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Prof. Yao Yang Urges for Quick Return to Common Sense

Dec 09-2022   



Economic theories that are not in line with common sense can bring outsize harm to the society, said Prof. Yao Yang, Dean of both the NSD and BiMBA Business School, in a recent seminar. Of the examples he gave, a salient one concerns the pandemic controls implemented by some local governments that deviate from both the policy of the central government and common sense. He called for a quick return to common sense, which is a prerequisite for overcoming economic challenges.

 

He refuted three highly regarded theories that go against common sense, namely those on currency neutrality, excessive liquidity, and labor value. Increasingly more ‘blackboard economists’ are absorbed in theoretical inductions but neglect fact-based common sense, he lamented.

 

Certain policies that disregard common sense have led to enormous economic losses. One example is encouraging banks to lend to small and medium enterprises. Despite their importance, SMEs have an average lifespan of three years and therefore entails high risks for lenders. It’s common sense that large banks are unwilling to lend to SMEs, and doing otherwise is likely to result in financial problems.

 

Another example is pandemic controls. Three kinds of common sense should be reckoned with, said Prof. Yao. Firstly, zero-covid doesn’t mean the elimination of the virus for good; therefore, normalized measures in line with the recently announced central government policy should be adopted, rather than movement-styled ones. In addition, zero-covid policy causes serious secondary damages, such as decreasing income, loss of freedom of the public, and a growing number of people inflicted with mental illnesses. The third common sense is that the toxic level of the virus will drop over time, so timely adjustment of control measures must be made.

Prof. Yao Yang Urges for Quick Return to Common Sense

Dec 09-2022   



Economic theories that are not in line with common sense can bring outsize harm to the society, said Prof. Yao Yang, Dean of both the NSD and BiMBA Business School, in a recent seminar. Of the examples he gave, a salient one concerns the pandemic controls implemented by some local governments that deviate from both the policy of the central government and common sense. He called for a quick return to common sense, which is a prerequisite for overcoming economic challenges.

 

He refuted three highly regarded theories that go against common sense, namely those on currency neutrality, excessive liquidity, and labor value. Increasingly more ‘blackboard economists’ are absorbed in theoretical inductions but neglect fact-based common sense, he lamented.

 

Certain policies that disregard common sense have led to enormous economic losses. One example is encouraging banks to lend to small and medium enterprises. Despite their importance, SMEs have an average lifespan of three years and therefore entails high risks for lenders. It’s common sense that large banks are unwilling to lend to SMEs, and doing otherwise is likely to result in financial problems.

 

Another example is pandemic controls. Three kinds of common sense should be reckoned with, said Prof. Yao. Firstly, zero-covid doesn’t mean the elimination of the virus for good; therefore, normalized measures in line with the recently announced central government policy should be adopted, rather than movement-styled ones. In addition, zero-covid policy causes serious secondary damages, such as decreasing income, loss of freedom of the public, and a growing number of people inflicted with mental illnesses. The third common sense is that the toxic level of the virus will drop over time, so timely adjustment of control measures must be made.