Economists sometimes take us for children

Economists sometimes take us for children. In the evening, for us to sleep, they tell us many beautiful stories with only a distant connection with reality, such as the tale of the great moderation or the fable of decoupling. Once the light is extinguished, they disappear in the night to imagine new nonsense.

First history, thus: the tale of the great moderation. Indeed, it seemed so far-fetched that it was never question in these columns. He has yet mobilized from beautiful minds over the last decade. The current President of the Federal Reserve of the United States, Ben Bernanke, is devoted a beautiful speech five years ago. The starting point was a finding. From the mid-1980s, production increased at a much more regular pace than before. Oscillations of growth became two times less strong. It was the great moderation of volatility. The men had finally managed to find the key to the economy fresh and happy.

Brilliant researchers have spent years to find a series of explanations of this failure: failover in an economy of services, better management of stocks, financial innovation, monetary policy more effective, and even... more likely, in the form of less frequent shocks. Some, like the current Chief Economist of the IMF, Olivier Blanchard, approached what today appears to be the main explanation of moderation: the rise of finance has cushioned the decline in activity and fueled his rise. But nobody had seen that it was at the cost of a tremendous debt that eventually explode. Based on an unsustainable accumulation of debts, the great moderation was bound to lead to its opposite, the great Fluctuation, and to which will remain in history as the second great depression. This story has obviously no morality.

Second story: the fable of decoupling. The original idea was as simple and attractive, if not new. Emerging countries have finally emerged. They can move forward alone, even in America and Europe dive. Indeed, in twenty years, the weight of the developed countries in the emerging exports increased from 70 to 50. Exports from China to the United States are just 8 of its GDP. Problem in developed countries, China, the Russia and the other countries of the East, the Brazil and South Africa have the means of global growth. It is perhaps true... but not for the moment. In these countries as the economy slows sharply. It is the offset, non-decoupling! China began to slow from six to nine months after the United States. In 2009, activity will strongly back into rich countries and it is more secure that it progresses in the other.

This "recoupling" is not surprising. In a globalized economy, each dependent on others and therefore illusory to believe that each disease will save the other. In a finance it also globalized, the transmission is even more brutal. Banks and businesses in rich countries, which have big problems of money, do more to invest elsewhere. Liquidity will sorely miss. It is one of the most impressive figures of the beginning of this year, and there is yet much: private emerging world capital flows should drop to $ 165 billion this year 929 billion in 2007 (forecasts of the Institute for International Finance). A division by five! The depletion precipitated from Europe's turmoil. It may hit Asia and Latin America, despite the reserves accumulated over the past decade. The IMF fears do not have pockets deep enough to help all those in need.

This story below has a morality: one world, a single crisis. It could also lead to hope. Efforts to overcome the crisis may begin another decoupling, vital it between economic activity and its bite on the environment. In the meantime, economists have invented us other beautiful stories.