Classical policy and the ongoing crisis
Still in Shanghai where the G20 is about to be held today and tomorrow and this is the story on the front page of The Weekend China Daily: Slow global growth sets challenges. From which:
How to revitalize a slowing global economy when many policy tools have been exhausted will be a key challenge for leaders at the G20 summit. . . .
Eight years after the global financial crisis, growth has failed to return to anything that would have been considered normal before the crisis.
Of course, it is those very policy tools that have been the problem. I presented my paper on the classical model to a group who would know be more likely to know whether I had deviated from the original texts than any other group alive, here at the UK History of Economics Conference, and the only criticism was that it is too wide to call it “the” classical model, but it would be OK to call it the John Stuart Mill model. Good enough for me. But what did not seem to occur to anyone is that if that is what Mill did say, and if you take his model seriously, as I do, you would never do the things we have been doing to make the economy come right.
For more on this, in the latest Quadrant, there is an article on classical interest rate policies in contrast to what you see today. More on this when I return.