Over at CarolinaJournal.com, the featured Friday interview is with University of Chicago economist Luigi Zingales. JLF’s Mitch Kokai talked with Zingales about the U.S. financial crisis. Here’s an excerpt:
Kokai: What happens here in the United States if we do nothing and allow the cronyism to fester?
Zingales: I think it’s a slow and very painful decline with a lot of social tension and a sort of a reduction in the vibrancy and productivity of the economy, in a sense. What you have is, on the one hand, some populist pressure will force some equalities so that incentives will be dampened and people will be less attracted to come to the United States. On the other hand, you will have much more sort of government redistribution of resources with the cronyism that this brings, and with the slowdown in productivity growth, et cetera, that this brings.
So the problem of this crisis is not immediate traumatic effect. It’s a slow undermining of the expectations and beliefs of people, and by the time you realize this has happened, very often it’s too late. And so that’s the urgency, not because the problem will arise tomorrow, it is the urgency because if you don’t start early enough, it’s too late.
