Welcome…to the World of Failed Nations: Daron Acemoglu, James Robinson – following the release of their new book Why Nations Fail in the UK, I thought it would be appropriate to also introduce their new blog, covering themes from the book itself. More specifically they talk about various examples of how extractive institutions have been the main cause of failed nations.
Too Big to Jail: Simon Johnson – having only just recently watched the film Inside Job, I came across this interesting article following on from the themes of the film, about corporate fraud and criminality within some of the biggest banks that were involved in the financial crisis. An interesting play on the “too big to fail” argument, whereby banks have an incentive to take on excessive risks. The “too big to jail” view describes how banks can also get away with just about anything if they are big enough.
A Devaluation Option for Southern Europe: Gita Gopinath, Emmanuel Farhi, Oleg Itskhoki – an clever suggestion on how Southern European countries can effectively create the same effects as devaluation, without the need to actually leave the Euro and readopt their old currencies. In my opinion it definitely seems like a viable idea. What the Southern European countries need most now is to increase their competitiveness and show signs of growth, as opposed to imposing austerity measures. Only once their economies begin to grow again, will they be able to fix their balance sheets.
Jeremy Lin and the Political Economy of Superstars: Kenneth Rogoff – an interesting discussion on why we accept high pay for sports superstars, but on the other hand do not tolerate the high bonuses of financial superstars. In my opinion this is a very fair point to make, but the question that remains is, should we accept high pay for both or not tolerate either? I’ll leave that for you to decide.