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...The theory of the second best tells us that, faced with an externality, subsidies can help us achieve the best attainable outcome. The second global arms race under way is remilitarisation....
...The writer is a former editor of The Economist and author of ‘Good Italy, Bad Italy’ As a fine economist, Mario Draghi knows the theory of the second best....
...Enter the economic theory of the second best, also known as (heavily) constrained optimisation....
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