This extraordinary graph comes from a new paper by Prof Richard Jones of Sheffield University in a new paper on the need to invest in innovation published by the Sheffield Political Economy Research Institute (SPERI):
I have not read the full paper as yet, but it looks worth doing so.
What the graph shows is something anyone interested in political economy needs to understand: 2008 was not a blip; it was a complete change in trajectory for economic growth.
The questions that remain are what we do about it and how we react to it? And as yet few have answers to either. Richard Jones is tackling the first, in particular.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Removing the need for growth might be a sensible place to start. The only reason we need it now is because we are reliant for our money supply on the commercial banks, who create money into the economy at interest, causing us to continually go back to them asking them to create more, at interest, so we can pay the interest on the prior issue. It’s unsustainable for reasons I hope will be obvious, yet instead of seeking to bring this situation to a timely end we chose to address it through continuous economic growth. Remove the banks from the equation and this rat race ends. Obvious, yet where’s the discussion? We should be considering how to remove these parasites, not how best to cater for them.
This is extremely interesting, Richard. The importance of controlling for population growth in the 1948-2008 period is something I hadn’t really noticed before but it makes a lot of difference to trends in the 1970s, 1980s and 1990s in particular. For example the conventional wisdom was that GDP growth in the 1970s was v poor compared to 1950-70 but I think UK population actually declined somewhat in the 1970s whereas the 1950s and 1960s were decades of population expansion. So if you control for population growth it looks as if the 70s weren’t as bad as we thought. Most of the 1980s and 1990s had below trend growth but booms at the end of each decade seem to have made up the difference by 1989 and 2007 respectively. But yep – it really does fall off a cliff after 2008, doesn’t it?
That’s what I found so significant
This is a big new perception
Well, let’s be honest Mr. M., we’ve let lots more people in as well and not all of them are rocket scientists or doctors or people who are going to earn lots of cash or create lots of jobs…..
…like I said Mr. M., I know sometimes you think my comments are bit harsh, but really, do you think they are that different from what a big chunk of the electorate think given polling on immigration and crime?
I am with Jonathan Portes on the subject of immigration
But then, I come from a migrant family
Linked to your Hong Kong item yesterday, Wednesday, along with a couple of others to make a point. Around a decade ago I was trying to persuade the FT that it all wasn’t going to work even if the short term looked bright and shiny. The question now is how we clear up the mess, or not.
What most strikes me about this graph is what looks like the ‘Barber boom’ in the 1970s, the absolutely dire recession in the early 1980s, the Lawson boom that looks like the biggest and shortest upswing on this graph, the Major recession, and of course the Great recession under New Labour. All of these have a strong link to the financialisation of UK society, whereas the previous period looks much more benign in terms of volatility; now I wonder who benefits from such increases in volatility…?
Richard,
You and the people in the Transition movement (start with Rob Hopkins) need to be talking to each other. Please take a few minutes to look at this.
James
I can’t make the link work
As I understand it from the original paper, this graph reflects the impact of big corporations withdrawing investment from R&D and the real economy, because they get bigger returns from financial speculation. Certainly General Motors now has a sideline in making cars because their real money comes from fictitious capital.
As Citigroup stated in their 2005 pamphlet:
‘ Citigroup believed that we had moved in to a new kind of macro-economy, where growth was primarily driven by the rich and enjoyed by the rich. Everyone else was fairly irrelevant, as was the global imbalance in trade between the US and everyone else and the strength of the dollar. The fact that inequality was massively widening was not seen as a big issue — the important thing was to keep the rich and their stocks, getting richer.’
http://www.neweconomics.org/blog/2011/08/22/“plutonomy”-guaranteed-by-the-tax-payer
http://think-left.org/2011/09/08/soylent-green-george-osborne-and-plutonomy/