Tuesday, 7 October 2008
From A Spectator Sport to Mass Participation
So far the financial crisis has been a spectator sport for most of us - a bit like watching a report of an earthquake on the other side of the world. The commentators routinely refer to a difference between the financial markets and 'the real economy', and at least some of them are very careful not to assume the current meltdown will necessarily feed through into any similarly sized effects on jobs, wages, company insolvencies and inflation.
Phooey say I. Either the money markets are simply and solely an obscene casino for creating money and making the rest of the world pay the Masters of the Universe for their kindness in doing so, or they do, in reality, supply not just investment money but also, crucially, cash flow to the 'real economy. If that dries up the 'real economy' starts to grind to a halt.There's a time delay, sure - but it can't be long in coming along now.
The traditional way of dealing with this is Keynesian reflation and I am attracted to the proposals set out in the Green New Deal as a possible contribution to any solution. But there is a definite limit to how far an economy like Britain's- the most indebted of all the major Western economies - can sustain this on a scale need to counteract the effects of our 'world class' (sic) financial services industry going down the pan. So let me make three small suggestions for helping to balance those government books:
* Cancel Trident
* Cancel the ID card scheme
* Bring the troops home from Iraq and Afghanistan
Every little helps....
Britain it seems to me is in the most desperately difficult situation it has faced since 1940. We're way, way out on a limb in our role as a kind of giant 'offshore' casino for the world's hot money. That money will flee as soon as it can and won't come back without massive reassurances - reassurances which can only come, in the short term, from moves against social spending and the restoration of the obscene differentials in income once provided by our casino economy.