Some time ago, in May to be precise, one of my favourite blogger, Tyler Cowen (from Marginal Revolution, link on the side) posted the following:
Raghu Rajan nails it
The industrial countries have a choice. They can act as if all is well except that their consumers are in a funk and so what John Maynard Keynes called “animal spirits” must be revived through stimulus measures. Or they can treat the crisis as a wake-up call and move to fix all that has been papered over in the last few decades and thus put themselves in a better position to take advantage of coming opportunities. For better or worse, the narrative that persuades these countries’ governments and publics will determine their futures—and that of the global economy.
I don't know if the hyper-links follow through a C&P so here is the link to the original:
Now this was high praise indeed and so I followed the hyper-link and read Mr. Rajan's piece. And I walked away a lot less impressed than Tyler Cowen...
Now, I am not the only one who wasn't over-awed. Mr. Cowen had a subsequent post detailing some of the reception the article got and his own reaction to the reactions:
Hopefully, I'll get to those too.
Although May was some time ago, the issues debated are still important and the discourse hasn't changed so, hopefully, this belated reply will not feel irrelevant to the readers'.
I will adopt the slightly unusual technique (for this blog, at least) to go through the piece more or less paragraph by paragraph and add my comments. To facilitate comprehension, the original text will be in "Georgia font" and my comments will be italicised. Ideally, this is a technique I might re-use on other articles since a lot of my own economic thinking tends to be in reaction to other people's articles/theories.
BTW, I am not entirely sure about the legality or the netiquette of quoting someone as lengthily as I am going to as I go through Raghu Rajan's piece in extensive detail. Let me just state for the record that I obviously respect his authorship, his legal rights re. reproduction and I hope that me linking to the original piece will make it clear I am not trying to steal anything from him or indeed from Tyler Cowen