Niall Ferguson: It's the Stupid Economy
Mr Obama hired some pretty good economists from both camps and he did more or less what they recommended... Well these measures helped us avoid a great depression, but they conspicuously failed to produce a sustained recovery. Right now, to be precise, the US economy isn't growing at all. Stupid economy! Dumb economy! ...He goes on to say the economy is stupid because the tax system is inefficient. But Blind Freddy can see that tax reform and productivity are merely tinkering at the margins, there are much bigger forces at work.
They say that generals are always fighting the last war. Maybe the problem today is that economists are fighting the last depression. What they just don't seem to get is that this depression is different. Unlike in the great depression, the world's economies remain open and interconnected. As a result, stimulus tends to leak across borders, boosting the price of pork in China instead of helping home owners in Nevada. It's really hard to predict how this kind of economic butterfly effect plays out...
Ferguson himself identifies the problem: "It's really hard to predict how this kind of economic butterfly effect plays out". Bingo. Specialise, trade, and then what? Nobody knows what except for the giant sucking sound of jobs going offshore.
The problem is blind free-trade with no good endpoint in sight. We need an economics that is more predictable and stable.
File under: the brain-dead ideology of indiscriminate trade sucks all the butterflies to China.
Did you hear the latest? Julia Gillard now wants to totally remove our remaing trade barriers. I think her reasoning is that the DOHA (?) trade talks have prooved unproductive in bringing down trade barriers, so therefore Australia needs to show the way and unilaterally bring down our barriers as a show of faith. Talk about ramping up the insanity. This smells of Kevin Rudd too: prostrating and sacrificing ourselves on the global stage always and everywhere. Labor are totally bonkers.
ReplyDeleteYeah it reeks of Rudd. But Labor is mostly full of free-trade fundamentalists with or without Rudd. They are demented to the core. The Liberals aren't much better.
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