Fault Lines: How Hidden Fractures Still Threaten The World Economy

by Raghuram G. Rajan

In an international athletic race, one of the participants is found to have taken an energy booster. He is disqualified for violating the rules. But on closer investigation, we find that when the race began, one set of participants had the latest, specially designed aerodynamic equipment, specifically allowed by the rule-making body, which is dominated by representatives of this set of countries, whereas the participant who took the energy booster used ordinary, off-the-shelf, cheap equipment. Who is competing unfairly now? Under the rules of the game, it is still the competitor who took the energy booster. But the rules themselves entrench disadvantages. The term unfair takes a lot as given, including the framework of evaluation, and it is a term that cuts little ice with the leaders of developing countries.