If developed countries' citizens want to feel slightly better about their economies' slow growth and high unemployment, they should contemplate how much worse matters could be without the institutions that they have.
Interpretation
This quote emphasizes the importance of institutions in stabilizing economies, particularly in developed countries with slow growth and high unemployment.
Raghuram Rajan's quote suggests that citizens of developed nations should appreciate the role of their institutions in mitigating economic challenges, such as slow growth and high unemployment. Rather than focusing solely on the negatives, contemplating the potential worse outcomes in the absence of these institutions can foster a sense of gratitude and perspective, highlighting how essential these frameworks are to maintaining economic stability and societal welfare.
In practice
In a discussion about economic challenges during a community meeting.
The U.S. should worry about the effects of its polices on the rest of the world. We would like to live in a world where countries take into account the effect of their policies on other countries and do what is right, broadly, rather than what is just right given the circumstances of that country.
Customers often value a good more when its price goes up. One reason may be its signaling value. An expensive handcrafted mechanical watch may tell time no more accurately than a cheap quartz model; but, because few people can afford one, buying it signals that the owner is rich.
The problem with forbearance is that it always looks like a good thing to do until it stops working.
Perhaps the hardest challenge has been to persuade the public, impatient for rapid growth, of the need to ensure stability first. Growth, it is argued, is always more important, regardless of the looming economic risks.
Too many years away from academia renders you pretty incompetent at research and teaching. So I had to go back.
The gap in India has always been between the promise and the execution.
We need to revise our economic thinking to give full value to our natural resources. This revised economics will stabilize both the theory and the practice of free-market capitalism. It will provide business and public policy with a powerful new tool for economic development, profitability, and the promotion of the public good.
Developing economies may not have much control over the headwinds that they face today, but that does not mean that they are powerless. Much can be done not just to sustain moderate growth but also to secure a more prosperous and resilient future.
Contrary to a tenacious myth, France is not owned by California pension funds or the Bank of China, any more than the United States belongs to Japanese and German investors. The fear of getting into such a predicament is so strong today that fantasy often outstrips reality. The reality is that inequality with respect to capital is a far greater domestic issue than it is an international one.
How could economics not be behavioral? If it isn't behavioral, what the hell is it?
The trouble with the profit system has always been that it was highly unprofitable to most people.
The most important single central fact about a free market is that no exchange takes place unless both parties benefit.
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