Special interests hold undue sway over official decision makers in many countries, and regulators are always prone to see the world through the eyes of the people whose activities they are supposed to oversee. But the rise of finance in industrialized countries has cast these issues in a new, much harsher light.

I am convinced, for example, that over the years there has been too much regulatory capture by the supply side of the financial services market, with its well organized and powerful lobbies. By contrast, there has been too little engagement on the demand side.

In fact, the ministry has used its informational campaign to shape public discussion, convincing scholars, business economists, and the general public to be more concerned about keeping the budget deficit under control than about the effects of a negative demand shock. This is a typical example of what economists like Joseph Stiglitz call cognitive capture.

The list of growth obstacles in emerging markets is even longer corruption and weak rule of law, state capture, organized crime, poor infrastructure, an unskilled workforce, limited access to finance, and too much state ownership. In addition, markets of all sizes and levels of development continue to suffer from protectionism, restrictions on foreign capital flows, rising economic populism, and profligate or poorly targeted welfare programs.

There is no single, easy solution that addresses both of these imperatives. Reining in global warming while ensuring economic growth will require a balanced portfolio of solutions, including renewable energy and increased energy efficiency.

The global financial crisis of 2007 2008 and the deep recession that resulted made it plain to see that the financial sector in the US and elsewhere had become too powerful. Since the 1980 s, a form of cognitive capture had occurred, with policymakers becoming convinced that innovation and deregulation could only improve the functioning of both financial intermediation and the broader economy.