Ten Useful Economic Lessons

Dr John Llewellyn, chief global economist at Lehman Brothers, writes about lessons from 35 years as a professional economist:

1) Economic events (‘shocks’) – seldom produce just one consequence. Usually, the effects ripple on for years.
2) Good economic policies do not guarantee good economic performance; bad economic policies inevitably result in bad performance.
3) It is structural, not demand-side, policies that most influence economic performance over the long term.
4) People respond powerfully to economic incentives.
5) Economic and social policies have to be considered as a whole.
6) Competition is one of the most powerful of forces that motivate the perpetual quest for more efficient ways of doing things.
7) History seldom, if ever, repeats precisely. Economies have the habit of producing new mixtures of circumstances that require new approaches.
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) Just because professional economists don’t always have a confident answer, it does not follow that all proffered solutions have equal validity. Demonstrate why the current fad is wrong and will fail is a valid contribution.

via New Economist

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Sources:
Ten useful lessons for a sexagenarian    
John Llewellyn
The Observer, Sunday August 7, 2005
http://politics.guardian.co.uk/economics/comment/0,11268,1544056,00.html

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