The world’s economies are creaking.
Its bank are failing.
Countries are collapsing.
So what sense is there in this?:
And what happens when these markets fall over, again?
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The WFE data actually goes back to 1990, not 1996. Showing all the data would have led to a very different conclusion (I just did it).
But onto your question directly: what happens when these markets fall over again? probably the same as what happened when they fell over before – we pick ourselves up, dust ourselves off, go into the next phase of the cycle, increase GDP per capita significantly and lift more people out of poverty. Then at the end of the cycle, some of the gains of the previous few years will turn out to be illusiory, but net/net almost all people will be markedly better off.
It’s not pretty, it has flaws, and not all people benefit equally, but it works.
Three words come to mind when looking at this graph since the end of 2008: one is “bubble” and the others are “quantitative easing”.
When this new bubble bursts – which maybe in the process of happening now (ex-FT columnist Willem Buiter certainly thinks so, for one) – all hell is likely to break loose.
😮
@Howard
I agree
And it will fall over …
QE paper should be out soon…
Richard
@Gary
Tell that to Ireland
You’re wrong – systemic failures require systemic solutions
But you can’t / won’t / don’t ant to see that
That’s the problem of those who benefit unequaly
@Richard Murphy
Gary’s point is that overall living standards rise in the long term, despite the boom and bust which is seemingly implicit in capitalism. Your response isn’t really helpful – as a whole are standards of living higher in Ireland than there have been in the past or not? Are you saying that due to “systemic failures” living standards are falling? I don’t pretend to know the answer and of course it is your prerogative to disagree with people who come to your online space and post there, but your response does not appear to have dealt with his point as decisively as perhaps you intended.
It’s an argument I’ve seen a couple of times recently that unequal benefits should be tolerated if the opportunity to derive unequal benefits drives overall increases in living standards. I don’t know what to make of this yet and I need to think about it a bit more – is it “trickle down” under a new name, do you think?
@Adam
Trickle down is an excuse for what is actually trickle up – ever increasing inequality
Utilitarian theory is what you’re describing
It was maybe OK when Jeremy Bentham got to it
We’ve moved on a bit since then
Even if many economists haven’t – which is just another indication of how out of touch hey are
@Richard Murphy
I have no need to travel as far as Ireland to find people right in the middle of this pain – my own wife works for a Local Council and is being made redundant.
So I know *exactly* what this means to ‘the squeezed middle’, but it changes nothing to the wider structural question you raise what happens next: we will pick ourselves up, dust ourselves off, go into the next phase of the cycle. Our wealth will increase significantly and, the end of the next cycle, some of the gains of the previous few years will turn out to be illusiory, but net/net we will still be better off.
That’s what happened to our family during that last cycle. That’s what happening during this cycle. That’s what will probably happen next time to.
That’s what happens to real families, and the ‘folk stories’ aggregate up pretty well I think into the wider economy.
It’s proving tough, but the proof is it works.
Experience tells me that living standards have been falling for the last one or two decades. Pay rises are typically below the rate of inflation. Pensions are a write-off. Job mobility is zero through high house prices. Labour casualization has brought regular bouts of unemployment and a scarcity of full-time jobs.
As for the growing share prices, this is money that could be usefully invested in industry that is instead being parked until the economy improves.
You may surmise that I work in manufacturing.
@Gary
You cannot get macro from inflating micro – at least not in the way you imply
Good for your family
For millions it isn’t like that
For billions in developing countries it never will be
That’s why we have to change
@Adam
US figures disprove this neo-liberal fantasy. The real wages of 90% of US workers have virtually stood still since 1973. This was until recently masked by excessive personal borrowing.
I SUGGEST YOU PLOT WORLD GDP NEXT TO IT
@Richard Murphy
The “billions” in China, India and Brazil seem to be doing all right these days.
@Carol Wilcox
Since 90% of current US workers were probably not even born or resident in the US in 1973, I doubt that your statement is strictly speaking correct. Having said that, the underlying statistic is interesting. Can you share the source?
@Michael Hardy
It should be NOMINAL GDP of course.
@Million Dollar Babe
Your first remark is ridiculous. The source of the data on US earnings was the FT magazine about 3 months ago. My friend has a hard copy in his copious cuttings collection – if I could be bothered to search, but I would try googling 90% 1973 – there was lots of on-line comment at the time.
@Million Dollar Babe
I presume you meant to ,make gratuitously offensive remarks about the poor of India, China and Brazil
For doing so you are blocked from this site
I’m sure million dollar babe meant to type ‘billionaires’ and was not referring to the workers at China’s foxconn, farmers in India or the sugar cane labourers in brazil.
@ paul
Its a bit ridiculous to say that billions of people are doing ‘all right’, but is just as gross a generalisation for richard to say that ‘for billions it will never be’.
I would have thought it was common ground to say something along the lines of ‘billions of people are suffering in absolute poverty, but in BRIC countries at least, millions of people are regularly lifted out of that situation. That’s good for those affected. Let’s hope more people can benefit’. That’s not *everyone*, but its not *none* either.
Actually Gary, no.
Richard is correct, the implicit eschatology of neoliberalism, where we are are all lifted out of poverty by the good offices of the market is in stark contrast with the facts on the ground.
While the popular press gurgles over the pharonic excesses of Mukesh Ambani, there is no discussion of the normalisation of low wages, high unemployment and total insecurity for the masses.
Why are ‘billions of people are suffering in absolute poverty’ in the first place?
If the BRIC countries represent the future,(all excellent examples of Gunnar Myrdhal’s soft state idea), its not worth hoping for.