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.
The economic miracle that has been the United States was not produced by socialized enterprises, by government-unon-industry cartels or by centralized economic planning. It was produced by private enterprises in a profit-and-loss system. And losses were at least as important in weeding out failures, as profits in fostering successes. Let government succor failures, and we shall be headed for stagnation and decline.
Economies are supposed to serve human ends.. not the other way round. We forget at our peril that markets make a good servant, a bad master and a worse religion.
Money is not capital in most of the developing countries. It's just cash. Because it lacks the institutional, organizational, managerial forms to turn it into capital.
The merchants will manage [commerce] the better, the more they are left free to manage for themselves.
I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible. ... because I believe the big problem is not taxes, the big problem is spending.
The introduction of a substantial Government transfer tax on all transactions might prove the most serviceable reform available,with a view to mitigating the predominance of speculation in the United States.
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