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The Consolations of Economics by Gerard Lyons, book review: Comfort and hope across the globe
Thursday 10 July 2014
Maybe economics should not be billed as "the dismal science" after all. The expression was coined by the Scottish historian Thomas Carlyle more than 150 years ago. Since then there has been a huge explosion of wealth worldwide, but even now it is much easier to promote economic gloom than economic success – witness the appeal of the pretty dismal observations of Thomas Piketty. So Gerald Lyons's solid and convincingly optimistic perspective is a welcome counterpoint to the narrow concerns about both the overall decline of the West and the growing inequalities within the developed world.
He argues that we are moving away from the dominance over the world economy by the West, but this multi-polar world will be better for all: "The next century will not be China's. Nor will it be Africa's. It will be a global century, where many different parts of the world will do well. This new world order should offer more economic comfort and hope across the globe…"
It might seem strange to be arguing this at a time when many people in Europe and the US feel their living standards have been squeezed. But consider this: between 2008 and 2012 three-quarters of global economies saw an increase in living standards. That was the worst crisis for 80 years, so it is reasonable to assume that while there will be setbacks in the future, nothing as bad is likely to occur for a couple of generations.
Naturally there are risks. These include climate change, health hazards, too little water and energy – and too much corruption. He argues that there are ways of countering these risks, that we can increase our resilience to them, and that we need to be responsible. As for financial risks, Lyons feels that lessons have been learned and the pieces are being put back together. That does not mean that the rigidities imposed by the euro can continue – he believes that some countries will leave and the project may eventually collapse. But if Europe were to reform, then the euro could eventually become the major currency EU leaders would like it to be. At least the narrow crisis over the euro and the wider one over the West's banking system have taught the world a lot about coping with risks, but he would be first to argue that reform is very much a work in process.
Lyons has been a city economist for most of his career, and has now become the economic adviser to Boris Johnson. That feels appropriate, for London is certainly doing well out of the globalisation that Lyons stylishly chronicles.
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