We do so enjoy the New Economics
The world has entirely changed, so we’re told in The Guardian:
Their problem is that many of the issues exacerbated by the pandemic, such as wage stagnation, precarious work and rising inequality are not bugs in an otherwise well-functioning system, but inevitable outcomes of the way that western economies are now organised. So a business-as-usual approach simply won’t work. Much more fundamental change is needed.
Global neoliberalism hasn’t produced much growth so we must have a different system that produces growth. Well, OK, not much growth except for the greatest reduction in absolute poverty in the history of our species.
Still we must have change:
Unlike his predecessors, Biden is pursuing large-scale public spending and taking advantage of ultra-low interest rates to borrow for infrastructure investment. His stimulus plans target the climate crisis while creating green jobs and expanding health, education and childcare – the “social infrastructure” that is essential to the economy but has often been ignored by mainstream economists.
That’s more generally called current spending rather than investment in infrastructure. But, change!
This was followed by long years of austerity and slow growth, stagnating wages, stalling productivity and extreme inequality.
We must have that more growth!
As long as low interest rates keep the cost of borrowing affordable, and borrowing is used to fund investment (which raises future national income and therefore brings in more taxes), the ratio of debt to GDP will ultimately fall.
Not just will the growth pay for all these lovely things, we need the growth in order to pay for the lovelies.
We’re really pretty sure this has all been tried before. Sweden quite famously retreated from it a few decades back. But still, the true glory of the New Economics argument is here:
Above all, many are starting to realise that economic policy needs to end its fixation with growth. Growth was never the only aim, but economists long assumed that it would solve most other problems. It’s now clear this was never the case. New ideas for “post-growth” economics are emerging, which focus on environmental sustainability, reducing inequalities, improving individual and social wellbeing and ensuring the economic system is more resilient to shocks.
As well as complaining that global neoliberalism doesn’t produce growth, therefore we need more government to have more growth and, also, we must invest to get the more growth to pay for the investment, we don’t need and shouldn’t have growth anyway.
Believing entirely contradictory things is oft taken as a sign of a certain mental fragility and we used to have comfy places for people to recover from such. That system was abandoned but we were unaware that it was replaced by positions in economics departments:
Michael Jacobs is professor of political economy at the University of Sheffield, and managing editor of NewEconomyBrief.net
Ah, that’s right, political economy isn’t economics is it? Nor, apparently, is it constrained by basic logic.