Right-wing dogma has had its day

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Not my words, but those of my Green New Deal colleague Larry Elliott writing in the Guardian this morning. He’s right though. As he says:

Left to their own devices, markets have proved to be neither rational nor stable. They don't miraculously come up with perfect solutions.

Unemployment is a case in point. According to neoliberal theory, those countries that had the most flexible labour markets would find it easiest to adapt to the more challenging environment, while those countries that insisted on featherbedding their workers would reap the consequences of being soft.

It hasn't worked out like that. There are, according to estimates, 210 million unemployed people around the globe, an increase of 30 million since 2007. The largest increases have been in the US, the home of the hire-and-fire culture, and Spain, which developed a two-tier labour market in which temporary workers enjoyed fewer rights than their full-time colleagues. Youth unemployment in Spain has doubled to almost 40%.

In contrast, in Germany and Norway — two countries that have strong trade unions and long traditions of collective bargaining — the unemployment rate barely budged.

Larry’s right. The data proves the point.

And he’s right to note that increasing inequality helped create the environment for the recession by forcing people into debt — and that greater equality will therefore help us out of it. As will growth. As he puts it:

The concentration of wealth at the top, the attacks on trade unions and the whittling away of welfare protection have all contributed to both greater inequality and greater instability.

Even the IMF see that now, and argue:

As a general strategy, most advanced countries should not tighten their fiscal policies before 2011, because tightening sooner could undermine recovery.


There should be specific measures to protect the most vulnerable from the effects of the consolidation.

As Larry concludes:

In other words, we need to junk the right-wing dogma that has dominated economic thinking for the past 30 years. And, in the case of the UK government, still does.

I fear that we’ll have four million unemployed before we do.

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