At first glance it may looks that the notion of mediocrity as a rule for global economy and local economies in particular, is unfair. The fact is that policy makers, are doing their best to overcome the lasting effect of the worst financial recesion of this century.They did not create that recesion because of their policies, but because they lacked of them,otherwise it is hard to understand the reason why smart people did nothing to prevent it.This fact, some how shift the burden of responsibility to markets economic agent, however, not any of them ,but those innovators who lead the new way to do business with high risk financial products.-
Financial Innovation went through markets transaction at a faster pace, than policy makers were able to design the proper approach first , then the proper policy, to deal with its higher than usual risk profile in financial transactions.
Therefore ,the new mediocrity hypothesis arise from the fact that no matter its consequences, a lot of the most promiment financial institution in the world ,followed that innovation bet,and aside from almost the usual innovation flow coming from information and communication technologies , there is no current innovation on the global economy capable of matching that one which led to the financial crisis.The obvious implication is that those innovation failed, but that is the path for better and stronger innovation in the future.
Perhaps, unconventional Monetary policy match such an innovation label, but it is unusual to count on that indefinitely,sooner or later it will back to normal, which is the opposite of lasting innovation(creative destruction).Fiscal policy, still is depending on taxes, and worst of all on higher taxes. This macro economy policy , should follow the innovation path of the monetary policy, but this one, to last for longer period of time. Let take the case of a partnership with the private sector to provide better services, protecting the state from corruption with better laws ,or to get rid of centralized solutions away where the problems come from
Thus, given that none of these macroeconomic policies are even close to be innovative, so the sources of economic growth will not be either.The endogeneous source of growth, arise from talented people who have the chance of following their way up to the top, within a supportive environment, with clear and stable rules,and the right incentives, which asumes an innovative State.
At the end of daily analisys, economic growth still depend upon the same approach applied in the past, more State and less private initiative.If this is the case, there are two implications:
a.-The new mediocrity means, lacking of new ideas to lift both investors and consumers expectations up.To get rid of traditional text books solutions to solve old problems, but inefficient to deal with new problems arising from konwledge and information, as the driving force of the global economy, and economy growth.
b.-The new mediocrity will stay for a long period of time,unless innovation also apply to fiscal policy.
