NOT MUCH TO QUIBBLE WITH:

The recovery will prove Thatcherism right: This recession has been overstated. And states with liberal, flexible economies are best placed to benefit from the upturn (Bill Emmott, 8/13/09, Times of London)

The first point, however, is that claims that this is the worst slump since the 1930s, or in a century, were way overblown. [....]

This recession has looked historic chiefly because it has been global. But from most national points of view, it has not looked or felt quite so exceptional. In neither Britain nor America has it yet felt worse, for jobs or living standards — surely the two things that matter most — than the early 1980s or (in America’s case) the late 1950s. Unemployment is still rising but would have to rise a lot farther before this recession achieves once-in-a-century status.

Its true novelty, by comparison with the 1970s, 1980s or 1990s, is that it was caused by a banking crisis and is deflationary, rather than being caused by an effort to tame inflation. Hence interest rates have been at rock bottom, cutting living costs for millions of mortgage-borrowers and thus supporting consumer spending. [...]

The fourth, and biggest, implication of a recession that ends now is that the obituaries written last year for liberalism, for the 30 years of policy domination by the ideas of Reagan and Thatcher, will prove premature. The state has been back only as an emergency rescue service, albeit a vital one, and governments in Europe and America will sell nationalised banks and other assets at the first opportunity, and cut public spending wherever they can. Financial regulation will be tighter at the end of this crisis than at the start, but even Friedrich Hayek, Lady Thatcher’s guru, would not quibble with that.

Indeed, I would venture a prediction: five or ten years hence, we will conclude that the countries that recovered most strongly and durably from the 2007-09 recession were those whose economies were the most flexible, the most able to seek out new opportunities and to shift resources from dud old sectors to new ones — which means more liberal countries, such as Britain and America. Over-regulated Europe will feel obliged again to shuffle in a liberal direction. Japan got stuck in its 1990s stagnation because its economy proved too rigid. That is the case for liberalism: not that markets are always right, but that they are a system of constant experimentation and adaptation that governments thwart at their countries’ peril.