Jackson Hole Economics is an ‘action tank,’ designed to provide considered opinions, policy proposals and concrete ideas to address the economic, political, social and environmental challenges we collectively face. We believe that progress to more just, fair and sustainable outcomes requires open and informed discussion. Jackson Hole Economics offers a global platform for a diverse group of authors to share views in clear, jargon-free terms across a range of important issues. We are committed to a free and critical exchange of ideas, with the aim of offering direction towards better outcomes for ourselves, for our planet and for future generations. No paywalls, no advertising – because ideas should be free.
Twenty-five years ago, former UK Prime Minister Margaret Thatcher published her memoir, The Path to Power. Among the book’s more quotable passages was one that summarized Thatcher’s economic ethos, as well as that of her deepest admirer, Ronald Reagan:
“…government should create the right framework of sound money, low taxes, light regulation and flexible markets…to allow prosperity and employment to grow.”
Thatcher’s memoir coincided with a burst of optimism that the great political, economic and policy struggles of the twentieth century had been decisively and forever resolved. Capitalism had triumphed over communism, epitomized in the collapse of the Soviet Union and the fall of the Berlin Wall. Prudent fiscal policy, inflation-targeting monetary policy, economic deregulation, the expansion of free trade and financial market liberalization promised a path to prosperity. The ‘western liberal democracy’ model was not just victorious, but the only way forward.
The optimism of the mid-1990s was not unfounded. A burst of innovation and productivity growth in the middle of the decade promised to fulfill the dream of economic opportunity and human empowerment for all. For billions of humans in the developing world, the Asian ‘tiger’ economies offered a beacon of middle-class living standards, if only the Reagan-Thatcher prescription were applied worldwide to economic policy management.
A quarter century later, the spirit of 1990s has evaporated for all but the top 1%, giving way to frustration, anger and even despair. Populism, nativism, civil unrest, drug addiction and strife have replaced free-market capitalism and expanding democracy as the by-words of the 21st century. The sunny optimism of Reagan and Thatcher, which inspired a generation, now seems anachronistic. The mantra that society’s ills can be solved by more capitalism and less government appears unfit for purpose.
This is not to say that the European ideal of ‘social market capitalism’, Japan’s ‘social consensus’ or even Singapore’s ‘benevolently directed capitalism’ (which is widely admired and copied in China) offer the right alternatives. The rise of extremist political movements in Europe, Japan’s lost decades of growth or China’s imbalanced and environmentally ruinous growth model are just as ill-equipped as orthodox capitalism to address what ails the world today.
The decade since the great financial crisis has exposed fault lines that are too wide to bridge with simplified interpretations of moral philosophy. Healing begins with an understanding that the core challenge confronting society today is the achievement of sustainable growth.
Yet ‘sustainable’ implies much more than limiting human impact on the environment, as important as that is. Sustainable outcomes must be achieved across many dimensions of economics, politics, the environment and finance.
Sustainability starts with acknowledging that human beings strive to improve their lives, as well as the well-being of their families and communities. Accordingly, growth itself is an essential component of sustainability. Growth is intrinsic to the human condition, to our aspirations, dreams and well-being.
Sustainability also requires that growth and opportunity be enjoyed, in some form, by all members of society. Vastly unequal distribution of income and wealth is not politically or socially sustainable. Merit cannot be reduced to financial outcomes. Value must reflect one’s contribution to others and to the planet’s well-being.
Sustainability also requires recognition that growth may have inexorably slowed, with enormous implications for debt sustainability. Financial stability cannot be addressed by the central bank printing press.
Sustainable growth requires that today’s aspirations be pursued with due consideration for their impact on the environment and on the welfare of future generations. Humans cannot hope to prosper by destroying their planet, nor by leaving an inhospitable world to their progeny.
Philosophers have long understood that free societies can only survive if outcomes are sustainable. Locke, Hume, Smith, Riccardo and others elucidated the dangers of unequal opportunity, plutocratic tendencies, excessive concentration of wealth and power, and the need to recognize the inter-connected nature of economic and political systems.
Jackson Hole Economics has been established with the wisdom of the worldly philosophers in mind. We seek to promote dialogue and develop actionable ideas for how sustainable growth can be achieved. We seek new ways to improve the human condition.
We welcome your readership, your comments and your input for how we, together, can create a better world for ourselves, our offspring and our companion species on planet Earth.