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Prof Robert Wade on economy to 2015

Written By: - Date published: 8:43 pm, September 21st, 2011 - 10 comments
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The global economy to 2015 and 2030

ABSTRACT:  The western world economy is currently in an even more dangerous condition than in late 2008 after the Lehman collapse. Then policy makers were in a cognitive fog, but at least they stumbled on the right recipe: fiscal and monetary stimulus. Now policy makers are not in cognitive fog and  confidently prescribe austerity or “fiscal consolidation” – when private demand is weak, economies are close to recession, and unemployment is historically high. (Perhaps the scariest words spoken so far are from the German finance minister: “”Austerity is the only cure for the eurozone” , 6 September 2011.) They base their confidence on pre-Keynesian economics and ignore ample empirical
evidence of the damaging effects of fiscal austerity when the growth rate is very low and unemployment very high.

The fiscal consolidation recipe is likely to keep many western economies  close to recession for several more years. This paper outlines the reasons why the recipe is wrong and why policy makers have stuck with it.  It then turns to the longer-term outlook, emphasising increasing resource shortage (signalled by the sharp commodity price rises since
2002) and the effects of income concentration at the top on the ability to manage tragedies of the commons.

Robert Wade is Professor of Political Economy at the London School of Economics. He won the Leontief Prize for Advancing the Frontiers of Economic Thought in 2008, and his book Governing the Market: Economic Theory and the Role of Government in East Asia’s Industrialization (1990, 2004) won the American Political Science Association’s Best Book in Political Economy award.

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10 comments on “Prof Robert Wade on economy to 2015 ”

  1. Colonial Viper 1

    TPTB know full well that austerity measures will destroy economies and peoples.

    Greece etc will tail spin downwards. NB the German Finance minister was not talking about austerity for Germany. But for the debtor nations who owe to German banks.

    Austerity and economic collapse will then allow TPTB to swoop in and buy up strategic assets from within those bankrupt countries for mere cents on the dollar.

    • mik e 1.1

      no doubt National will Act the same way

      • Jum 1.1.1

        Mik e

        Clever use of words to prove the association.

      • Draco T Bastard 1.1.2

        That’s what they’ve promised and most definitely set out to do when they got in to power. Cut taxes so that the country went into an unmanageable deficit and then said that we had to sell of our assets to pay for them while having no plan to fix the deficits that they created.

  2. Afewknowthetruth 2

    ‘Then policy makers were in a cognitive fog, but at least they stumbled on the right recipe: fiscal and monetary stimulus.’

    That statement is absolute nonsense.

    The reason the global economic system is collapsing is energy depletion, resource depletion, and declining EROEI.

    By attempting to stimulate the consumption of declining resources, policy makers have worsened the predicament we are in and have ensured that the next round of collapse will be worse than the last.

    ‘The fiscal consolidation recipe is likely to keep many western economies close to recession for several more years.’

    More nonsense. Western economies are not ‘in recession’ or ‘close to recession’: official numbers (GDP, CPI, unemployment etc.) are fabricated to make it look as though there is a prospect of ‘recovery’ but in reality we are in the early stages of a depression that will evolve into a reversal of the industrial revolution. That is the unmentionable and unpalatable [in mainstream circles] reality from which there is no ‘escape’. And which every orhtodox economic remedy will make worse.

    Powerdown and permaculture are the only strategies that offer even the slightest hope for communites to get through what is ‘thundering up the beach’.

    ‘The global economy to 2015 and 2030’

    There almost certainly won’t be one by 2030. Even 2020 will be ‘pushing it’.

  3. Hilary 3

    Seems like we are getting to the end of the growth era and now have to look seriously at redistribution instead.

  4. johnm 4

    As said by Professor Wolf we have 4 plans here:
    Plann A, Gift the Financial Institutions who have ripped off the people’s wealth more wealth from the people’s purse in the vain hope it would trickle down and start up the economy, this daylight robbery hasn’t worked Why? The people who could make the economy work are stuffed by the excessive wealth transfer to those who already have too much $$$$$$$$$$$$$$$$$$$$$$$$.

    Plan B. The economy is stuffed and all the goodies are secreted into the useless bank accounts of the hoarding rich What to do!? Impose austerity on the already poor to pay for the wealth transfer to the rich and then pull up the ladder by privatising everything which short of a revolution is impossible to reverse. Result? Deprivation, Poverty, Riots and Militant Politics.

    Plan C Tax Speulative wealth and the rich to the maximum and restribute wealth througjhout all of society. This must and should be done despite the squeals, yammerings, bleatings and protests of the Randian elite. This is the solution they will not countenance but it must be done. National and Labour are in the pockets of the rich and certainly do not believe in the common man.

    Plan D. Corporate wealth and accountability must be shared with the workers and communities they are a part of, this includes workers and community councils on the board. Making money just for the share holders must be outlawed.

    Prof Wade is just a BS mouthpiece of the kleptocracy that produced the London Riots through the class war of austerity on those have little to hope for already.

    Also as AFKTT says we have the overarching major historical situation of the decline and failure of Industrial Civilisation due to Overshoot in every area imaginable.

  5. Draco T Bastard 5

    Now policy makers are not in cognitive fog and confidently prescribe austerity…

    No, they’re still in a “cognitive fog” due to their inability to realise that the financial economy is not the real economy. The blame for this can be laid at the feet of the capitalists and their pet economists who keep putting forward a monetary theory rather than an economic one – and then look surprised when their delusional theory fails to work.

    The fiscal consolidation recipe is likely to keep many western economies close to recession for several more years.

    And reality will put the financial economy in to a tailspin as real resources dry up resulting in the real economy becoming much more constrained. The growth that the financial economy requires to pay off it’s debts will not materialise, in fact it will go into negatives. It’s a good job that it’s only money and that we can default on those debts without affecting the real economy – just so long as we’ve got the courage to tell bludgers capitalists to fuck off.

  6. Barry 6

    They have forgotten that austerity used to be imposed on third world countries to make sure they stayed that way.

  7. Hilary 7

    Anybody who went to the this talk going to give a report?

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