Sunday, August 07, 2005

Ten useful lessons

A comment piece in the Observer from John Llewellyn, chief economist at Lehman Brothers, summing up the 10 most important things he's learnt in 35 years as a professional economist. Not all seem that surprising, except perhaps to the overly dogmatised economist. In short:
1. Economic events seldom produce just one consequence.
2. Good economic policies do not guarantee good economic performanc, but bad economic policies inevitably result in bad performance.
3. Structural, not demand-side, policies most influence economic performance over the long term.
4. People respond powerfully to economic incentives, even without realising it.
5. Economic and social policies have to be considered as a whole.
6. Competition is one of the most powerful forces for finding more efficient ways of doing things; it also makes companies' lives more demanding.
7. History seldom, if ever, repeats itself precisely.
8. Complicated economic policies whose rationale is hard to explain usually fail.
9. Some of the biggest, and most important, economic issues remain unresolved.
10. Perhaps most importantly - just because professional economists don't always have a confident answer, it does not follow that all proffered solutions have equal validity.



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