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Wednesday 23 Aug 2017 | 12:29 | SYDNEY
Wednesday 23 Aug 2017 | 12:29 | SYDNEY

Reader riposte: The Economist's principles



23 September 2008 10:04

Hans van Leeuwen writes:

The Economist editorial you pointed to on Friday argues that governments should intervene to bail out banks and  markets now, even though it will undermine moral hazard and shift the cost burden from foolish risk-takers to long-suffering taxpayers. The reasoning is consequentialist: the alternative of not intervening, while better in principle, will have worse outcomes in practice.

This is fine, but it stands at odds with The Economist's usual line of reasoning, which sticks to principles rather than being consequentialist. When The Economist addresses emerging markets, it almost invariably recommends a stiff dose of economic reform (in particular, non-intervention and privatisation), even if the short-term consequences are worse, domestically, for that country than a dirigiste or interventionist state.

As is often the case with inconsistency in argument, it seems there's one rule for some and one rule for others. To put it a bit simplistically: The Economist regularly tells developing countries that privatising education, health care and utilities and cutting tariffs to zero is a worthwhile reform even in the short term, even as it wrecks industries and makes basic services unaffordable. But if it is investment bankers and Economist subscribers who have to suffer short-term pain, well, too much intervention is clearly not enough!

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