This is from the FT this morning, by SteingrÃmur Sigfússon:
Iceland's response to the financial crisis has been taken as a model for how a country should react to a dramatic economic shock. However, international observers should also take note of our country's recent election result. Despite guiding the country through a difficult but impressive recovery, the governing parties were ousted. The parties that were blamed for the financial crisis won a slim majority. This raises a fundamental question: in our age of austerity and slower growth, can politicians maintain popularity without the proceeds of a bubble economy? Put differently: can any politician meet the unrealistic expectations of Europe's voters?
The question, of course, is not that dissimilar in a way to that posed by Martin Wolf on climate change in the same paper this morning.
SteingrÃmur Sigfússon, who was Icelandic finance minister concludes:
The result from Iceland should prompt introspection not just from politicians, but from voters as well. Are our expectations realistic? Is the only way to meet the insatiable demand for growth to build economies based on quicksand? For that is a recipe for an ever more destructive boom-and-bust cycle.
No wonder we need a Green New Deal to break that approach to destructive growth.
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But you are the High Priest of growth, Richard??
Pardon?
have you read the Courageous State?
I want full employment
I want investment
I want sustainability
I want secure finance with banking back in its box
But growth that kills the planet? No way
I have indeed read The Courageous State, Richard (and furthermore, I bought a copy, with my own money!!).
And I agree, we do indeed need a Green New Deal. I suspect, however, that the large majority of those calling for “growth” (including, and probably especially, those in the Labour Party) want the growth bit first, and regard the green bit as an optional extra — which would probably be dropped in the heat of battle.
But I am happy to apologise and except you personally from this observation.
I agree entirely with your (and Mr Sigfusson’s) underlying point — unpopular, but necessary, measures are extremely difficult to achieve in a democracy. I suspect that this is the cause of the siren calls for “technocrat” administrations.
Thanks
The whinging former finance minister should reflect on his party’s initial austerian approach to the crisis and only after went for a big devaluation. The former government tried everything it could to bail out its corrupt bankers with taxpayers money. But when the electorate was having nothing of it, eventually it did nationalise them but then privatised them again in record time.Two out of the three collapsed major banks in Iceland are now owned by their creditors, not the state. The government negotiated a deal to pay back Dutch and British depositors that would have crippled the economy for decades. The deal was rejected again and again by the Icelanders, although payback terms were eventually reached, Cyprus-style. Yet he’s surprised the electorate kicked them out!
Paul, I think you have “nailed it”.
The mistakes being:-
1) slow regarding the devaluation
2) slow to sort out the banksters
3) compounding 2) by privatising the banks in record time
4) being spineless when negotiating the deal to pay back Dutch and British depositors
With that sort of performance you may as well have the original lot back in, because at least they perhaps have conviction?
Interesting analysis both of you
“Put differently: can any politician meet the unrealistic expectations of Europe’s voters?”
For voters raised with the concept of ‘free’ universal health care and deep rooted welfare state, the answer is no.
For example, the Chinese made that quite clear when they declined to help Greece out. In essence they said, “We’re not going to invest in / bail out a country where people can retire in their 50s on a large pension and also expect to claim that large pension for another 25+ years after doing very little to earn it.”
I know that Mr. M talks about ‘green growth’ – well when the BRICs have green growth, then perhaps I’ll take calls for ‘green action’ seriously, otherwise such green policies simply make the UK economically unproductive. Which means either accepting massively higher energy prices and thus higher prices for goods, higher rates of unemployment as UK workers are priced out of the game by ever rising energy costs or the introduction of protectionist tarrifs.
Even Germany has really ‘binned’ Green energy as it races to build new coal fired powerstations to replace its N-power gap. An the German coal is lignite – good old fashioned ‘brown coal’ which burns so poorly but is so abundant in Germany – that a powerstation needs utter ‘sheadloads’ of the stuff to produce power on a large scale.
That comment on Germany is just wrong
Don’t you know how green their system is now?
If you don’t, go check
In which case I think the rest may be too…
Mr. M.,
Germany is building new coal fired powerstations – that can’t be considered ‘green energy’ by any measure that the ‘green lobby’ would chose to describe green power.
The coal that is planned to be used for the new power stations is lignite as it is near the location of the plants and Germany – East and West as was – was quite prepared to use it.
http://wattsupwiththat.com/2013/04/23/germany-to-open-six-more-coal-power-stations-in-2013/
http://www.reuters.com/article/2013/04/26/us-germany-browncoal-idUSBRE93P0PI20130426
Lignite coal – brown coal – has a very low calorific value in comparison to hard, black coal which is why a powerstation needs shedloads of it – the station eats the stuff….
http://www.worldcoal.org/coal/what-is-coal/
http://www.rwe.com/web/cms/en/59998/rwe-power-ag/locations/lignite/garzweiler/
http://www.rwe.com/web/cms/en/12068/rwe-power-ag/locations/lignite/kw-neurath-boa-2-3/
They also have a very high degree of green energy
I’m always amazed at how green growth is seen as a ‘liability’ for our nations. What’s ignored is the jobs that can be created, which in turn bring returns to the state in tax revenues. As far as I’m concerned, it’s only a liability for corporations who can’t make much profit out of something like solar, wind, wave, etc, etc.
When you have sources of energy that are unlimited in supply, the long-term costs (and profits) become small. But the corporations would rather something limited like coal, gas, petrol and uranium that are finite in supply, so they can ratchet up the prices and make a mozza profit. So the Big End of town has convinced everyone that it’s a liability for us all.
No, our governments have to bite the bullet and invest in their people and resources and build a new energy infrastructure for the 21st C and beyond. This will never be done by the corporations – they have little interest in the future beyond 5-10 years. The Australian government created a project after the war to build the Snowy Hydro scheme, that involved thousands of migrants coming here from a war-torn Europe – it was a success. I cannot imagine a similar scheme on the scale required to make us carbon-free coming from the private sector. There have been numerous books written over the years, of inventors coming up with novel ideas for sustainable energy – most of these are bought out or pressured into quitting by these corporations.
We have to stop seeing the national interest as equating with the interests of the Murdochs, Bransons, etc, etc. Their interests have little if anything in common with those of the majority of the population.
“What’s ignored is the jobs that can be created, which in turn bring returns to the state in tax revenues. As far as I’m concerned, it’s only a liability for corporations who can’t make much profit out of something like solar, wind, wave, etc, etc.”
Really, this report might suggest otherwise when it comes to ‘green jobs’ and just how much they really do cost….
http://cascadepolicy.org/pdf/pub/CleanJobsReport8.22.11.pdf
Or perhaps there is this gem which seems to suggest that for a modern economy, there is a high price to be paid for ‘green jobs’….
http://www2.lse.ac.uk/GranthamInstitute/publications/WorkingPapers/Papers/70-79/WP76-green-growth-green-jobs-labour-markets.pdf
Or there is this piece as well….
http://www.aei.org/article/energy-and-the-environment/the-myth-of-green-energy-jobs-the-european-experience/
Naturally when it comes to ‘green energy’ like wind turbines, this bit is also often forgotten….
http://www.dailymail.co.uk/home/moslive/article-1350811/In-China-true-cost-Britains-clean-green-wind-power-experiment-Pollution-disastrous-scale.html
Read Andrew Simms
All these claims are wholly rebutted
And he points out carbon energy only grows because of massive subsidies
Richard, do you have a link to Andrew on this topic or is this rebuttal found in one of his books?
The End of the Apocalypse