Simon Johnson’s new Atlantic article The Quiet Coup—about how the crony capitalists of the U.S. financial sector have corrupted our system—has been getting a lot of deserved attention.
But Dani Rodrik isn’t so sure about Johnson’s proposed remedy, and I think Rodrik has a point:
Simon’s account is based on a very simple, and I believe misguided, theory of politics and economics. It is an odd marriage of populist and technocratic visions. Countries fail because political elites always end up in bed with economic elites. The solution, apparently, is to let the technocrats (read the IMF) run your affairs.
Among the many lessons from the crisis we should have learned is that economists and policy advisors need greater humility. Too many of us thought we had the right model when it turned out that we didn’t. We pushed certain policies with much greater confidence than we should have. Over-confidence bred hubris (and the other way around).
Do we really want to exhibit the same self-confidence and assurance now, as we struggle to devise solutions to the crisis caused by our own hubris?