Paul Krugman offers interesting insights into why business
leaders often provide lousy economic advice (especially, macroeconomic policy advice):
Krugman observes:
“… So think of what
happens when a successful businessperson looks at a troubled economy and tries
to apply the lessons of business experience. He or (rarely) she sees the
troubled economy as something like a troubled company, which needs to cut costs
and become competitive. To create jobs, the businessperson thinks, wages must
come down, expenses must be reduced; in general, belts must be tightened. And
surely gimmicks like deficit spending or printing more money can’t solve what
must be a fundamental problem.
In reality, however,
cutting wages and spending in a depressed economy just aggravates the real
problem, which is inadequate demand. Deficit spending and aggressive
money-printing, on the other hand, can help a lot.”