‘For ten years or so, my name was “that jerk”,’ says Professor Richard Thaler, president of the American Economics Association and principal architect of the behavioural economics movement. ‘But that was a promotion. Before, I was “Who’s he?”’
Thaler has had to get used to putting noses out of joint. His academic research, initially controversial, sparked an entirely new branch of economics, and now governments are adopting his theories across the globe. But he met plenty of resistance along the way. ‘You get your ideas straight when you argue with those whose views are most different from yours,’ he says.
“What is a Minsky Moment, anyway?” asks Gerry Stembridge, a razor-sharp Irish comedian. “I’ve been reading about them in the papers and have often wondered”. Stembridge is putting the question to Paul McCulley, Chief Economist at Pimco, the world’s largest bond fund with over $200bn under management. Among the ten most influential economists on earth, McCulley is sporting a T-shirt and jeans.
If that’s not odd enough, the two men, Celtic comic and American financial whizz, are on stage in a theatre in Kilkenny, a bijou provincial city in South-East Ireland. It’s Saturday night and they’re facing a sell-out crowd – all of whom have paid to watch a debate on global economics and most of whom aren’t waiting until the interval to have a drink.
After months of escalating tensions over Ukraine and talk of a new cold war, Russia and the West could soon reach a sanctions rapprochement. The eurozone economy is suffering badly and sanctions are partly to blame. Winter is also upon us, and that reminds everyone Vladimir Putin still holds the cards when it comes to supplying gas.
The clincher, though, is that Kiev is in a deep financial hole and fast heading towards financial meltdown. Unless an extremely large bail-out is delivered soon, there will be a default, sending shockwaves through the global economy. That’s a risk nobody wants to take – not least in Washington, London or Berlin.
William Hague was on rather shaky ground when he argued this week that Moscow has chosen “the route to isolation” by recognizing Crimea’s referendum. On the contrary, it is the European Union and the United States who look as if they have seriously overplayed their respective hands in Ukraine. Across Asia, Africa and Latin America, the cry of “Western hypocrisy” has been heard much louder than complaints about Vladimir Putin.
Even in the UK, mainstream opinion is steadily becoming more critical of Western interventionism and our “New Cold War” posturing – despite some pretty one-sided media coverage and much establishment “tut-tutting”. Independent thought is still viewed with suspicion, and even disgust, by some – and I should know, having consistently argued we should negotiate with Moscow, not threaten tough sanctions we’ll never impose.