The lesson from the financial crisis should have been a recognition of the limitations of the finance sector centric policies . The credit based expansions leading to boom bust bubbles across various asset classes is not sustainable. The old operational narrative of bank mediation and productive investment is a fallacy and dead.
The only institutions with the financial clout and ability to write the rules to foster incentive mechanisms are democratic. The problem is those who know better are increasing being drowned out and in a good way.
The column concludes:
It’s the politics, stupid
"The problem, then, is not that the world has run out of policy options. Politicians have known all along that they can make a difference, but they are weak and too quarrelsome to act. America’s political establishment is riven; Japan’s politicians are too timid to confront lobbies; and the euro area seems institutionally incapable of uniting around new policies.
If politicians fail to act now, while they still have time, a full-blown crisis in markets will force action upon them. Although that would be a poor outcome, it would nevertheless be better than the alternative. The greatest worry is that falling markets and stagnant economies hand political power to the populists who have grown strong on the back of the crisis of 2007-08. Populists have their own solutions to economic hardship, which include protectionist tariffs, windfall taxes, nationalisation and any number of ruinous schemes.
Behind the worry that central banks can no longer exert control is an even deeper fear. It is that liberal, centrist politicians are not up to the job. "
From the direct employment of the population during the Great Depression to Cold War era public investment in long term technological developments we're not short of ideas to promote. With more people on the planet than at any time in history, continuing the evolution away from a extractive fossil fuel/natural resource based economy to more productive, efficient use is the crisis of our age. Tangible benefits like alleviating the race to the populist bottom and distracting financial markets aside this is the job of leadership.
If only we had some.