Hamilton
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