As the FT reports this morning:
The Treasury opened the door to a more aggressive monetary policy on Wednesday, as aides to the chancellor welcomed the next Bank of England governor's radical views on stimulus measures for flagging economies.
In a speech on Monday, Mark Carney suggested setting targets for the overall size of the economy, or nominal gross domestic product, rather than inflation.
Well, that's better than setting inflation as the target, which was always a hopeless goal aimed solely at securing the wealth of those already rich. But it's still a long way short of the target. Nominal GDP is a poor target, distorted by negative factors that have no impact on well being (boost the number of divorcees and you increase nominal GDP but the world is not a better place; the same is true of major environmental disasters). The vest target for any economy is, of course, full employment. Why is it so glaringly obvious for Goldman Sachs people to see that?
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‘The vest target for any economy is, of course, full employment. Why is it so glaringly obvious for Goldman Sachs people to see that?’
The world of economics is so full of strange words and labels, that I’m sure few would turn a hair at there being a ‘vest’ target! However, I think that the last sentence needs some amendment 🙂
It is so blindingly obvious that what we need is full employment and a commitment to a job’s guarantee. But I doubt if that’s what GS would ever have in mind.
‘The best target for any economy is, of course, full employment. Why is it so glaringly obvious for Goldman Sachs people to see that?’
It’s not, Richard, but that would remove the reserve army of labour (to paraphrase slightly), with a beneficial impact on many, ordinary working people, but a negative impact on the likes of Walmart, G4S, Serco, etc and all those other organisations who pay so many of their emplyees less than a living wage. In short, it would have a positive impact on inequality – why ever would the 1% and their supporters want that.
Good lord!! Another Goldman Sachs appointee. England be afraid, be very afraid.
Why is it that we are seeing so many Goldman Sachs appointees in Western nations at the moment? Look at what Mario Monti has been doing to Italy. Richard, I’m sure the Goldman Sachs people are aware of the glaringly obvious – they don’t care.
On the issue of full employment, I think most governments around the world have to their disgrace abandoned the cause of full employment. Have a read of these posts by economist Bill Mitchell:
A national disgrace — the abandonment of full employment
(http://bilbo.economicoutlook.net/blog/?p=21944)
The demise of social democratic parties – they’re all neoliberals now (http://bilbo.economicoutlook.net/blog/?p=21091)