Friday, 8 June 2012

When Push Comes to Shove

That the basis of growth must be the reduction of public debt accompanied by the privatisation of economic activity inappropriately conducted in the state sector and the liberalisation of labour and trade relations is not accepted by the left, or by their current fellow travellers, the progressive authoritarians of the third way.

Their intellectual shock troops, armed as economists but acting as propagandists (a highly questionable ethical stance -  permitting a connexion between their undoubted technical status and their debatable political beliefs) call up the experiences of almost a century ago and the remedies to that Depression worked out with such care in subsequent decades, as if old-fashioned economics applied in toto to the present day.  And, guilty of this error, in true propagandistic fashion, they accuse the supporters of a more modern economic solution to the current crisis of secret subscription to an even older, Schumpeterian belief in the beneficial effects of the experience of Depression, and call them vindictive and even mad: guilty  of punitive assault upon the well-being of their fellow men. 

The 'New Dealers' of this millennium have failed to consider (or at least failed to acknowledge) that last century's over-use of deficit financing and state acquisition of economic controls has brought us here.  (Never mind the political refusal to recognise the popular overthrow of the regimes of eastern Europe where their economic theories, and their political beliefs and the necessary structures that in the end accompany them,  failed even to feed, house and clothe the people beyond the most basic level).

In thrall to the economics of the past  United States' debt stands now at 100% of a year's GDP.  European debt, on average,  is 88% of annual GDP.  The US has a higher current deficit and a higher balance of payments deficit on current account.  And they assault the Eurozone for rejecting the retro-economics that has produced this disaster?

There aren't really laws in economics, except in the sense of a few verifiable empirical regularities, but it's as true in there as anywhere else that 'to every action there is always opposed an equal reaction; or, the mutual actions of two bodies upon each other are always equal, and directed to contrary parts.',  and all this pushing and shoving of the Eurozone has indeed produced  an equally powerful response which will put in place rapidly the long-planned and prepared machinery of a core United Europe.


Caronte said...

Joan Robinson - one of your heroes - had devised a test to check the ideological content of someone's economics.

Suppose an economist changed his political views. If that required his also changing his economic views that meant that his economics was nothing but ideological rubbish.

E.g. someone believing in Gresham's law would not have to change that believe if he were to change his politics. Therefore he is "clean" of ideology,

hatfield girl said...

'The bastard Keynesian doctrine, evolved in the United States, invaded the economic faculties of the world, floating on the wings of the almighty dollar.'

is a pretty good view as well, C

Nomad said...

If you keep giving away his secrets, you will never be invited to join Bill deBurger's club you know!

hatfield girl said...

They'll (and Obama) be telling us next that 'a fall in the price of tea and cocoa caused unemployment in Lancashire.'

Why do competent economists turn into cod historians and expect to be taken seriously?