The term ‘Navarros recession’, coined by the US media, refers to the slowdown in the economy caused by the misguided trade and currency policies by Peter Navarro, an economist in the US administration, with complete backing from the US President Donald Trump.
With trained economists—some even trained in the University of Chicago—taking unconventional policy positions that undermine market expectations and defy scholarly evidence on free markets, economies around the world are in turmoil. Some of these ‘Navarros’ have had their candidacy mired in corruption, while some have even turned against their leader for not aligning with their policy vision.
It needs to be examined as to why are Navarros on the rise and taking unconventional stances. More so, how are their policy ideas impacting and deepening social and economic distortions?
In Brazil, Paulo Guedes, the Chicago-trained economist who was the chief economic adviser to the campaign of Jair Bolsonaro and is the Economy Minister under President Bolsonaro, is being touted as the principal force behind the opening up of Brazil’s markets. However, he is also under investigation over accusations of fraud tied to the pension funds of state-run Brazilian companies.
In Hungary, Lajos Simicska, an oligarch and friend of Prime Minister Viktor Orban, guided the Orban economics of fear and his policy of setting up of large nationalised organisations. Howbeit, he has since fallen out of favour with the prime minister.
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In India, though Chief Economic Advisor (CEA) K.V. Subramanian, also a Chicago-trained economist, has not taken any new policy positions, he invoked Goddess Maa Sharada, whom he also referred to as ‘Kashmira Pura Vasini’, while welcoming the government’s decision to abrogate Article 370, the constitutional provision which grants special status to Jammu and Kashmir.
On the other hand, Turkish President Recep Tayyip Erdogan has nominated a body of 76 members to nine policy boards to overhaul Turkish economic policy, raising the possibility of a ‘club of Navarros’ there. Moreover, the economic committee of Mr. Erdogan includes Servet Bayindir, a theology and economics professor specialising in Islamic finance, and so, for the first time in many decades the Islamic economic systems may influence economic policy decisions.
These examples point to a larger trend as the discipline of economics tries to reinvent itself to changes brought about by globalisation and automation. It remains to be seen as to how healthy and influential it is given the social unrest fostered by inequality and the rise of populists across the world would be mitigated.
A haircut, in the business context