Debate on the future of Poland

On November 23, 2009, I was invited to discuss of a paper by prof. Kuklinski on "Polonia Quo Vadis" in the seminar series of the Forum on Strategic Thinking organized by the Polish Economic Association.

There was a pretty interesting discussion on the past, present, and future growth prospects of Poland until 2050. Worryingly, most people in the audience looked like they would not make it till 2050 - the average age was above 60. Are there no younger people interested in discussing their future?

Here is the transcript of what I said.

The science of economics needs to change

Here two interesting articles on how economics will need to change to prevent future crises:

First, a review of two most recent books on Keynes, who said that an economist should be “mathematician, historian, statesman and philosopher . . . in some degree" rather than--as I would argue--only an economic mathematician.

Second, an article by William White, the former chief economist of BIS, one of those who predicted the crisis, arguing that "Modern macroeconomics is on the wrong track".

Why is there so much less populism in economic policymaking?

FT's Martin Wolf argues in his December 15 op-ed on "Cold war victory was a start and an end" that "transition countries have made few reversals of reforms. As the EBRD report notes, "government changes since early 2008 have either led to no change with respect to the reform stance, or indeed favoured pro-reform parties". This is quite consistent with what is happening in the emerging world, more broadly."

He explains that decline in economic populism is due to the fact that "the absence of a credible alternative economic model is evident. Populist adventurism also seems unattractive".

A big question, which I have raised in my paper on "The Coming Golden Age of New Europe", is what explains such relative lack of economic populism. Is lack of an economic alternative a sufficient explanation? This smacks of Fukuyama's end of history, which didn't happen. And why is populist adventurism suddenly unattractive? it is because of intellectual trends, globalization, the power of global financial markets which force countries to "behave"? Is it really different this time?

Another important question is whether such economic nirvana will last. I have serious doubts. Human nature doesn't change. Crises will happen, and soon, particularly in emerging markets. Extrapolation of the last decade of superpowered global economic growth into the future may make as much sense as extrapolating the future of the world in 1989. I argue in the Golden Age paper that New Europe will be much more resilient to economic populism than other emerging markets, owing to the EU straitjacket of institutions and the rule of law. Other emerging markets don't have it and have not much to rely on. Yet, I am yet to prove it, but can feel it in my gut that good times in the emerging markets, including BRICs, will not last...

State capitalism in the banking sector

Piergiorgio Alessandri and Andrew Haldane of the Bank of England published a cool paper on "Banking on the state" where they estimate that the total gross value of state interventions on behalf of banks has been $14,000bn. Michael Wolf of the Financial Times calls it "state capitalism".

TVN CNBC debate on economic prospects for 2010

On November 28, 2009 I participated in a 45 min debate transmitted live by TVN CNBC on the economic prospects for Poland and the European economy in 2010. More info below (in Polish)

TERMIN: 28.11.2009, godz. ok. 18.15-19.00 PM (tuż przed uroczystością wręczenia nagród, która też będzie będzie transmitowana - dodatkowo także przez TVN24), Centrum EXPO XXI przy ul Prądzyńskiego 12/14 w Warszawie
PANEL 45 minut.
TEMAT: Budżetując 2010 rok. Czy kryzys na pewno się skończył?
6 PANELISTÓW: Marcin Piątkowski, Leszek Czarnecki, Jan Krzysztof Bielecki, Andrzej Czernecki (HTLStrefa), Janusz Filipiak (ComArch), Łukasz Zalicki Partner EY.
ZAŁOŻENIA PANELU: według coraz większej liczby ekonomistów polscy konsumenci nie będą w stanie podtrzymywać dłużej wzrostu gospodarczego swoimi pieniędzmi. Impuls wzrostowy musi się pojawić z innej strony. Na inwestycje przedsiębiorstw w środki trwałe nie bardzo jest co liczyć. Pozostaje eksport… ale czy kryzys ma ochotę się skończyć na Zachodzie (około 11% polskiego PKB pochodzi z eksportu do Niemiec). A jeśli kryzys na zachodzie się nie kończy, w Polsce co najmniej nie nastąpi przyspieszenie gospodarcze. Jak uwzględnić to w planach sprzedażowych i kosztowych na przyszły rok? Spróbujmy wspólnie zaplanować budżet 2010.

How ideology shapes economic policy choices

Alex Cukierman argues here that:

"Ideology, institutions, political, and accepted economic wisdom shape economic policy choices. This column explores how political ideologies and academic conclusions shaped US policymakers’ responses to the global financial crisis. It says that forecasting macroeconomic developments necessarily involves forecasting the role of such beliefs."

Post-crisis changes in economics

Paul de Grauwe presents an interesting view here

Alex Cukierman in turn discusses "The Great Depression, the Current Crisis and Old versus New Keynesian Thinking –What have we Learned and
What Remains to be Learned?", available here