Over dosed on debt? Spend more!
Myth-makers are having a field day with the recession, which is why this year’s precipitous downturn will turn into next year’s depression.
Myth 1: When it comes to solutions, there is “no single silver bullet,” writes David Smith in the Sunday Times (September 14, 2008). How would he know? He failed to prepare his readers for the crash, which suggests we can’t place much value on his pronouncements.
Commentators like Smith love mind-bending jargon like “quantitative easing”. What on earth does it mean? Not “printing money,” insists Smith. No; it means something grander. But torture the language this way or that, it does boil down to scheming governments expanding aggregate demand by increasing spending power. Theirs!
It’s all a matter of logic
Myth 2: We have to spend our way out of recession, writes Roger Bootle of Capital Economics. This, he insists, is the logical strategy (Daily Telegraph, January 13). “The recession is about a shortage of aggregate demand.”
Funny, but I thought the recession came about because people spent too much money – on property they couldn’t afford; by over-dosing on products consumed by going into debt. The recession did not originate because of a shortage of aggregate demand, and we won’t get out of it by spending more money.
But governments don’t want people to do cold turkey, so they are dusting off the clichés from John Maynard Keynes. He prescribed government spending to “pump-prime” an economy out of recession. Politicians love it!
But what about that “silver bullet”?
To curtail the depression and build our way into stable growth, it’s necessary to eliminate the points of friction in the enterprise economy. We know the location of the problem: real estate. We know the dynamics of reckless lending: the pursuit of capital gains. We know where to find the solution: fiscal policy.
Just one silver bullet, and we bag just about all the pathological problems in the capitalist economy. But have economic commentators like David Smith turned the vitriol in their pens against those who have grown rich because of the perversities of the property market. No!
Does Roger Bootle apply his logic to the problem, to help governments order their policy priorities? No!
So sit tight, watch the Keynesian pump boost the money supply, and observe the busy-bees buzzing around all the solutions under the sun, except that one silver bullet that will remain locked away in the magazine.
Popularity: 12% [?]
It is necessary to teach those who do not want to understand as well as those who do. Why? Because your workshop on January 24 will be mainly attended by the faithful, the delightful people from the Henry George Society and the School of Economic Science will be there, and you will be preaching predominantly to the converted. Result?…. nothing will change.
Can I make a suggestion? Why not send a cordial invitation and free tickets to the 200 (or even 500) most influential people in the City and in Government? With a memo that if they personally could not attend to give the ticket to a representative or colleague. And maybe one special one to Gordon Brown, apologizing for criticizing him in the past, but promising to make him enlightened in two or three hours? And if they do not come, to their loss, then in due time send them a transcript of the speeches and proceedings, and an invitation to come to the next workshop?
Unless you yourself change, the world cannot change.
Everyone wants, even demands, the world to change, but nothing actually changes. Change one thing in your own nature, and change in the world becomes possible. I observe that you are always criticizing others, and Gordon is one of your favourites at the moment. If anyone in the Labour Party has heard of you and Land Value Taxation… then you are definitely on their list of enemies. One would think that the Labour Party would be your natural ally, but ridiculing their policies turns them into hostile or indifferent opponents. Clearly the Tories, the natural party of the Duke of Westminster and those who believe in the divine right to live off the benefit of property rents, are your natural opponents, since they have the most to lose? Praising Vince Cable reveals where your affinities lie, and it is well known that The School of Economic Science has been infiltrating the Liberal Part for some years, resulting in Chris Huhne and other converts… but be realistic, they will never come into power in the foreseeable future, and in a hung parliament a coalition with Labour or the Tories would not implement Land Tax Valuation policy. So… where is the opportunity for change? The first thing perhaps is to stop criticizing. Be objective but diplomatic. Regard all the warring parties with an equal eye, and treat them all equally with perfect respect. You will need good relations with them all to succeed.
I will subtly study your future blogs to see if you continue to criticize Gordon Brown et al. If you do… then I will realize that nothing can change. If you are really daring…. start your own party. The Genuine Democracy Party. Real democracy gives power back to the people, not takes it away from them accumulatively, as is the sad case at present. Genuine Democracy allows the people to vote, to have the deciding say, on what laws and regulations should govern themselves, not imposed by an elected dictatorship. In a genuine democracy people will decide whether or not they want a Land Value Taxation system to replace the multitude of repressive taxes that presently stifle enterprise and are a burden which increases year by year. In one of your videos you say it is up to the people to decide whether to mandate the appropriate social change. But how can they? There is no vehicle for change… unless you yourself, and your colleagues set one up? The politicians will never, in the near future, place these ideas on the table. So…. set up a party that will. But it has to be a party that is different from all the others, different from all the other power seekers aspiring to political office, different from all the other power grasping freaks…. one that makes reasoned enlightened suggestions to the population and then lets them decide. Genuine Democracy. If you ran a campaign of… abolish income tax, abolish national insurance, abolish VAT, abolish corporation tax, abolish council tax…. replace it with one simple tax that you are already paying indirectly to property owners…. you may succeed.
Start a Party, get a leaflet into every household in the country giving full, frank, and open details about the changes to the taxation structure proposed…. and see what happens. Your present strategy of videos, lectures, esoteric workshops, representations to the Shriti Vederas of public life, infiltration of political parties… although admirable, will not achieve the change nor the result you aspire to. People are imprisoned by the parties, they have no obvious means of escape. Only a party that frees people from the tyranny of the three big political powers has any chance of creating a just creative and harmonious society.
You are not quite marketing the cause properly…. it should be focused on the abolition of taxation, together with the right of every person in the country to have their say and directly vote on the laws which govern themselves and the nation. Only by freeing the people will you be free to place your policies before the people for them to decide.
For the Myth #2, believe that the policymakers are trying to entice people to do long term investment, rather than hording of finances. On the other hand, it is not clear who are they planning to target – the rich and powerful or people that have some finances saved. Mostly, they believe that forcing or luring people into clearing out their caches of cash will fix the economy.
Yehan,
I don’t share your pessimism.
My criticism is constructive – who else has held our elected leaders to account while offering a viable alternative? The political space is filled with sound bites, not sound policies. But those policies will not emerge until we get rid of the ideological dross.
The Renegade Economist is not preaching to the converted, and nor do we intend to start a political party. I believe that, in these extremely dangerous times, all political parties should set aside their doctrinal differences and unite behind the reforms that really will work.
I welcome your subtle study of future blogs.