|Peter Boettke|
In this piece by Pierre-Olivier Gourinchas, he states very clearly the reality constraint in public policy deliberations in the current crisis. Without commenting one way or another, I think it could serve as a very useful point of departure for serious conversations about trade-offs, short-run/long-run, and public policy in a liberal society.
My sincere hope is that we will be able to deliberate our way to a consensus that will reduce regime uncertainty, and free up the creative powers of our civilization to both address our public health crisis and make sure the economic future is bright. As I mentioned yesterday, Tyler Cowen has some ideas we might be able to build a consensus around.
When I wrote Why Perestroika Failed: The Politics and Economics of Socialist Transformation (1993) the conversation was different. The problem with the communist economies was a feature of those systems, and thus the policy conversation focused on changing those features as quickly and clearly as possible. I discuss this in chapter 7 of the book. This crisis is different. It in not endogenously created, though the vulnerabilities of certain sectors are in my opinion a function of policy choices that were made over the years — in particular since 9/11 and 08, but more generally — the current situation is a result of an exogenous shock and the policy responses to that exogenous shock that have in effect shut down significant sectors of the economy. So in tackling the trade-offs, we need to think hard about how to meet the challenge and unleash the creative power to simultaneously reduce human suffering and restore economic prosperity and peaceful social cooperation.