The quiet realisation that the world economy is in trouble is gathering pace. Larry Elliott is talking about it in the Guardian. As he suggests, after noting that the European Central Bank is looking at a further round of economic stimulus in 2016:
This is a time for caution. The fact that central banks feel the need to provide more stimulus more than six years into a recovery is not a reason to load up on shares or, indeed, any risky assets. Rather, it is a sign of trouble ahead. If the global economy requires a fresh growth boost, it means that an already feeble recovery is waning. If it doesn't, it means there is a heightened risk of a new financial crash or higher inflation.
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Of course it is! Berated the local Labour MP for abstaining rather than opposing the ludicrous fiscal charter. Got a reply back to say Labour hadn’t made themselves consistent enough and that their surveys showed that they hadn’t won the last election because people didn’t think they were competent with the economy. To me those are yesterday’s battles. Suggested that if Labour don’t shout out loud now about PQE then people won’t think they are economically competent next time. Even if, as we agree seems likely, Osborne gets forced into PQE then at least he will have nicked a Labour Policy!
In other news even the local rag has a letter which states that “the government doesn’t need to create a surplus .. the government has a central bank… government debt and household debt are completely different”. So what the commentariat don’t understand perhaps the locals are beginning to….
“Larry Elliott and Wolfgang Munchau really are as much a part of the problem as they are of being any part of the solution. Calling for Plan B and not having a clue what it might be is not helpful.”
I’m sure that much of the problem in the UK as well many other old established developed economies resides in decades of an educational system that hasn’t taught its students to think analytically or critically as a matter of course about any subject.
So, for example, in the case of Larry Elliott you can have his colleague Jill Treanor, the Guardian’s City Editor specialising in banking matters, write an article stating that China now has more members of the Middle Class than the United States (You have to assume she is referring to income levels on a purchasing power parity basis) and Larry not be curious about the reasons for this reverse.
Larry to my knowledge has never shown in his articles any interest in analysing China’s economic rise to power, no mention of currency rigging, Functional Finance or Sector Balances Accounting.
David Sloan Wilson touches on the causes of this failure to think analytically as a matter of habit from the nurturing angle but fails to go on to stress how educational methods can remedy the situation.
http://www.theguardian.com/money/2015/oct/13/half-world-wealth-in-hands-population-inequality-report
http://www.huffingtonpost.com/david-sloan-wilson/are-liberals-and-conserva_b_72044.html
Of COURSE the British electorate didn’t trust Labour on the economy — the ineffable “two Ed’s” had taken the CRACKPOT decision not to counter the Tory lie about how “Labour wrecked the economy”, and so couldn’t also defend Labour’s pretty good economic record , even post-2007/8, and certainly pre-2007. Frankly, had they been my defence Counsel in a trial in which I’d been wrongly found guilty – which WAS the situation in the case of Labour’s record – I’d want to sue them both for professional negligence.
The reaction to that the view the public have of Labour’s record i
is not to adopt what, quite frankly, is a lame-brained response by the Labour MP (calling into question his/her grasp of the REAL economy), but to re-double, and re-double again, the Party’s efforts to educate first itself, and then the public, as to how the economy REALLY works (as some of the ordinary Joe Public now appear to be doing, as MayP notes). Included in that must be a ROBUST defence of Labour’s record in Government.
The Labour Party CERTAINLY shouldn’t roll over and ask to be tickled on the tummy and patted on the head by the “robber Baron” Tory Party, fawning on it like some demented lap-dog, licking the hand that chastises, which is basically what this particular Labour MP is doing vis-Ã -vis Cameron and his “protection racket” henchmen.
Hear Hear
Round of applause.
Andrew. Absolutely spot on.
and so couldn’t also defend Labour’s pretty good economic record
Their record post the crash wasn’t too bad. They did the right things re fiscal stimulus.
But we have to consider where they went wrong in contributing to the crash in the first place. They simply ran a credit bubble economy which inflated asset prices, and led to a fixation on property price increases as an economic driver. It was good while it lasted – at least it was for those lucky enough to be on the property ladder but it’s no way to run an economy.
Interest rates were kept too low. They should have been higher. Too compensate and produce the required growth the Labour government should have had run a looser fiscal policy.
So they did err in their budget deficits. They were too low!
“fixation on property price increases as an economic driver. ”
True Peter-and the Tories have done the same as if it is the only field that can be ploughed. If only Labour NOW had the ‘cojones’ to admit this and lambast the Tories for continuing it. I’m giving Corbyn and McDonell some slack but I’m beginning to think I’ll be tearing up my newly acquired membership card in a few months.
Simon,
After last nights debacle in the Lords, where HM’S official opposition ensured that any scuppering vote on tax credits was soundly defeated and provided cover for the Government in voting through an amendment that will result in higher cuts, that your membership card is already on its way to the recycling depot.
I agree that people need to be educated on how the economy works and that so few do know. And as was pointed out there are some(I include myself in this) who are only just educating themselves how it works(not fully yet). The problem as far as I can tell from *cough* discussions with people is that they are too used to getting their economic wisdom from regular news media and absolutely refuse to do any critical research of their own, preferring to live in an echo chamber. And they do get quite shirty when you pull them up about it. Claiming that they don’t base their views on the media is a joke since no research ever found that children are born with a left or right political view.
I find myself carrying on these discussions as much to amuse myself now as to inform since I have pretty much given up on getting anyone to change their point of view no matter how politely I put it.
The journal link gives a clue as to why. Or you could read Thinking Fast and Slow by Daniel Kahneman.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2319992http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2319992
Many of us are in your boat Clare! The lack of transparency by politicians/media and economists means it feels a bit like walking through a dark tunnel hoping the light at the end isn’t an oncoming train!
I think you are discovering that economics functions like religion with beliefs clung to for dear life, such is the need for psychological security at any cost.
By the way, link doesn’t seem to work!
(Simon Q)
“The problem as far as I can tell from *cough* discussions with people is that they are too used to getting their economic wisdom from regular news media and absolutely refuse to do any critical research of their own, preferring to live in an echo chamber”
You are correct but it’s no different to advocates of MMT. This blog for example, is largely filled with people who agree from an economics standpoint and it has turned into an echo chamber.
Surely it’s best for people to consider all economic viewpoints as it is hardly an exact science.
You are here and you’re no echo
You argument does not stack
Present one then. The economic chaos in the EU because of rigid insistence on austerity proves that it is economic illiteracy and just does not work.
There are barely any examples in history where it has.
Although it was not intended Jim ‘ s comment here is pure comic genius.
Those who are advocating that economics is an exact science are all on the right, which is where Jim claims he sits. They are called neo liberals who have taken over and effectively made the paternalistic Tories of a previous era an extinct species.
The neo liberal orthodoxy does this by claiming it’s economic paradigm is the natural scientific truth, like a physicist would do with something like gravity, a mathematician with pi, or a biologist with evolutionary theory. University economics courses teach nothing else but this faith based pseudo science orthodoxy masquerading as scientific truth and reality.
Meanwhile, the real champions of trying to save Capitalism from these parasites with a different paradigm are anyone who Jim claims are a mirror echo chamber. Like Stiglitz, Krugman et al.
Bleedin’ priceless Jim. You should go on Live at the Apollo with this material.
I’ve been following this blog as part of a self-education programme rather late in life. I’ve always had strong left leanings, as this was what we heard around the dinner table from 0 to 18 years
These days I often have a tea or lunch break with electricians, plumbers and skilled tradesmen and know that their education on many things political is sadly wanting. However, despite my own upbringing, raising a family, working relatively hard, having a comfortable income and moving amongst people with a similar lifestyle seemed to make a critical interest in politics, economics and world affairs somewhat unnecessary and I suspect that this is true for most voters.
It seems very clear to me now, that unless we educate young people to the reality of work as a contract between the individual, the employer and the state then young voters will be solely guided by their peers, parents and a relatively right-wing media and will continue to do so throughout their working life.
But, given the right forum, youngsters will question the meaning of work, the role of the employer within society, the nature and function of local authorities and state in providing infrastructure, the need for civic and social responsibility on an individual and corporate level, the nature of taxation and what it provides, the reality of global capitalism in enabling global financialisation, the sheer size and power of corporate lobbying and legal challenges to state regulation, the role of the internet as a tool for information about the world around them ……. (how long should this list be?)
Only with relevant education can voters really understand the reasons for the inequality that surrounds them. Only armed with relevant education when they enter the workplace will they be able to understand what is said by politicians, the corporations and the press and what they need to do, say and challenge on a daily basis and through the ballot box. They need education to evaluate what they see and hear and to envision and create a future for their children and grandchildren that is better than the one they inhabit.
The task for Corbyn’s Labour Party is one of education, but schools and colleges can’t fit in the key requirements and at the moment I’m unsure how those of us with time available can spread a coherent message to the next generation of voters………..
It’s a grand idea
I rather hope it succeeds
There was a time, when this country had a functioning manufacturing industry in which people in employment were were working together en masse (steel mills, coal pits, railway yards, car plants, docks etc) where this type of education was provided on the job every day by older experienced workers who would pass on not just necessary tips n how to handle a gaffer but stuff like the great capitalist money trick (from Robert Tressells ‘ Ragged Trousered Philanthrapists).
With the decimation of manufacturing and the break up, atomisation, and computerisation of work that education no longer takes place. It was done very deliberately for that very reason.
Basic income is plan C. I imagine that’ll replace benefits like JSA and some sickness benefits, basic ones, and pensions too.
Claire I can’t get your web link to work.
Jim we live in a world where all of the news and media we see in the every day is neo-lib so I would argue that this blog would balance out the constant bombardment from the every day. Yes it is a form of echo chamber, but then so is watching the BBC. There has been a miniscule counter arguement to what the Conservatives have been doing and the very fact that they insisted on calling Corbyn the Left Wing Labour leader but stopped short of calling Cameron the Right Wing Conservative PM kind of proves this. It is also the balance you have mentioned when talking about getting different opinions.
Noam Chomsky wrote an extremely good book called Manufacturing Conscent which I would recommend to you.
Perhaps this link will work better.
http://www.slideshare.net/jonbonachon/motivated-numeracy-and-enlightened-self-government