The EREP network — Economists for Rational Economic Policies (of which I am a member) — has published its Review of the UK Economy in 2015, with a series of short articles focusing on different aspects. The Review argues (adopting an Osbornian “building” metaphor) that:
“As the year has progressed, the economy has slowed and regressed. The public finances are built on hopes and assumptions that appear to be fragile indeed, and economic activity in many key areas has decelerated whilst the property boom helps the asset-rich. The weaknesses in the UK economy are more and more apparent, like a building with a flashy design but poor construction. The cracks begin to show. Let's hope there's no earthquake coming…”
The report's authors include:
John Weeks on fiscal policy
Ann Pettifor on monetary policy
Richard Murphy on taxation
Özlem Onaran on inequality and wage stagnation
Jeremy Smith on labour productivity
Andrew Simms on climate change and energy
Jo Michell on private debt
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I like John Weeks – I’ve read his ‘Economics of the 1%’ full of irony and wry humour, not bad for an ex-Texan! No MMT’ers on the list?
Jo Mitchell says at the end of the article:
” Osborne is using the housing
market as a casino in the hope of keeping economic growth on track during another five
years of austerity. It is a high-risk strategy. His luck may soon run out.”
What worries me, is that this ‘casino’ approach is the new ‘normal’ with a populace accepting its serf-like status (there are signs already that this is so), this could mean ‘the luck WON’T run out as the framework of crap jobs, debt-slavery and rentier wealth syphoning of land and housing IS establishing itself as a new norm, the Ganesh article you reviewed yesterday, Richard, already indicates this IS the paradigm – depressing, of course but very possible, in my view.
Plausible, I agree
I largely agree, Simon, but not entirely.
The UK and Europe are witnessing a farce where the endlessly repeated talk of recovery has become as a substitute for a an actual recovery. It is a both a lie and a deliberate psychological ploy with a broad message that seems to be saying that:
A. Austerity isn’t deranged, its finally working.
B. Don’t change now and threaten the ‘recovery’.
C. The economy is back on track, your problems are your own.
D. This (stagnation) is the new normal. Get used to it and carry on.
The ‘recovery’ story is essentially one of those lies that, repeated often enough, will eventually be believed. UK govt. and media keep repeating it. Although I am not sure that the message is as well accepted as they would like it to be.
Either way, it is not the housing bubble that would be the “new normal”. That version of normal can’t last be if it is inherently bound to collapse. If anything, secular stagnation, becomes the accepted norm.
Looking solely at unemployment,some might argue that this has been the case since 1979. Now were adding zero interest and near deflation to the list (Kalecki had some interesting things to say on this subject).
On reflection, I wouldn’t worry too much. The Japanese have lived with this for quite a while but never really accepted it or seen it as anything other than stagnation. Casino economies of the type you have described can’t really stabilise as they are inherently unstable. Bubbles burst.
To clarify, I probably should have said that casino economies cannot last indefinitely. In which case we are back to the question of whether Osborne can eke it out for 5 years before it comes apart.
Good point Franco-I suspect the ‘eking out’ will take place and everytime there is another quarterly reveiw showing 100,000 (crap) jobs it will be hailed as ‘green shoots’ and the garbage that keeps getting spouted.
As regards the housing bubble, we’ve had about 40 years of that and it keeps going with still the same trash about getting on ‘the ladder’. James Galbraith wrote that the ability to make money out of housing stopped about 1975, so the banks had to really ramp that one up after the collapse of manufacturing. What i was trying to get across was that EVEN if a collapse happens it will be looked at as a new norm for the rentier society and continue again like a wash-rinse cycle.
The chisellings away of democracy will ensure the corporate state doesn’t allow significant dissent.
I hope I’m wrong (as I’m certainly not a beneficiary of this in any way) and of course it will collapse in a way that might not be recoverable at all but it could take decades -this is a worst case scenario as part of my personal psychological preparation.
Yeah, Simon, maybe. I doubt it though. I can’t see how a serious crash -by definition – can be normalised. Thankfully it would also seem that the attempts at talking up low-level stagnation are having limited success as well.
I don’t say this in attempt at being optimistic or pessimistic merely interpreting as dispassionately as I can.
If I founded the EIEP do you think I`d get a lot of neoliberal backing?
What is the EIEP?
Presumably “Economists for Irrational Economic Policies” ?
Ah….
Matt, I suspect that given the irrationality of existing economic policy that such a body would be somewhat superfluous to requirements.
What’s the chances Osborne will hijack Murphynomics before the next election? Or is he saddled with too many vested interests?
High, I think
This may not be relevant to this particular thread, but I read yesterday that the average household income is now £33,400 pa. Given the figures I have seen from previous statistics, this suggests wage increases of 5% plus for each of the last seven years. Who is getting this extra income? Also, we are supposed to be having economic “growth” albeit weaker than Osborne claims, in what sectors of the economy is this growth occurring? The answers may be in the report I have just downloaded and not yet read, but it seems to me that any growth under the present conditions must only add to the already dangerous imbalance in the economy and that increases in income must be confined to a few individuals and cannot effectively be used to average out the incomes of all just to make us look wealthier.
I have to say I question your source of data
Unless it is ‘average’ meaning mean
Median is usually quoted precisely because the extremes at the top do not impact it and so misrepresent the truth