Martin Wolf has written for the New York Review of Books, saying:
Austerity has failed. It turned a nascent recovery into stagnation. That imposes huge and unnecessary costs, not just in the short run, but also in the long term: the costs of investments unmade, of businesses not started, of skills atrophied, and of hopes destroyed.
What is being done here in the UK and also in much of the eurozone is worse than a crime, it is a blunder. If policymakers listened to the arguments put forward by our opponents, the picture, already dark, would become still darker.
And he concludes:
We on this side of the argument, are certainly not stating that premature austerity is the only reason for weak economies: the financial crisis, the subsequent end of the era of easy credit, and the adverse shocks are crucial. But austerity has made it far more difficult than it needed to be to deal with these shocks.
The right approach to a crisis of this kind is to use everything: policies that strengthen the banking system; policies that increase private sector incentives to invest; expansionary monetary policies; and, last but not least, the government's capacity to borrow and spend.
Failing to do this, in the UK, or failing to make this possible, in the eurozone, has helped cause a lamentably weak recovery that is very likely to leave long-lasting scars. It was a huge mistake. It is not too late to change course.
Will Mark Carney in his first letter to the Chancellor say?:
Dear George
Austerity has failed.
Monetary policy no longer works.Please provide a fiscal stimulus as that is what is needed and I cannot.
Kind Regards
Mark
I wish he would. I'm not holding my breath.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
According to Wikipedia, Carney is implicated in the manipulation of the Russian financial crisis of 1998 . Unless he has undergone a sea change, I wouldn’t expect much from him.
”Carney spent thirteen years with Goldman Sachs in its London, Tokyo, New York and Toronto offices. His progressively more senior positions included co-head of sovereign risk; executive director, emerging debt capital markets; and managing director, investment banking. He worked on South Africa’s post-apartheid venture into international bond markets, and was involved in Goldman’s work with the 1998 Russian financial crisis.[5]
Goldman’s role in the Russian crisis was criticized at the time because while the company was advising Russia it was simultaneously betting against the country’s ability to repay its debt.[7]”
Richard
surely you heard David Cameron. Martin Wolf isn’t an internationally respected economist. Hes an eejit who believes in a magic money tree!
Carney looks like the enemy and I will be astounded if he does not work exclusively in their interests.
I can’t help but think that Osborne has appointed Carney as a “lightning rod” or a “fall guy”. He has come in from some crticism from the Centre Left
http://www.newstatesman.com/business/business/2013/01/dangerous-power-mark-carney-next-governor-bank-england
However, his redeeming feature is that he has also come in from some criticism from the “Loonies” at the Ludwig Von Mises Institute, the economics equivalent of “The Flat Earth Society”. Readers may be aware that apparently they worship at the altar of capitalism, believing that it is a divine creation and so flawless. All attempts at intervention in capitalism’s operation by man are therefore doomed to failure. Hands up, this descrption is slightly hyperbolic;-)
http://www.zerohedge.com/news/2013-06-02/guest-post-mark-carneys-false-ideology
Theremustbeanotherway: I’m not sure it is a redeeming feature. The so called ‘right’ in America is as concerned about the corporate worlds threat to democracy as the left. Some have a vision of free enterprise working in a low or zero growth model using Land value Tax to control house prices – they certainly don’t support the hegemony of the banks. It’s true, they want little Government and don’t support social programmes which sounds like it’s a recipe for the workhouses but, in terms of banking there is, ironically, some common ground.
I agree with your comments on banking…there is common ground between some on the Right and the Left. The Left can also find common ground with some of the views of say Ron Paul, eg the Iraq war and the military/industrial complex.
Having listened to comments by a number of US libetarians, there is however no common ground between Left and Right on capitalism being a perfect system not requiring any form of regulation. Surely this is a recipe for disaster?
The New Austrian School does have some interesting views on banks and Adam Smith’s “Real Bills Doctrine”.
And as I’ve been saying for some time, in the absence of any consideration for these ideas from the two main political parties a new party formed from the disaffected from both must emerge whose essential characteristic is anti-neoliberal. Tick tock!
I, along with others, shall be debating The Socialist Case for Supporting
Annual Land Value Tax – Why socializing land rent and untaxing production is good for labour” at the Conference of the International Union for Land Value Tax on 26 July. See http://www.theiu.org/theiu-conference-2013. (Should have paid a bit more attention to title – I do not in fact support ‘untaxing production’ until we have eliminated the ‘rent-seeking’ of the owners of capital.)