Be careful what you wish for

“Be careful what you wish for” is going to be the theme of my introduction to the session on “growing pains” at this coming weekend’s Battle of Ideas.

For a long time growth sceptics have expressed concern about the rising affluence of places such as China and India. They have argued, at least implicitly, for a cut in their economic growth. Now, with the global financial crisis, they could get what they wish for. If they do it will be a tragedy as billions of people will not be in a position to benefit from rising prosperity.

There are already signs that instability is spreading to developing economies. This was discussed in last week’s Economist (25 October) as well as by such luminaries as Paul Krugman of Princeton and Dani Rodrik of Harvard.

Over the past couple of days the authorities (the International Monetary Fund, America’s Federal Reserve and the European Union) have offered financial help to emerging economies in a bid to stabilise them. The catch is, according to a report by Capital Economics, that they are offering help to those countries that need it least. Those which most need help are unlikely to qualify.