Former Governor of the Bank of England, Mervyn King is suggesting that “Economics Needs a Post-Crash Revolution” in a seeming admission that current frameworks don’t work in a world of radical uncertainty and necessary reallocation.
Is the former BOE governor and academic icon correct, or is this an unfair critique of the mainstream? As a summary, I have two issues with his argument:
- Reallocation does not have anything to do with “average demand”, which is predominantly a monetary policy issue,
- If excessive reallocation is necessary and requires government assistance, where are the “high return” industries that need reallocation to them?
Let me explain.Read more