Failed: What the "Experts" Got Wrong about the Global Economy

313 Pages·2015·12.31 MB·English

by  Mark Weisbrot

FAILED

FAILED
What the “Experts” Got Wrong
about the Global Economy
MARK WEISBROT
1
1
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Library of Congress Cataloging-in-Publication Data
Weisbrot, Mark.
Failed : what the “experts” got wrong about the global economy / Mark Weisbrot.
pages cm
Includes bibliographical references and index.
ISBN 978–0–19–517018–4 (hbk.)
1. Financial crises—European Union countries. 2. Economic forecasting.
3. Economic policy. 4. International Monetary Fund. I. Title.
HB3782.W45 2015
330.94ʹ0561—dc23
2015014988
9 8 7 6 5 4 3 2 1
Printed in the United States of America
on acid-free paper
To Francesca.

Contents
Preface | ix
Acknowledgments | xv
Introduction | 1
1. Troubles in Euroland: When the Cures Worsen
the Disease | 20
2. This Time Could Be Different: The Aftermath
of Financial Crises | 56
3. Untold History, Unsolved Mystery: The Long-Term
Economic Growth Failure | 83
4. The Misunderstood Role of the International
Monetary Fund | 125
5. The Latin American Spring | 167
Conclusion: Looking Ahead | 234
BIBLIOGRAPHY | 243
INDEX | 275

Preface
The history of economics and especially of economic policy has
often been rewritten beyond recognition. The history of economic
development is filled with episodes of industrialization through
protective tariffs, import bans, state-owned enterprises, govern-
ment subsidies for exports and favored industries, regulation and
control over foreign investment and ownership, as well as foreign
exchange, and the careful, often prolonged nurturing of infant
industries. My own country, South Korea, went from a desperately
poor country with per capita income half that of Ghana in 1961, to
reach European living standards half a century later. It used all of
these policy tools and more to defy the odds and become of one of
the few developing countries in the past 70 years to make it into
the club of high-income countries.
In my books and research I have shown that it is not only the
late-comers like South Korea that have violated the “creation
myths” of modern (and especially neoliberal) economics along
the road to a developed economy. On the contrary, protection
and state-sponsored development were essential to the success of
almost all of today’s high-income countries. The first British Prime
Minister, Robert Walpole, protected the British woolen indus-
try with high tariffs from the 1720s onward, while making sure
that the colonies (including America) would supply raw materials
ix