Thursday, December 11, 2008

Just been reading a report of the views of Peer Steinbruck, Angela Merkel's Finance Minister, on the response to the recession. He is not part of the Brownian Movement, not one who says, "Is it a bird? Is it a plane? No, it is Flash Gordon! Wow!"

He has various criticisms of Brownianism.

Too fast, untested. Not fair, imo. Sometimes quick action is necessary in an emergency, action whose testing in action. This is no time for cogitation.

VAT reductions are crap. Well, yes, the intentions were good, but small reductions, ones that may not appear in prices are marginally important. This was silly. I bet it was some civil servant who pushed that one.

Debt is going to go up. Yes indeedy. But there was no alternative, apart from a meltdown. The whole finance system is predicated on debt. It need not be, but it is. The Great Depression is thought to be worsened because the governments were more interested in balancing the books than charging in to help.

Crass Keynesianism. Depends on what he means here. Does he mean all Keynesianism is crass, or that Brown is peddling a crass kind of Keynesianism. If the former, then he is wrong, wrong, wrong. Keynes is the Man: now is the time for the Government to put money into the economy.

If on the other hand, he thinks Brown's formula of Keyneianism is crass, then I agree. His grasp of planetary realities is weak, as evidenced by the tiny amount in his pre-Budget package devoted to insulation - I am told that it will take 300 years to insulate Britain's houses given the amount he has put forward. Maybe it was 100 years. Whatever. Gordon doesn't Get It. Yet.

The origin of the crisis is credit financed growth. Well, yes. What other kind is there in this world where all money is created by credit? He's said a mouthful here, opened up an area into which we will not go at present because it is a major topic.

The Great Rescue Plan doesn't exist. This is getting interesting. Peer Steinbruck (and presumably Angela Merkel) are what we medics call therapeutic nihilists.
Then, it gets more interesting still:
It's not about to collapse. Ah, that explains it: the German economy is a bit more stable than the US/UK economies, so their perceptions are different.

In England, we have a saying: "He who laughs last has only just seen the joke". Contrariwise, "He who is not running away has not yet seen the bear".

Stenbruck and Merkel think this is a bit of a cyclical downturn, and so no need to do much because nothing much needs to be done.

I hope they are right. If only we could believe they are right. But the facts are otherwise.

Let's end on a bright note:

In his own words, "For me the only stimulus measures that make sense are those that create jobs and have a positive structural effect beyond the economic cycle".
Amen to that. No more money for the banks, unless to nationalise them. No money for the car industry. But yes, money for the structure of the economy itself, for the energy conservation, renewable energy, and the entire green economy. That's where the money should be directed. Into a Citizen's Income, or if that is beyond Gordon's ken, then a Green Wage Subsidy.


Anonymous said...

I am still following your blog.
Therapeutic nihilists-that's not an expression I have ever heard before.Does it mean those who favour the 'do the least' approach?

I have been reading the welfare reform white paper - isn't the proposal for mothers of children over seven to find work discriminatory.Those not on benefit can choose to stay at home to bring up their children, if they want to.
Concerning human rights-I have always been puzzled as to what rights you have over your DNA.If it is part of you physically why don't you have automatic ownership rights over it.
How can the Dept. for Work and Pensions get away with using lie detectors (possibly)during claimant's phone calls?
Isn't "Work for your Benefit" a form of involuntary servitude?

DocRichard said...

Hi JMac, thanks for commenting. Therapeutic nihilism is what doctors do when they say "Nothing can be done for this patient".

I have been meaning to write about the latest wheeze to get people off benefits back into work. It is problematic at the best of times, but at the beginning of a recession it is off the wall fantasy imagination stuff. What a waste of everybody's time to have people spending their days chasing around looking for work that does not exist?

Citizen's Income is the opposite approach - give all citizens a fair proportion of the national wealth, and allow them to keep it when they find work. Much simpler, less admin, less hassling, easier to get into (and out of) work. Totally rational, but it will take a huge paradigm shift to get over the "What about the liggers?" response. So the way around that is to use a Green Wage Subsidy

DNA - it is outrageous that researchers have been granted patents on genes. This is a step away from patents for "invention" to patents for "discovery". Just more big money for big business.