Monday, December 10, 2012

Is Monti a "technocrat" or rather a "fundamentalist" who is dooming Italy?

From New Economic Perspectives:

Why is the failed Monti a “technocrat” and the successful Correa a “left-leaning economist”?

By William K. Black
(Cross posted at

The New York Times produces profiles of national leaders like Italy’s Mario Monti and Ecuador’s Rafael Correa.  I invite readers to contrast the worshipful treatment accorded Monti with the Correa profile.  The next time someone tells you the NYT is a “leftist” paper you can show them how far right it is on financial issues.

The NYT’s slant in describing Monti as a “technocrat” and Correa as a “left-leaning economist” is typical of the dominant media.  Monti and Correa both have doctorates in economics from U.S. universities and both have been professors of economics.  
Why does the NYT treat Monti reverentially and Correa dismissively?

There are a series of factors that the U.S. media normally uses to judge relative merit among those with elite qualifications and national leaders.  The media normally values most highly national leaders who demonstrate:
  1. A track record of success
  2. Courage and leadership in making the tough decisions that produce success
  3. Rising from humble circumstances through hard work and self-sacrifice
  4. Repeated success in democratic elections
  5. Dedication to the interests of those with the greatest needs rather than to the wealthy
  6. Bold, innovative policies

A track record of success

Readers of the Monti and Correa profiles would not be able to judge their relative success as economists and national leaders, but that is not because the facts are not readily available.  Under Monti, Italy’s economy sank back into a serious recession because of the self-destructive austerity policies that Monti strongly supported.  


Correa’s track record is one of dramatic success.  Ecuador did not fall into recession even when the financial crisis caused the Great Recession.  This was a remarkable achievement, for Ecuador uses the dollar as its currency, has extensive trade with the U.S., and was harmed greatly by the fall in oil prices in 2008.  Since 2008, Ecuador has demonstrated fairly robust growth of real GDP, substantially reduced unemployment, reduced poverty, and established a far more effective safety net to reduce misery for the poor.  Unemployment in Ecuador (4.6%) is less than half of Italy’s rate (11.1%).  Unemployment in Ecuador has been falling under Correa while it has risen in Italy under Monti.
Correa inherited a more crippling debt crisis than did Monti.  He used his skills as an economist to devise a default on that debt and a buy-back of the debt at a dramatically discounted rate.  He did all of this while producing robust growth.


... read full article at New Economic Perspectives.

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