Tuesday, 27 July 2010
The Austerity Debate
Slí Eile: Don't miss the Great Austerity Debate running on the Financial Times at this site. Some heavy hitters have weighed in followed by a thread of comments. You may have missed the Austerity debate on the home ground on irisheconomy here. Funny thing right now is that if you ask people are they for or agin stimulus/deflation they will tell you that they are all for a jobs-creating stimulus while, at the same time, imposing pain through deflation. Pain must be good. Per crucem ad lucem is the battle cry of the deflationists - to the light via the cross. Yet, the evidence that stimulus will not work, cannot be afforded and could spook the markets is thin. It is incumbent on those of us who argue for stimulus to spell out what it would mean, how long it would run, what levels of spending, taxation and borrowing at home and abroad would be envisaged and what sets of assumptions, scenarios and 'what if' circumstances were factored in. The debate, internationally, will not go away as most industrial economies stuck in a deficit trap and trade/capital imbalance cannot easily deflate their way of the impasse. Neither can they readily devalue or pump prime their way out. The fundamental contradictions within a 'for profit' economy have come home to roost. Yet, the time is not right for a fundamental change in economic and social relations - or is it? Underlying all the simulations and scenarios considered by agencies from ESRI to OECD to IMF to ECion is the presumption that the current world order and system of economic production is here to stay. We need to think bigger and bolder than that - if only for the sake of the coming generations. We need a vision stimulus to offer hope and justice where governments, media conspire to depress and sometimes deceive.