Ülo Ennuste Economics

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Letter

Letter to the Editor of the FT

Sir, with all respect to the FT.com’s copyright policy I would like to announce with extracts that two of FT’s Letters (August 29) have in my own mind extremely correctly identified and pinpointed the most kicking macro-economic policy errors associated with the current crisis in general:

A)    “Tax ‘competition’ benefits no oneFrom Mr Chris Jordan:

“… The term “tax competition” itself is extremely misleading, because it implies countries are “selling” their tax systems and companies are “buying” into them, comparable to competition between companies in a marketplace. This analogy falls down because the ultimate sanction on a company that ceases to be competitive is that it goes out of business. As recent examples from Greece and elsewhere show, this is highly undesirable in the case of a state. …

… it’s high time to slay the myth of beneficial tax “competition”.”

And

B)     „Modern macroeconomics is alive and kickingFrom Prof Michael Wickens:

„ … My own view is that it is not faulty macroeconomic theories that brought about the financial crisis and the current recession, but the consequence of policies formulated without sufficient regard to modern macroeconomics that caused huge distortions in the global economy. …

… The consequences of these distortions are predictable using modern macroeconomics. It also tells us that the capitalist system, far from collapsing as some claim – and however imperfect it is and imperfectly understood – is now doing its best to correct these policy errors, painful though this is.”

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August 29, 2011 - Posted by | Uncategorized

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