Rolling Shocks Explain Why the World Is So Depressed

It’s an expectation that free economies and political systems return to normal after periods of volatility. But that’s not always so, explains David Ignatius in his column for the Daily Star. “A disruption that initially seems manageable gets bigger and more dangerous as the system oscillates up and down,” he writes. “Indeed, the effort to understand market failure and social disorder helped create modern economics and political science.” The notion that government intervention had the potential of dislodging markets from problematic ruts, thereby promoting stability and peace, as argued by economist John Maynard Keynes, was revolutionary in the early 20th century. “The scariest aspect of the current political-economic crisis is that it tests this faith in democratic governance,” Ignatius contends. Political leaders in the US and Europe quarrel over narrow, special-interest issues and decline to tackle the well-known known core problems. As a result, capable systems of governance are left in dysfunction and they no longer inspire. – YaleGlobal