I have been away from my blog and web site for an extended period, last posting at the close of June. I will be resuming a more frequent schedule beginning next week. A heck of a lot has transpired both politically and economically since I last posted commentary and analysis. I have also travelled to London for an LSE reunion and visits with family there and an opportunity to hear directly from the new head of the School, Professor Craig Calhoun who gave an excellent talk at the reunion about the noble LSE tradition of dissent,radicalism, argument and critical thinking.This was a long tradition in many branches of the social sciences and certainly was close to the heart of the some of the founders of the school. During the time I was a Ph.D. student there it lived in the person of teachers like Amartya Sen, Ralph Miliband, Michio Morishima, Harry Johnson and others who regardless of the side of the issue they tended to be on emphasized critical thinking, careful research and solid argument as well as rhetoric and eloquence. At a time where simple even crude ideological assertion has come to dominate public policy discourse its an important tradition to reinvigorate.
I also spent time in Winnipeg the city where I grew up and still have family. It pleased me to see how with the lamentable exception of their last place football team how well the city seemed to be doing in terms of building a new and architecturally striking museum of human rights which has been the product of the generous contribution and hard work of the Asper family and all three levels of government and a new strikingly modernist airport terminal. The city has its problems with neglected infrastructure and lack of a proper rapid transit system but it bustles with energy,interesting politics, very nice people, modernist architecture and a concern for culture and good cuisine. A pleasure to visit(in summer, of course)
The controversy over privacy continues, as it should and the debate over the economy and how best to sustain the recovery is ongoing. The data suggests that slow but steady recovery continues. But it is far from the time where it would make any sense to jettison quantitative easing and substitute interest rate increases, except very gradually in slow and deliberate process. The unemployment rate is still simply too high.
There is a legitimate debate about the efficacy of QE actually stimulating directly additional aggregate demand but it is clear that without it interest rates would have risen as deficit hysteria took hold. Money may well be hoarded in quasi hoards internal to firms, banks and in wealth holders’ balance sheets but if we tried to liquidate these hoards through raising rates it is likely the negative impact upon growth and employment would be at this point in the cycle substantial.