سیاست های اقتصادی پس از بحران

Following is the text of the letter that Edmund Phelps, the Director of the Center on Capitalism and Society at Columbia, sent to Canadian Prime Minister Stephen Harper on February 2010 to report to the G20 on the conference “Post-Crisis Economic Policies” that the Center held on 11–12 December 2009 in Berlin. The letter makes a special contribution to the topic of this Special Issue on “Growth or Stagnation after Recession?” and so it is reproduced in its entirety without any editorial change. As Director of the Center on Capitalism and Society at Columbia University, I want to report to the G20 on the conference “Post-Crisis Economic Policies” the Center held on 11–12 December 2009 in Berlin. Last year I reported to the G20 on our conference “Emerging from the Financial Crisis” held 20 February 2009 in New York. At this recent conference, as at the previous one, a great many renowned policymakers, bankers, regulators and scholars joined forces with members of the Center to discuss key issues and come up with proposals on how to improve economic performance in the advanced economies in the aftermath of the financial crisis. Paul Volcker, chairman of President Obama's Economic Recovery Advisory Board, and Josef Ackerman, Chairman of Deutsche Bank, were dinner speakers. Lucas Papademos, Vice-President of the European Central Bank, Sir Howard Davies, Director of the London School of Economics and former Chairman of the Financial Services Authority, Dr. Joachim Faber, Member of the Board of Management of Allianz SE, and two Nobel laureates – Robert Mundell and I – each spoke in a panel as did the chair of the Center's Advisory Board Peter Jungen. We convened to discuss ways to raise radically our post-crisis prospects – to boost our nations’ normal prosperity levels and to buttress their prosperity from severe swings brought by speculative forces. A prosperous nation is one with adequately high employment in broadly rewarding jobs – jobs in which not only wages are good (relative to other income) but jobholders are flourishing: learning, exploring, creating and finding stimulation, engagement and self-discovery. For a nation to be normally prosperous, not just prospering for awhile thanks to some happenstance, its economy must possess adequate economic dynamism – a capacity and propensity for indigenous innovation – and adequate economic inclusion – wide access to jobs made rewarding by innovation are widely shared. Though the members of the Center present a range of views on the ways to generate prosperity and bolster it in cyclical troughs, we are united in taking a modern perspective on economies: The actors in an economy, particularly a dynamic one, face limitations in their economic knowledge – knowledge of the consequences of departing this way or that from past practice; these limitations create room for speculative excesses (and oversights too); yet such limitations make it possible for the business sector of an economy equipped for dynamism to conceive of plausible innovations without the deus ex machina of (exogenous) science; and innovation is the key to normally high prosperity. This modern perspective is essential to constructing a satisfactory political economy, in particular a conception of the good economy, and it is now crucial to conceiving an economic policy adequate for the times. It is unfortunate, therefore, that a great many economists and policymakers still take the contrary neoclassical view that businesses are incapable of creativity, that the sole rewards of business are wages and consumption, and that innovation depends instead on the discoveries in basic science. They conclude that the world's innovation requires governments with the wisdom and wherewithal to support science. Schumpeter spelled it out in 1911 and Mussolini tested it in the 1930s. The evidence is heavily against this old theory. Case studies of enterprises belie the myth that, in the modern age, innovation is still driven by external discoveries in basic science rather than by ideas in companies and markets.1 Country studies belie the myth that “top-down” economies founded on statism and scientism succeed at innovation better than economies in which ideas bubble up from grassroots businesses. Household survey evidence belies the idea that people care only or predominantly about the money. Respondents report that they look for careers of initiative and exploration. And the job satisfaction they report is pronounced in economies of appreciable dynamism – ones buzzing with the challenges of the new. Apparently ordinary people value the experience it offers: the excitement from involvement in conceiving, developing, marketing and pioneering the use of new products.2 (In addition, those who easily gain such participation may well value the inclusion of others. They may see best-effort inclusion as important if they are not to feel ashamed at the deprivations suffered by those left out. And they may see broad inclusion as essential if the institutions and values that nourish economic dynamism are to continue to earn broad-based political support.)3 In this view, the cost of the financial crisis – a crisis centering in the U.S., U.K., Spain, Ireland, and Iceland with fallout in all industrialized nations – is not just the lost output. The loss in economic inclusion is severe, since the healing process is bound to take years. The situation may be even worse. There are reasons for concern about the dynamism of the industrialized economies. In the U.S., there are many signs of a downward trend in economic dynamism over the past decade. Employment in Silicon Valley, far from expanding from its remarkably small level at the start of the last decade, has been contracting. The institutional venture capitalist industry and the rate of new firm formation have also been shrinking over the decade. In Europe, venture capital investment is less than it is in China. Innovation has contracted at established companies as well. Reportedly, investment funds have put stronger pressure on CEOs of business companies to intensify their already strong emphasis on meeting quarterly earnings targets. Business investment levels in the U.S. are, relative to output, at postwar lows. The situation is a Depression, like that of the 1870s, not a Great Recession. Equally ominous, a new and different loss of inclusion has been developing for a couple of decades and may go on worsening: in several industrialized nations, society has been splitting into two nations, one a thriving elite and the other a working class struggling in occupations made obsolescent by expanded competition from emerging economies and made redundant by the decline of innovation and thus capital good production – thus increasingly cut off from the experiences of the elite and finding less to engage them in their business life. This damage to inclusion comes at a time when the old deficiencies of inclusion among ethnic and racial minorities are still far from solved. The conferees shared the belief that post-crisis economic policy should respond by aiming to increase dynamism by restructuring both the financial system and the business system; and by promoting inclusion of workers by reforming the labor market and the tax/subsidy system. If societies have a critical need for markedly more innovation, governments should increase economic freedom, create a business and entrepreneurship economy and make it easy to hire and fire, and easy to start up and close down. The recent turmoil in financial markets is not a reason to retrench away from capitalism but to reform and, when necessary, to restructure it so that it generates dynamism in the real economy in preference to short-term speculative gains in financial markets. One year ago, at the February 20th conference, we made several proposals: putting a tax on the banks’ liabilities to limit the level of short-term borrowing; setting up a new class of narrow banks specializing in financing innovative projects; creating an agency with regulatory powers that would be able to intervene when asset prices depart from historical norms; and strengthening collaboration between countries to work together to design and institute a new financial regulatory framework that is internationally consistent. At the Berlin conference we added to this list several new proposals. Many conference participants at Berlin noted that the policy responses to the current crisis have focused on the “demand side” through fiscal stimuli, liquidity support to banks and very low central bank interest rates.4 They agreed that the challenge in the post-crisis era can be primarily found on the supply side. The problem is structural of the economy. The bursting of stock market and housing bubbles has left a void in the real economy that needs to be filled by innovation and entrepreneurship now that so many workers can no longer continue to produce houses or financial service. When this process is completed, a different kind of an economy will have emerged, where the size of the labor-intensive non-tradable service and construction sectors is diminished while the more capital-intensive tradable goods sectors has expanded. Moreover, the bursting of the asset prices bubble will leave a void within firms by making firms in all sectors shed labor since they will no longer put as much emphasis on planning for the future. Labor productivity may gradually rise but the recovery may be to a degree “jobless.” Such an impaired recovery presents problems of inclusion. The workers worst affected are likely to be those who have entered working age when the crisis is at full force. For them a number of years of unemployment or non-participation in the labor force await that may leave scarring effects for the rest of their lives. The Finish experience of a financial crisis in the early 1990s shows the effect on the labor market outcomes of the young generation, as well as on their state of health. The temptation for policy makers may be to turn again to fiscal stimulus or prolong easy money but, due to the changing structure of the economy, it is doubtful that such measures can be effective or long sustained. As the economy picks up steam, their benefit may come at a rising cost in diverting resources from the avenues of recovery. In any case, the void left in the real economy – principally a newfound structural weakness in business investment – cannot be filled by general fiscal or monetary stimulus. There is a supply deficiency, notwithstanding the occurrence early on of a consumer-demand deficiency marked by price weakness – a deficiency driven by balance sheet troubles and an exchange rate weakness caused as the economies tries to substitute export production for capital goods output. Moreover, a mounting level of public debt may lead to bond market difficulties and further exchange rate weaknesses. What is needed is a financial system that promotes innovation in the business sector so as to generate good jobs and a set of targeted fiscal measures that pull the poorer employed workers up from poverty and the unemployed youth into jobs. Several speakers described how a good real economy should be defined and how a financial system could best be designed to promote such an economy. It was argued that a good financial system was by definition one that supported a good real economy. The nature of such a good financial system was discussed and also the needs and scope for regulation and supervision at the national and the international level.

The expansionary fiscal and monetary policies that are being pursued by many countries are premised on the belief that demand has fallen in relation to supply, which has sailed on unperturbed by the crisis. But, as will now be argued, the output that can be produced without triggering rising inflation can confidently be said to have shifted down to a lower growth-path than the old one (lower and probably flatter too). Because potential output has fallen in this sense, policy makers should be aware of over-expansionary monetary policy and over-sustained fiscal stimuli as recovery starts and the economy gropes its way toward the new potential-output (and potential-employment) path (also identifiable as the medium-term natural unemployment rate). The credit-driven boom that has so suddenly come to an end in many countries had the consequence that workers enjoyed a larger share of national income, the level of employment was higher and real living standards were higher not just because of a higher purchasing power of wages but also because the inflow of capital from the surplus saving countries elevated real exchange rates, which made goods cheaper, and also allowed households to live beyond their means. Labor intensive sectors expanded and firms across the economy hired workers to prepare for a profitable future. The collapse of various asset prices, notably housing and commercial structures, made these sectors contract and firms lay off workers who were not essential to current production. (The reduction of wage ratings was reported as an income of “profits”, as if a genuine increase of productivity or decrease of wage rates had occurred.) An economic boom generated by rising asset prices and increased leverage of businesses and household affects the structure of the economy. The non-traded goods sectors of construction, retail and finance expand at the expense of the traded goods sectors, such as manufacturing. Since the non-traded goods industries – the bubble sector – tend to be intensive in their use of labor, the effect is to raise both real wages and aggregate employment. High asset prices may also induce firms to hire workers to prepare for future expansions; to train new workers in anticipation of higher output; and to slash markups of price over marginal cost to attract more customers. The effect is again to increase the demand for labor, to raise real wages and also to raise the share of labor in national income. The momentary natural rate of unemployment falls and the supply of output – or potential output – goes up. When asset prices start to decline the effect is to lower real wages, employment and the share of labor in national income. The momentary natural rate of unemployment goes up and the supply of output contracts. The implication is that the natural rate of unemployment falls in a structural boom and potential output increases while a structural slump is characterized by a rising natural rate of unemployment and falling potential output. For this reason the boom tends to be non-inflationary and the recovery relatively jobless in the sense that employment does not reach its previous level. The economic boom that now has come to an end was in a sense too good to be true and the relatively jobless recovery that will follow the current slump will show that to have been the case. If, for a period during the upswing of output, firms are still discharging employees assigned to forward, or advanced, projects, the “recovery” may be absolutely jobless until the reservoir of such employees has run dry. Monetary and fiscal policy authorities should not make the mistake of attempting to reach the pre-recession level of output and unemployment using low interest rates and fiscal deficits. Keeping interest rates low for too long may create inflation while an expansionary fiscal policy may exhaust the fiscal capacity of the state or give birth to moral hazards such as default or currency debasement. Instead, the state should use targeted fiscal measures such as an earned income tax credit, low wage subsidies or generalized job subsidies to raise employment, especially among the younger, more vulnerable workers who would otherwise be scarred by their experience of unemployment.

The current recession has caused very large job losses in industrialized nations. The OECD members currently have around 18 million more unemployed people than at the end of 2007, an unprecedented increase of unemployment to an average level of 8.8%. There are differences in the mode of adjustment across countries; some countries have experienced higher unemployment while in others the number of hours worked per employed worker has fallen. There have been major job losses in the U.S., Spain, Ireland, the U.K. and some Nordic countries. In contrast, there have been only reductions in hours worked in Germany and almost no change in unemployment; in Singapore little decline in employment or hours. In some part this is due to differences in the shocks experienced.6 But a huge part is due to the state interventions undertaken promptly and swiftly to moderate employers’ desire to fire. Many countries – Germany the prime example – provided resources to encourage the retention of workers. Singapore went for a program of wage subsidies to companies that serves to encourage employment of workers toward the bottom of the wage distribution. Several participants thought that such wage subsidization is important for running modern societies because they both help in recessions and lower the level of structural unemployment. At least one participant was of the view that if the private sector does not pay low-wage people enough to accord with social preferences, then the country has to subsidize low-wage employment in that sector. Most participants thought that wage subsidies create employment and a socially acceptable wage distribution, thus fostering economic inclusion. Income support for the unemployed is also important. Coverage differs between countries and in some countries those on temporary jobs are not eligible. It is important to combine benefits with reemployment services and incentives to search in order to mobilize workers back into work, especially the young who may otherwise suffer persistent unemployment due to scarring effects. Let me take the opportunity to send my good wishes for the G-20 meeting in June. I hope that ministers, their advisors and aides preparing for the meeting will find this report helpful both in canvassing and in weighing policy ideas. Corresponding author contact information Tel.: +1 212 854 2060; fax: +1 212 851 0260. 1 A lengthy empirical study by Richard Nelson and long study by Amar Bhide, both members of the Center, give evidence supporting the modern view that most of the cumulative advance in techniques, products and productivity are the result of experimentation by producers or trial launch of new products in end-user markets. 2 National job satisfaction averages and the international differences among them have been the subject of my research over the past 4 years in collaboration with Gylfi Zoega, Raicho Bojilov and Luminita Stevens. The findings suggest that higher dynamism tends to produce higher job satisfaction. 3 None of the above denies that an economically advanced nation may gain relatively high productivity simply by copying from industrial leaders; and, with high productivity, a nation can pay high wages and pour out money for social insurance and even wage subsidies. 4 Once a structural downturn was evident, uncertainty seized the economy and an excess demand for liquidity arose. Had the central banks not addressed the latter by increasing the supply of liquidity, the economic contraction would have metastasized into a panic and a sense of free fall. 5 Richard Robb argued that securitization was not a principal cause of the current turmoil, since mortgages that banks have kept on their balance sheets have not performed any worse than those they sold off and a country like the Netherlands that relies heavily on securitization has not experienced a mortgage crisis. Moreover, he argued that there was no lack of transparency in subprime mortgage securitizations or CDS. 6 Some countries saw a burst of their house price bubble with a subsequent collapse of construction activity while others, such as Germany and Singapore, saw mainly a drop of export demand. In Germany the shock affected the skilled tradable sector and firms decided to avoid dismissal costs and hiring costs by hoarding labor, which is helped by job subsidies.