It is odd to have a Mnday morning that feels as quiet on the economic news front as this one does. The morning's press has delivered little of note, no significant comment and nothing to directly engage with as far as I am concerned. That, though, may be significant in itself. The world is waiting. That is the massage implicit in this paucity of news.
It is hoping Trump will not be elected.
It is hoping that somehow something of the UK economy might be salvaged from Brexit.
It is wondering if fiscal policy will ever be used again.
It is waiting for someone to admit conventional QE has run out of road.
It is waiting for business to find a reason to invest.
Some answers will come sooner than others, simply because they have to. But n every case the feeling is much the same: it is 'How the heck did we get here?'
And the honest answer is also much the same: by running the economy for the benefit of a few; by imposing austerity in an attempt to shrink government and by killing demand in the process; and by undermining confidence in available democratic choices as a result.
We won't get out of this mess until that is appreciated. But we might wait some time for that to occur.
Welcome to the lull before whatever it is that's going to happen. Just hope there might be some wisdom left somewhere that directs that happening in a socially useful way.
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Here’s something to get your teeth into Richard.
https://www.gov.uk/government/news/uk-tax-gap-falls-to-65-as-hmrc-targets-the-dishonest-minority
No mention of the loss of revenue to dodgy tax complaince.
In fairness, the dishonest minority are a bigger problem
I’m hoping that the Tories will see the threat that the more right-wing reactionaries in this country pose to national security by continued austerity instead of trying to be clever and using it to manufacture consent to further erode the role of state in the wealth of the nation.
Sooner or later they will run out of others to blame for our malaise and hopefully all eyes will be on them. But I agree that it will take time which is both a perverse testament to the resilience of human beings as much as an affirmation of how effective the vested interests are at diverting people’s attention away from the real issues.
In a very recent Guardian, Skidelsky had an outstanding article. The main hypothesis being that medium/long term economic decline for the UK is inevitable unless certain steps are taken.
https://www.theguardian.com/business/2016/oct/21/why-pound-sterling-collapse-not-good-uk-economy-robert-skidelsky
the problem is that the Tories are ideologically incapable of taking these steps – it is simply not (& never has been) in their DNA. I liked the article because it charts out what will happen – if nothing changes – the only uncertainty is the speed. The Tories have long been called “the stupid party” – perhaps with just cause.
I agree – excellent article
Strong argument
The 7th Cavalry, alas, has been dismounted.
Apparently we are told today the lull is all down to politicians who won’t implement new thinking from economists:
https://www.project-syndicate.org/commentary/advanced-country-politicians-ignore-policy-consensus-by-mohamed-a–el-erian-2016-10?utm_source=Project+Syndicate+Newsletter&utm_campaign=cd005a1fb6-El_Erian_Toxic+Politics_23_10_2016&utm_medium=email&utm_term=0_73bad5b7d8-cd005a1fb6-104333621
I will ignore the hypocrisy of economists’ overnight conversion to fiscal expansion. However, the real problem this highlights is that while economists can change their policies overnight, provided their funding is secure, politicians face considerably greater difficulties. Their funding and power depends on thousands of party members and millions of voters who base their support on stable policy positions.
The question is therefore whether radical policies can successfully be adopted by established political parties, or whether change can only come from new or emerging political movements. Of current parties the best chance lies in the US with the Democrats, who have been very lucky. Bernie Sanders grew their base of supporters and shifted their policies to new ground, but without winning a leadership election which would have alienated traditional supporters. Meanwhile the Republicans are between a rock and a hard place. Even if they could see the need for green policies, progressive taxation, and expanding public spending, these measures fly in the face of everything they have told their supporters they are about for the last 30 years.
In the UK the situation is far less clear, with no party yet showing the potential to be able to combine fresh economic thinking with popular support. The current lull may be very protracted, as waiting for economists to reach a consensus is much like herding cats. But if a new policy approach eventually emerges we will face an even greater problem. How do we find any UK political party that can combine a broad voter base with the fresh thinking needed to implement a radical economic and fiscal policy.
Whereas in the UK we have had an insurgent party of the right UKIP, successfully dragging our ‘centre-right’ party off to the far right. Whilst the centre left is In chaos. Never thought I’d see a parallel betwee Trump/Republicans and Corbyn/Labour.
The question is therefore whether radical policies can successfully be adopted by established political parties, or whether change can only come from new or emerging political movements.
“No problem can be solved from the same level of consciousness that created it.”
– A Einstein (allegedly).
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
– R Buckminster Fuller (probably).
All I can suggest – during the lull – is a read of Yanis Varousakis’s speech at the LSE, in which he says the EU will never negotiate…
https://diem25.org/post-brexit-britain/
things do seem remarkably unhinged in the world of politics and economics across the western world at the moment,
I assume people have watched the new Adam Curtis film ‘Hypernormalisation’ on iPlayer?
it does explain some of the dissonance apparent in our topsy turvy world!
the behaviour of some of the fervent Brexiteers seems to be disturbingly similar to Cult members,
when you speak of a lull I can’t help thinking of the sense of acceptance of the inevitable shown by members of the Heavens Gate religious group just prior to their mass (Br)exit in March 1997
when so many people sense that something is wrong but nothing ever seems to change you find yourself wondering what is inhibiting the change,
I found this piece on John Perkins (author of ‘The Economic Hitman’) website that illustrates what sort of forces are actively trying to thwart change for the better,
http://johnperkins.org/social-responsibility/hit-by-the-chamber-of-commerces-economic-hit-men
for those that appreciate the mental health benefits of a daily exposure to the polite, indignant sanity of Mr Murphy but might need an additional lift of spirits can I suggest the satiric parody and wit of Mr Hutton on…
https://richardhutton.wordpress.com/
taken once a week I find it quite beneficial
Meanwhile, taxpayers remain as on the hook as ever
http://wallstreetexaminer.com/2016/10/big-fail-banks-financial-world-undead
Well, the next time a bank gets into serious trouble, we should either let it fail, or nationalise it and keep it nationalised, and run it in the public interest.
Hear, hear!