My Green New Deal colleague Ann Pettifor is in the Guardian:
A banker, Alan Clarke of BNP Paribas, citing a NIESR report, confidently tells the Guardian that the recession is over. Should we take the word of any banker — especially one that claims to be an economist — seriously? ..
I say firmly, no.
[T]he most important reason for pessimism, in my view, is the hegemonic role played by fiscal conservatives. By raising fears over government deficits, and by refusing to acknowledge that government spending pays for itself, these conservatives have set the economic and political agenda in all the British media, and in every British political party (with the Green party the honourable exception). As a result, Alistair Darling seems hell-bent on committing electoral suicide, with shadow chancellor George Osborne actively encouraging him.
[As a result] the private sector will not be able to rely on the public sector for the stimulus vital to recovery.
As things stand, any fragile signs of economic recovery will quickly be crushed by the failure of government to intervene and spend at an appropriate level.
Instead, government cutbacks will impact with considerable force on the fragile economy, and will hurt the middle and working classes.
As the year proceeds many will discover the true, and often pitiful value of their pensions, and will be hurt by cuts in services and job losses in the public sector. This will hamper recovery and deepen, if that is possible, the alienation of British voters from the Labour government.
We — employees, consumers, investors and borrowers — have been misled and fooled by the economics profession and finance sector for years before this crisis. As a result of our gullibility, we lost $60tn of wealth in the past year. We would be wise now to dismiss their vain efforts at confidence-boosting, and instead rest our judgments on the real world economic outlook.
Quite so.
Well worth reading the rest.
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Richard,
I’m not sure that describing the comments as “confident” gives the full picture: what he said was much more cautious:
“We are accumulating more and more evidence that the recession is over. This report from NIESR provides more confirmation that recession is over. To be clear, we are not heading for a boom. The economy is still likely to grow much slower than potential, in turn meaning that unemployment will continue to rise. The point is the economy is no longer shrinking.”
As far as “government spending pays for itself” is concerned, isn’t the problem that a large proportion of government spending over the next 20 years will be paying off interest on the debt we have taken on? I’m not sure how that “pays for itself”.
The usual load of tosh from you Richard. You really do manage to be wrong about almost everything.
Joanna
Which is why time after time I’m proven right.
See what I’ve just posted on flat tax, for example. http://www.taxresearch.org.uk/Blog/2009/06/12/flat-tax-bites-the-dust/
Richard
I don’t think any kind of government spending “pays for itself”. The right kinds of government spending will. Obviously spending money on weapons is the wrong kind of spending. Spending money on things we need, things that make us more energy-efficient, things like infrastructure that makes everything work better and faster, this kind of spending will pay for itself. What we don’t want to do is pursue the same policy that we pursued in the 1930s – that was a disaster.
However, Brown has truly mucked everything up. In the good times, you should be reducing debt and and increasing it in the bad times. But to make this work, the goverment accounts have to be sufficiently transparent that chancellors actually know where they are. PFI has left us with huge debts which were never really factored in.
James
You’re right
There is some government spending we just don’t need: Trident, identity cards, PFI debt servicing, contributions to the CAP which still needs reform so badly, and more
But there’s also a large part of government spending that is vital
Richard
Well, I suppose the bankers won’t be feeling the pinch, since they’ve been handed everybody else’s money. Why should we take anything they say seriously?
Even if the overall economy has stopped shrinking, not only is unemployment continuing to increase, the real point is that public services will be crucified to pay for the damage they caused. In other words, those not responsible for this will bail out those who are, who will not suffer the consequences of their own actions, and are in any case, the best paid people in society.