http://www.ft.com/intl/cms/s/0/4e0a21fc-2261-11e1-acdc-00144feabdc0.html#axzz1unqREWIh

The Financial Times is one of the best economic and financial newspapers in the world. It is also a good mirror of the conventional wisdom about the economy and the state.

On December 11, 2011, the newspaper ran a story on the growing public debt crisis in Europe. “Markets and governments”, the journalist argued, “face an uphill struggle … as new figures reveal that the borrowing of industrialised governments has surged”. The story cited an OECD official commenting that “market events seem to reflect situations whereby animal spirits dominate market dynamics, thereby pushing up sovereign borrowing rates with serious consequences for the sustainability of sovereign debt.”

It would be a good exercise for a student in political economy to find the two mistakes illustrated by these statements. One mistake is encapsulated in the Keynesian expression “animal spirits”. We have since seen that those “animal spirits” about the European public debt problem were quite correct, if only a bit optimistic. In fact, the animal spirits of the state are much more dangerous than private animal spirits.

The other mistake relates to the strange expression “industrialised governments”. The expression is properly nonsensical as a government cannot be industrialized or non-industrialized. What the newspaper actually refers to are the governments of industrialized countries. Confusing the country and its government (or its state, to be more precise) would have pleased Jean-Jacques Rousseau, but it is seriously misleading.