Larry Elliott said in the Guardian this morning that:
Clouds are massing over the global economy and if the storm breaks, Corbynomics would fit the bill perfectly because the lesson of the recession of 2008-09 is that, in a crisis, anything goes. The unorthodox becomes orthodox.
Should the next crisis of global capitalism be delayed (or not happen at all), Corbyn will have more of a problem.
And this morning we note that the Chinese stock market has fallen 11% in a week and the storm clouds are definitely gathering.
Heather Stewart has a very good article in the Guardian on what this means, listing, amongst others:
- Global economic instability
- Currency wars
- Deflation
- A threat to UK exports
- Very low interest rates
- Potential Euro instability.
I would add it being nigh on impossible for George Osborne to come close to meeting his balanced budget target which is wholly dependent on UK export growth. It will also burst the UK housing bubble: Chinese money is helping fuel that.
So, what that means is Jeremy Corbyn has a plan that I prepared to tackle this.
I have not noticed with anything similar in their armoury.
I wait to see how long it is before George Osborne borrows the idea, because it may be his only chance of staying in office.
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It might make sense to avoid the risk of conveying the impression that you are hoping for economic chaos so that the efficacy of the policies you are advancing may be demonstrated. It’s a fine line between, on one side, warning about the inevitably deterimental outcomes of policies that are stupid but favour the powerful and the greedy and advancing credible remedies and, on the other, being seen to welcome the deterimental outcomes that will require your proposed remedies.
But you are right about Osborne. The Tory party isn’t known as the Stupid Party for nothing. The one big thing they know (most of the time) is how to secure and retain political power. The existing conventional wisdom will be junked at the drop of a hat and unorthodox policies adopted if they provide any prospect of saving their political bacon. But it would be a sweet turning of the tables if the Tories were forced to adopt elements of Corbynomics. In the same way that many voters rejected Labour in May because they saw it as Tory-lite and decided to opt for the full Tory, voters in 2020 (and, remember, it could be sooner) could be encouraged to reject the Tories as semi-skimmed Labour and accept full cream Labour.
There is no need currently to present a fully detailed set of Corbynomic policies, but there are wrinkles that need to be ironed out because these wrinkles are providing opportunities for cheap shots by those who wish to protect the current conventional wisdom. These cheap shots resonate and are amplified by the mainstream media which, almost universally, are viscerally opposed to Jeremy Corbyn and those who support him.
Richard
I have followed your blog for years.
Have you read the work of American Economist Richard Duncan? He too believes that the present economic environment is perfect for major infrastructure works via QE, with interest rates so low.
Worth a read.
Thanks for keeping the blog going, brain cells sparking, and hearts hoping.
Kind Regards
Paul
I will take a look
“I wait to see how long it is before George Osborne borrows the idea, because it may be his only chance of staying in office.”
This was exactly my thought after reading today’s newsprint on China’s rapidly slowing economy. Given how poorly pre-2012 QE transmitted to real economic activity vs inflating asset bubbles, I don’t think he will have any choice but to do PQE.
The problem is if he does he instantly and completely legitimizes Corbyn and ALL his economic policies, the ones his allies have spent months trying to smear and discredit. After all if Corbyn is right about PQE then why not about everything else too?
So it will be a case of damned if Osborne doesn’t (let the economy crash and burn) and damned if he does (massively strengthen his political enemy). Either way he loses.
It seems the Chinese are learning a valuable lesson on the consequences of unfettered capitalism.
Steveo!
The Chinese & the Indians have never tried unfettered capitalism & I strongly doubt they ever will. If you look at the recent Indian election, which has come at the end of about 20 years of strong growth, the new president was saying that he’d like to introduce free-market economics. India had had no truck with it up til now, They won’t allow foreign supermarkets, e.g., to compete with their local stores. As for China, it may no longer be strictly communist but it is a 100 miles from being, in any sense, capitalist.
John Redwood, among others, has said that “free market capitalism has lifted millions out of poverty” but the people lifted out of poverty have been in 2 countries that don’t follow free market economics. Put simply, it was the UK & the USA that embraced free-market economics, put millions out of work, destroyed their own industrial sectors & thus enriched China & India. I suppose it was remarkably beneficent of the people of the UK & USA to vote for policies that would ruin themselves but immeasurably help people on the other side of the world.
Hence, I suppose, the Conservatives can honestly say “vote for us & you’ll increase prosperity” without adding that people in Redcar, Wolverhampton, Luton will be thrown out of work & the prosperity will come to the provinces of other countries.
Its a bit like the Delphic Oracle & Croesus “if you attack Persia a great empire will be ruined”. Yes, er… which one?