Friday, Feb 13, 2009
Martin Jacques's essay on the subject
New Statesman: The New Depression
Since my earlier NS post has gone down so well, I'm posting this essay too. It's a substantial commentary on the situation, and there are not many of those.
Posted by letthemfall @ 12:34 PM (815 views) Add Comment
14 Comments
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1. ketha said...
Brilliant, thanks. One of the best articles Ive read on this for a while. I find it amazing the the right could have the nerve to try and pretend that it wasn't market capitalism and neoliberalism that caused this mess.
2. Cynicalsoothsayer said...
Starts out okay, but then turns into hard left drivel.
Some have to own up to the financial losses, then the chaos will stop.
3. Dan Hind said...
You might also be interested in this long article on the crisis, published on the Verso books website -
http://www.versobooks.com/books/ghij/h-titles/hind_d_threat_reason.shtml
For what it's worth, I wrote it.
4. goweresque said...
Poppycock! Its not that we've had too much free markets in the last 30 years, its that we've not had enough of them! Most of the reasons this whole crisis has blown up are down to govt meddling. Here in the UK Gordon Brown hadn't reformed the bank regulation system, and given the BoE an inflation target that didn't include house prices, and then changed the from the RPI to the CPI (which doesn't even have housing costs - via interest rates - in it), we would never had had the boom in house prices past 2002/3. Inflation would have risen substantially, rates would have risen to cut off the credit boom before it got out of hand. We would have had lower growth of course, and lower tax revenues, and that would never do for a socialist Chancellor who wanted to hose tax revenue around the place. Equally the reason we have little room for manouevre fiscally now is that Gordon spent all the cash in the boom years. Now there's no room to increase spending prudently (I notice Gordon doesn't mention Prudence much nowadays). We face a mountain of debt to be paid back for decades to come, at best. If it all goes wrong and there's a run on the pound, heaven help us. Hyperinflation, massive govt spending cuts, IMF bailout here we come.
All of this can be laid at the feet of State interference in the market. When a govt takes 40-50% of the economy it is the most responsible factor for any disaster that befalls us. It cannot now claim that none of this is down to its actions and decisions, blame the market led half of the economy, and claim that it should be entrusted with even more of the nations output. Govt should be reduced to 25% of GDP, and limited by statute. If GDP grows, govt would get more tax revenue. Otherwise they would have to live within their means just like the rest of us.
5. braindeed said...
@. goweresque.....'. Hyperinflation, massive govt spending cuts, IMF bailout here we come.'
Where have you been this last 15 years?!! We've had that scenario - I just presume your a 'saver' who's 'savings' have been aquired, inflated and 'saved', during this collusal asset price boom. The 'money' I'm talking about is all subject to the 'pop' princple - it's gone.
The self righteous are so desperate to keep a hold of their own stash, they'll go to great lengths to blame any passing numpty.
It's been a great party - now we've all got a similarily scaled hang-over. ......get over it, and yourself.
6. letthemfall said...
Poppycock indeed, goweresque. Which part of govt spending would you like to see reduced?
House price booms were around before the CPI. Even since CPI's introduction, RPI has not been all that much higher, and not of the mangitude to ensure interest rates high enough to choke off the credit fiesta.
Mountain of debt + decades to pay back = deflation (probably).
7. Boynamedsue said...
Doesn't he realise it wasn't REAL capitalism. REAL capitalism has never been tried.... (repeat ad nauseum until you believe its true or you suffer an aneurism from the strain).
We are going to need to build a new system in which economic power is returned to the masses, a return to the economic democracy of the post-war years (you never had it so good....), though the danger is we fall into a Russian or Chinese style oligarchical capitalist system. Why Jacques loves these billionaire filled dictatorships so much is a mystery to me.
8. goweresque said...
The part of govt spending I want to see reduced is the approximately 50% that is currently wasted. Wasted as they buy stuff that never gets used, or doesn't work, or is totally pointless, or overspend massively in getting some simple item/service, or providing some pointless service, or is paid to people who don't need or deserve it. I could cut govt spending easily by 25% without ever touching the NHS, education or DHS (though that would be next on my list).
I have dealings with govt agencies/departments and the money wasted is frightening. Its oh so easy when its someone elses money. I see no reason why the govt should not have to learn to budget like the rest of us. When we get short of cash we can't just go to our boss and demand a raise, we either have to work more, or cut our spending. If the State had to do the same there would be less waste, and more efficiency.
9. goweresque said...
@ braindeed: Where in the last 15 years have we had hyperinflation, spending cuts and an IMF bailout? I must have missed that. Inflation may have been higher than measured by the CPI or RPI, but could never be described as hyperinflation. As for govt spending, Gordons been hosing that around the economy since 2000 like its going out of fashion. There have never been any spending cuts in actual terms, even under the vicious Tories. In every year since 1979 (and many before that) the govt has spent more than the year before. A couple of times the increase has been less than inflation, but thats all. Since 2000 we have run a structural budget deficit at the height of a boom. And you talk of spending cuts? What planet are you on?
10. braindeed said...
goweresque
House price inflation, tech shares, commodities.....don't split hairs.......or don't these count for hyperinflation purposes?
And all the time we've been heading in the direction of a pop and IMF bail-out. Or did you imagine the 'abolition of boom and bust' was real', and people would be able to keep spending with the MEWing, bonuses, and other funny money generating schemes?
New Order? yea right.
11. goweresque said...
@ braindeed: No I certainly didn't think the credit bubble could be sustained. I was banging on about house prices back in 2003. But the level of inflation experienced by Joe Public could not be described as 'hyperinflationary'. Inflation was definitely higher than the official figures, and artificially suppressed by cheap Chinese imports. But hyperinflation is 10s of % per month, not 5-10% per year.
12. letthemfall said...
goweresque
Sweeping comments. Do you have detailed figures from somewhere to support your claim that 50% is wasted? What are all these pointless services? Are there no bad services in the private sector too? I don't know any part of the public sector where one can go to the boss and demand a raise.
No doubt there is waste in the public sector. But some of the worst has been caused by private contractors (plenty of those used now), and then there is PFI as an example of public spending disasters. The myth of public sector waste has been around a long time, despite many measures supposed to reduce it. Examples of inefficiency and efficiency may be found in both sectors. I doubt one could prove conclusively that one is worse than the other.
13. braindeed said...
Goweresque...'the level of inflation experienced by Joe Public'
...if you believe the official figures. Do you? I think the rise in asset prices (let's call it, say, 30% compound consevatively) when your wages are near static (my case getting less) IS F+cKIn hyperinflation you self absorbed nob.
14. Mcfall said...
braindeed, I am not sure where your figure of 30% comes from, but just making things up does not make a coherent argument. You might be right, but what is your source? Your abusive tone does nothing to help your argument.
The definition of hyperinflation is "a condition in which prices increase rapidly as a currency loses its value". (http://en.wikipedia.org/wiki/Hyperinflation) It has nothing to do with the asset price bubbles to which you referred in a previous post.
First time I have been compelled to comment - usually posts are a little more informed!