So the news is spreading that the Belgian PM, Herman Van Rompuy, would be the first president of the EU. I am not going to comment on what that means for the EU now. It’s after nine in the evening here, and I’m preparing my teaching for tomorrow morning (and for reasons I need not disclose in this post, I need my time to prepare).

But despite time shortage, one thing I am happy to throw in cyberspace is a prediction that this will not be good for Belgium. Not a very hard-to-make prediction indeed. In the last years I’ve blogged here, once in a while, on the political instability of Belgian politics, indeed perhaps even the instability of the very future of Belgium; and Van Rompuy seemed to have been the only one able to bring calm back, and at least lead a more-or-less functioning government. His professional skills and talents in making compromises in extremely difficult situations will certainly be very useful in Babylonian Europe; but who will rescue Belgium? How long will it take for the Belgian government to have a new PM, and is there anyone to be found with the same authority that Van Rompuy has been able to command? Tonight Belgium will celebrate that this little country has been able to achieve something powerful, but tomorrow it will wake up with headackes…

Bookblogging: What next for macroeconomics ?

by John Quiggin on November 19, 2009

It’s been slow going, but I’ve finally finished the draft chapter of my book-in-progress that looks forward to a new research program for macroeconomics, an absurdly ambitious task, but one that needs to be tackled. Of course, what I’ve written isn’t fundamentally new – it’s a distillation of points that Old Keynesians, post-Keynesians and some behavioral economists have been putting forward for a while. But I hope I’ve got some positive contribution to make. More than ever, comments are much appreciated.

Update In response to comments, I’ve fairly substantially revised the section on “avoiding stagflation”. While I don’t back away from the points I made previously, I took for granted some things that I’d mentioned in other places in the book. The result made for a fairly unbalanced treatment with an excessive focus on the role of labor militancy. I’ve now tried to put this into proper context. I don’t expect that will satisfy everybody, but this is closer to what I meant to say all along.End update
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Risk Pollution, Market Failure & Social Justice

by John Holbo on November 19, 2009

I just listened to an EconTalk podcast interview with Richard Posner about his new book, A Failure of Capitalism: The Crisis of ’08 and the Descent into Depression [amazon]. The book has gotten a bit of buzz for the way in which Posner semi-recants certain libertarian or Chicago-style economics positions he is known for. But certain other positions he has not recanted, such as his narrow view of economic actors’ duties to consider negative externalities of their activities (discussed at CT before here and here). In the podcast, Posner basically asserts that those actors in the financial sector who almost crashed the world economy were right to do so, in the sense that it was rational for them, individually, to be massive ‘risk polluters’ (to coin a phrase someone else has probably coined already.) He would probably go further, although he isn’t actually asked to in the podcast: some of these actors were obliged to take the risk. In at least some cases it would have been their strong, positive fiduciary duty, under the circumstances, to do something which – taking a larger view – seriously threatened to run the whole world economy off a cliff. Because that was the apparent route of profit-maximization. It was their job not to take the larger view. Posner blames regulators, not these profit-maximizing actors, for the market failure; for not seeing that the damage to everyone downwind of all that toxic risk was so great that it should not have been permitted. [click to continue…]