ISTANBUL -- A new social contract is needed to account for the increasingly important role that individual preferences, and individual responsibility, play in today's world. Each citizen should feel empowered, not isolated and abandoned, in the face of globalization and technological transformation.
Behind the numbers lies an unusually complex set of forces shaping the world economy. Some, such as the decline in the price of oil and the evolution of exchange rates, are highly visible. Some, from crisis legacies to lower potential growth, play more of behind-the-scenes role but are important nevertheless. Let me briefly review them.
The March job numbers came in somewhat worse than most analysts had expected. The slower job growth was largely attributable to unusually bad weather in late February and early March, but most of the commentators seem to be missing this fact. Many are warning that the economy might be weaker than they thought. These warnings from commentators are in fact good news. They are good news first because it is almost certainly true that the economy is weaker than these analysts thought. Many had been making silly pronouncements about a new American boom that was not based in any real understanding of the economy. It's always best when the people who are determining economic policy have some idea of the actual state of the economy. The other reason the warnings are good news is that they may slow down the Federal Reserve Board's rush to raise interest rates.