Tag Archives: economic crisis

Is Greece losing its reform drive?

Mr. Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own. This article has also been published in kathimerini.gr

Is Greece losing its reform drive? Prime Minister Antonis Samaras has stuck to a harsh fitness program for two years. But just as it is bearing fruit, he has sidelined some reformers in a reshuffle. There is only one viable path to redemption for Athens: stick to the straight and narrow.

The Greek economy is not out of the woods yet, although the measures taken to balance public finances and restore the country’s competitiveness are having their effect.

Athens partly regained access to the bond markets in April. Banks have been able to issue equity on the markets. The unemployment rate has fallen for four months in a row, albeit to a still terrible 27 percent. The economy has also either just stopped shrinking or will do soon.

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Why do we (Europeans) vote in Euro elections?

nikos_konstandarasMr. Nikos Konstandaras is managing editor and a columnist of Kathimerini, the leading Greek morning daily.
He is also a contributor to The BusinessThinker.com

This editorial has appeared in elathimerini.com as well-

On last Thursday the British and Dutch voted. The next day voters went to the polls in Ireland and the Czech Republic, yesterday, Saturday, Saturday in Latvia,
Malta and Slovakia. Today, Sunday, the rest of the EU will vote. In the 28 member states, 400 million citizens are eligible to vote for 751 members of the European
Parliament, who will, in turn, elect the new president of the European Commission. This is the eighth such vote since 1979. But this time there is a sense that the
Union is in decline that it is losing in economic and strategic significance. Even so, the electoral debate in each country focused on domestic issues. Very often
those issues stemmed from EU membership, but the elections remained stuck on local problems, not on EU-wide solutions.

Throughout the EU people worry about where the EU is headed. The years of crisis showed up weaknesses in the bloc’s construction. This created
the need and the opportunity for solutions through the adoption of new mechanisms and institutions. Precious time was lost, as was the even more
precious sense that Europe was the home in which we could all feel safe. However much the Greeks may have been to blame for their problems, they
were not the only culprits in the EU. For the good of all, Europe should have shown that its grand construction was not in danger because one of its
rooms had caught fire. “Personifying” the crisis, presenting Greece as a scapegoat and a “unique case,” renewed old enmities and ethnic stereotypes.
It sowed division. In the markets, Europe appeared as weak as its weakest member. It abdicated the power and the responsibility that it would have
had if it functioned as a single force, with the world’s largest economy (with a combined GDP of 13 trillion euros in 2012), with 500 million citizens
constituting the wealthiest and best-educated group of people the world has known. Instead, the EU found itself on the brink of losing its common
currency. Many people felt threatened by strangers – either immigrants or citizens of other countries who needed their support. Some were angered
because they were asked to help, others because they lost benefits and security.

The debt crisis is one of many important issues. How can developed countries continue to provide their citizens with everything to which they are
accustomed when the global economy has made them uncompetitive? How can each country gain the most from being in the EU when the EU does
not project its power because each member acts according to its own narrow interests? When voters reject austerity and reforms because they consider
them unjust, how do economies become more competitive? Is the solution to be found in reducing social security in Europe or should we demand that
competitor countries take equal care of their own citizens?

The problems remain unsolved and can be dealt with only at the EU level. Europe will be saved only if the serious debate begins within the next
European Parliament – the one that will represent powerful centrifugal forces


What’s the use of economics?

Dr. Diane Doyle runs the consultancy Enlightenment Economics. She is a BBC Trustee and member of the Migration Advisory Committee and of the independent Higher Education Funding Review panel, and was for eight years a member of the Competition Commission (until September 2009). She is also visiting professor at the University of Manchester. She has a PhD from Harvard.

This article is published here in by permission of Vox. (voxeu.org)

Five years after Lehman’s collapse, economics is under fire both from outside and inside the profession for irrelevance, arrogance and more. This column introduces a new Vox debate focused on two questions: What’s the use of economics, and how should we be teaching it to the next generation?

If economics emerges from the Global Crisis unchanged, it will lose all credibility. That is certainly not the view of all economists, but many do think so. There are plenty of examples of criticism of our subject from within and without. Some are ill-informed rants, but others – such as the recent article ‘Economics in Denial’ by Howard Davies (2012), founding chairman of the Financial Services Authority – must be taken seriously.

However, it is not obvious what shape an effective response to even well-founded criticisms could take. After all, engaging in a professional debate about the content and methodology of economics, supported by research, will take years.

One starting point, identified at a conference organized by the Bank of England earlier this year, is the teaching of economics, beginning with the undergraduate level. Participants included both employers of economists (including the Bank and the Government Economic Service) and academic economists. A book with the pre-conference papers and papers by conference participants is published this month (What’s The Use of Economics: Teaching The Dismal Science After The Crisis, London Publishing Partnership).

Feedback from the employers of young economists

Some clear themes have emerged from the conference and the book. One is the extent of employer dissatisfaction with the teaching of economics in universities, for all that economics graduates remain highly employable. Employers of graduates in any subject have some consistent complaints about the lack of certain skills among new graduates, and employers of young economists are no different. For example, the prevalence of poor communication skills is a common theme. Economists working outside the academic world will all need to communicate their technical expertise to non-technical colleagues and customers, so it is a core skill for them. For example, in a 2012 survey of economists in the Government Economic Service – the single biggest employer of economists in the UK – they described the two main areas of their work as the production of briefing material and the preparation of policy advice. City economists and economists in consulting will often have to present research to their firm’s non-economist clients.

Perhaps more surprising is the consistent view among all the employers, as well as some of the academics, that undergraduates need to learn more about both economic history and the history of economic thought, and moreover to be made to pay attention to the economic conjuncture, to economic institutions, to the operation of actual markets in the economy and current policy debates. For instance, as Stephen King, Group Chief Economist at HSBC, put it: “Young economists arrive in the financial world with little or no knowledge of how the financial system operates. This is a matter of collective guilt. Economic models typically assume the financial system is a black box.” Although employers all recognize the need to be realistic about fitting more into the curriculum, and about what a new graduate can reasonably be expected to know, the level of dissatisfaction with current shortfalls is striking.

These gaps in graduates’ knowledge seem not to be due to any lack of interest in economics on their part. In the UK, the number of students beginning an undergraduate degree in economics rose 8.5% to 7,800 in 2011, compared with a 1% rise in the total number of undergraduates, and although the number declined by 2% in 2012, this compared with a 7% decline in the total. The number taking the economics A level has been rising since 2006. It is hard to believe that these figures do not reflect young people’s interest in the dramatic economic events of recent years.

Questions about methodology

A second theme is the way the crisis has given added urgency to some questions or doubts about economic methodology. It is probably true to say that a majority of academic economists do not believe the financial crisis seriously undermines the theoretical framework of their discipline. Even so, a number of participants raised concerns about the emphasis on reductive rather than inductive thinking in economics, and about the use of mathematics without meaning.

Andrew Lo of MIT argues that mathematical techniques in economics only gain meaning from application to actual empirical questions and should be taught in that context. Paul Seabright of the Toulouse School of Economics says students must be taught not that economics is an ever more successful approach to true knowledge about how the economy works, but rather as an empirical investigation of an ever-evolving phenomenon. There was a strong consensus on the need to demote the role of theory and promote empiricism. As Andrew Lo expressed it: “We economists wish to explain 99% of all observable phenomena using three simple laws, like physicists do, but we have to settle instead for ninety-nine laws that explain only 3%, which is terribly frustrating.”

Role of macroeconomics

On the third area, the role of macroeconomics, there was little consensus, but rather a wide array of opinions. These ranged from the view that modest adjustments to the existing models and curriculum would suffice to take account of recent real world economic events, all the way to the more radical view that a new methodological approach to modelling the macroeconomy is required. What to teach on macroeconomics is obviously a secondary question to the current debate about macro analysis (covered in some detail by Simon Wren-Lewis on his blog, for example).

However, when Benjamin Friedman of Harvard describes pre-crisis macro as “wrong headed” and Andrew Haldane of the Bank of England describes representative agent models with expectations reflecting fundamentals as “fundamentally ill-suited” to today’s worlds, it would take someone who is either very confident or very complacent not to reflect some of these doubts in what they teach the next generations of economists.

Changing the teaching of economics courses in universities faces numerous hurdles, and reforming the content of the curriculum may not even be the hardest to overcome. Universities in many countries face financial challenges at present, needing to teach more students with no additional funding. So the demands on academics’ time are increasing. In the UK university system and elsewhere, there are also strong incentives for academics to devote their time to research rather than teaching. What’s more, their research profile and promotion will benefit from their publishing a large number of papers that are incremental to an existing literature. According to academic contributors, the UK’s Research Excellence Framework keeps researchers focused on writing papers, not books, and also on quite a narrow range of journals.

Meanwhile, student surveys suggest many are already rather dissatisfied with the extent of their contact with lecturers or the quality of teaching. In addition, where they face incurring large loans to pay fees, they are becoming more instrumental about their university education: it needs to ensure they do well in their exams and get a good job. Finally, undergraduates are the product of a schooling that has strongly emphasised ‘teaching to the test’ to improve school results in league tables, rather than encouraging intellectual exploration and independent study.

A number of contributors suggest practical steps, not all that time-intensive, to improve undergraduate teaching. Mechanisms for sharing best practice and making use of online resources are among them. As Michael McMahon of Warwick University points out, however, students themselves need to appreciate that in order to benefit in the fullest sense from university, they need to read widely, engage in discussion and above all stop expecting to be spoonfed. As for wider reforms of academic incentive structures, they are under discussion by a post-conference working group that plans to issue a report next year making recommendations for reform.

Economists are in the best position to understand the intellectual power and rigour of our subject, and its ability to contribute to tackling the enormous range of challenges in problems in today’s world, not least the continuing financial and economic crisis. Any intellectually honest economist will acknowledge that the length and severity of the crisis demand at least a certain amount of professional introspection and self-evaluation. Many will agree that economics does need to change. Surely the education of young economists is the best place to start?


Davies, Howard (2012), “Economics in Denial”, ProjectSyndicate.org, 22 August.

About the Author

Diane Doyle runs the consultancy Enlightenment Economics. She is a BBC Trustee and member of the Migration Advisory Committee and of the independent Higher Education Funding Review panel, and was for eight years a member of the Competition Commission (until September 2009). She is also visiting professor at the University of Manchester. She has a PhD from Harvard.

Diane specializes in the economics of new technologies, including extensive work on the impacts of mobile telephony in developing countries. Recent projects include work for NESTA on the wider conditions for innovation, and a study on the effects of mobiles in India. She is the author of several books, including The Soulful Science (Princeton University Press 2007), Sex, Drugs and Economics (2002, Texere), Paradoxes of Prosperity (2001, Texere), Governing the World Economy (2000, Polity) and The Weightless World (1997, Capstone/MIT Press), all translated into many languages. She has also published numerous book chapters, reports and articles, and was formerly a regular presenter on BBC Radio 4’s Analysis. Her next book is to be published by Princeton University Press in 2010.

Diane has acted as a member of the advisory board of ING Direct UK and of the stakeholder advisory panel of EDF Energy, and is a member of the advisory council of the think tank Demos. She was previously Economics Editor of The Independent, and earlier worked at the UK Treasury and in the private sector as an economist. Diane was awarded the OBE in January 2009.