Raghuram Rajan. We need to take note of this man’s wisdom. Here is a short extract from one of his latest articles plus a link to a podcast of the whole article ‘Three Paths for Indebted Democracies’
“Democratic governments are not incentivised to take decisions that have short-term costs
but produce long-term gains, the typical pattern for any investment.
Indeed, in order to make such investments, democracies require either brave leadership
or an electorate that understands the costs of postponing hard choices.
Brave leadership is rare. So, too, is an informed and engaged electorate, because the
expert advice offered to voters is itself so confusing.
Economists of different persuasions find it difficult to reach a consensus about the
necessity of any policy. Consider, for example, the cacophony of arguments
about government spending: is it the only thing keeping depression at bay, or
is it moving us steadily down the road to perdition?
The debate does not lead to agreement, moderate voters do not know what to believe,
and policy choices ultimately follow the path of least resistance – until they
run into a brick wall.”
Raghuram Rajan, a former chief economist of the IMF,
is a professor of finance at the University of Chicago’s Booth School of
Business and the author of Fault Lines: How Hidden
Fractures Still Threaten the World Economy. His blog is at http://blogs.chicagobooth.edu/faultlines.