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Radio 4: Analysis: Radical Economics: Yo Hayek!

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'Radical Economics: Yo Hayek!':

http://www.bbc.co.uk/programmes/b00y2bwz

Was the economic crisis caused by fundamental problems with the system rather than a mere failure of policy?

Over two weeks, Analysis investigates two schools of economics with radical solutions.

This week, Jamie Whyte looks at the free market Austrian School of FA Hayek. The global recession has revived interest in this area of economics, even inspiring an educational rap video.

"Austrian" economists believe that the banking crisis was caused by too much regulation rather than too little. The fact that interest rates are set by central banks rather than the market is at the heart of the problem, they argue. Artificially low interest rates sent out the wrong signals to investors, causing them to borrow to spend on "malinvestments", such as overpriced housing.

Jamie Whyte is head of research and publishing at Oliver Wyman, a management consulting firm. He is a former lecturer in philosophy at Cambridge University and the author of Bad Thoughts: A Guide to Clear Thinking.

Contributors: 
Prof Steven Horwitz, St Lawrence University, New York
Prof Larry White, George Mason University, Washington DC
Prof Robert Higgs, Independent Institute, California 
Philip Booth, Institute of Economic Affairs
Steve Baker, Conservative MP 
John Papola, co-creator Fear the Boom and Bust 
Lord Robert Skidelsky, economic historian and biographer of John Maynard Keynes
Tim Congdon, founder, Lombard Street Research

Producer : Rosamund Jones

Next week, Newsnight's Economics Editor Paul Mason meets the economists of "financialisation" and asks whether the growth of credit has given birth to a new kind of capitalism.

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We all rightfully come down on the BBC like a ton of bricks when they get it wrong but this was a great broadcast.

Too little too late.

The BBC should have been warning the nation about the credit bubble since at least 2003.

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Next segment of this is tonight Monday R4 8.30pm

Radical Economics: Escaping Credit Serfdom.

Paul Mason investigates new thinking on the Left about the role of credit in reshaping our culture and creating a new kind of capitalism.

Radio Times

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Next segment of this is tonight Monday R4 8.30pm

Radical Economics: Escaping Credit Serfdom.

Paul Mason investigates new thinking on the Left about the role of credit in reshaping our culture and creating a new kind of capitalism.

Radio Times

:lol:

Brilliant: "Credit Serfdom" and the left.

I wonder what Gordon Brown/Balls/The Labour party in general think about that...

Priceless.

.

Edited by Tired of Waiting

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Radical Economics: Escaping Credit Serfdom.

http://www.bbc.co.uk/iplayer/episode/b00y6qtb/Analysis_Radical_Economics_escaping_credit_serfdom/

Worth a listen - lots of references to HPI/HPC/MEW/BTL etc...

However, as usual, no-one questioning the underlying debt-based money system. :angry:

Disappointingly, the discussion is couched in political left/right terms of Keynsian vs "Free market" economics. :(

Still, it might encourage a few listeners to think on. :)

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Just had a listen to this, not bad. Talks about how Labour presided over the housing boom to help along a grand plan called 'Asset based welfare'.

Podcast mp3s of the whole series available here.

Transcript available here

'Asset based welfare' bit

In Britain, financialisation solved a different problem: Labour didn’t

want to redistribute wealth via the personal tax system. So it was

rising house prices, and expanded personal credit that would

underpin the feel-good factor: economists call this asset based

welfare.

LANGLEY: Asset-based welfare in many ways comes out of a

perennial problem that Social Democratic parties face, and that is how

to make markets work to create wealth and welfare for a majority and

not just for the few. And this was clearly very much at the heart of the

New Labour project and the so-called Third Way. As a consequence,

you have a range of policies broadly aimed at creating so-called asset

based welfare, and this is the idea that the state is not responsible for

providing for your welfare; that welfare is something that as an

individual you are responsible for in a range of ways. And increasingly

that came to hinge on the idea that the individual would during their life

course accumulate particular assets. Now that may be financial assets as

we usually understand them - stock market assets and investment assets

-but in another sense thinking about your home as an asset.

MASON: By the turn of the century - with TV networks awash with

programmes telling us how to do up these assets and sell them on,

homes had become like cash machines. Mortgages became a source

of ready money that people increasingly dipped into to finance

everyday spending. A glut of new products were designed to blur the

edges between mortgages and bank accounts. But when researchers

looked at what people were spending the cash on, they were surprised.

Professor Susan Smith of Cambridge University is a social

geographer who authored a major study on how people were using

their mortgages over a 17 year period:

SMITH: We expected people to be spending them on high days and

holidays, high street consumption, cars, all of these kinds of things. We

also expected people to be reinvesting it into their homes - getting their

gutters repaired, their roofs repaired and so on. But actually what we

found is that all of those kinds of expenditures declined over the 17

year period that we were able to look at the data, and what was

increasing were other kinds of expenditure - all of which seemed to us

to be about propping up family welfare, about bridging short drops in

income, about meeting the financial shocks of unexpected life events

like divorce and separation or health problems or anticipated

unemployment and so on. So people were really using this money to

boost their subsistence spending, to manage from day to day and to

meet welfare needs.

MASON: So people were treating mortgages like their own, personal

mini welfare state. But if this new, close relationship with credit

suited consumers, it was also highly profitable for the banks. In

Britain - and above all in America - people have become used to

paying over a large part of their monthly income to mortgage

companies, credit card companies, student loans, car loans.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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