Archive for July, 2012
A version of this post appeared on LabourList on 1st August 2012.
The charge sheet against Messrs Cameron and Osborne as the architects of the coalition’s economic strategy is growing, and it may not be long before they, like their buddies Andy Coulson and Rebekah Brooks, find themselves in the dock.Not perhaps the dock of the Old Bailey, but the dock of public disgust at their approach to the economy.
It is forgivable to get economic strategy wrong – for those who have understood Keynes’s real message, uncertainty is the prime feature of economics. What is unforgivable is to propagate clear untruths about the recession that is threatening the livelihoods and incomes of so many. Read the rest of this entry »
Yet it’s still Keynes from whom we have most to learn. Not Keynes the economic engineer, who is invoked by his disciples today. But Keynes the sceptic, who understood that markets are as prone to fits of madness as any other human institution and who tried to envisage a more intelligent variety of capitalism. John Gray, BBC News Magazine, 22/7/2012.
Seeing this reminded me that I had forgotten to put up this piece that went on LabourList on 14th August last year.
In his thoughtful analysis on LabourList of our current economic predicament, Anthony Painter quoted Nobel Prize-winning economist Paul Krugman’s view of the eclipse of Keynesian economics. I think Anthony is slightly off the mark to see Krugman’s point as being that ‘it’s difficult to find people to fund debt and deficits on the scale that’s required’. In fact, public spending is limited less by the need to find funding, than by the ability of that spending to properly utilise resources (particularly labour) that the private sector does not. The failure of most of his fellow-economists and almost all policymakers to understand this is the real essence of Krugman’s lament. Read the rest of this entry »
Long piece today by the Guardian’s economics leader writer, Aditya Chakrabortty, on the cost of the banking crisis, bank misconduct and what should be done about it. I agree wholeheartedly with the thrust of this piece, and indeed said much the same two and half years ago in my piece on the Guardian Cif site. Aditya’s piece concludes that
any investigation needs to understand how to reform the finance sector so that crises like these don’t recur; and so that banks actually work in the public interest rather than hire propagandists to pretend they do. Because in the end, financial reform is not about technicalities, but about politics: deciding what role banks should play in an economy, and what kind of economy we want.
However, he says also that:
According to the IMF, the British stuck £1.2 trillion behind the finance sector. Read that again: well over a trillion pounds in bailouts, and loans and state guarantees on bankers’ trading. In just a few months, and with barely any public debate, every household subbed £46,774 to the City. A sliver of that money eventually went unused; as for the remaining hundreds of billions, we have no idea just how much we’ll get back – or when.