Good Economics and Bad

For John, BLUF:  The world has pulled a billion people out of poverty in the last 25 years.  Do we want to do as well in the next 25 years?  If so, don't mess with capitalism.  Nothing to see here; just move along.

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William Watson: New numbers suggest that maybe neoliberalism worked, after all

Here is the sub-headline:

People seem eager to throw off the taxing, borrowing and spending constraints imposed by economics’ old-time religion. Maybe we need to slow down on that

From the Financial Post (Canada), Mr William Watson, 5 November 2019.

Here is the lede plus two:

The early 1990s were halcyon days for us neoliberals.  The Reagan and Thatcher revolutions were being consolidated. Soviet communism was collapsing.  And an informal “Washington consensus,” according to which the way for poor countries to grow was to get right with their balance sheets, control their money supplies, open their markets to trade and capital flows, privatize, de-regulate and so on, took over the (Washington-headquartered) IMF and World Bank.  In short, they should follow the policies that conservative parties in the West had been recommending for their own countries and which, by the way — in case any might be looking around for post-election suggestions — they should still be following today.

Heady days didn’t last, however, and by the turn of the new century the economics consensus on the Washington consensus was that it hadn’t worked.  Across a wide range of indicators in a wide range of countries, economic performance didn’t seem much better in the second half of the 1990s than in the preceding 15 or 20 years.

But a new study by William Easterly of New York University suggests maybe the problem was simply that things take a while.  Extending the story through 2015, the negative 1990s verdict on neoliberal reforms may have to be reconsidered.

We have very smart people telling us that we need a new economic approach to pull the world out of poverty.  Sadly, The are ignorant people, ignorant of history and of economics.  If we put them in charge they will turn the world into Venezuela, and drag China down with them.

Hat tip to the InstaPundit.

Regards  —  Cliff