This fascinating programme the ’Masters of Money’ has been developed jointly between the Open University and the BBC. At the heart of the programme lies the question of how Keynes would have dealt with today’s economic problems. He was apparently a stunning intellect and unfortunately for us it is not likely he would repeat some prescriptive formula based on his previous remedy of bringing the economy out of depression in the 1930s.
Of course we still hear disciples of Keynes urging us to spend our way out of the crisis and push investment based on Government spending. However there is almost no doubt the great man himself would have suggested anything so simple as a solution.
The problem is that our difficulties now are very different from the economic woes of yesteryear. He would certainly have recognised the vast differences and realised that any solution would have to be based on the actual situation. Our situation is based on a conjuction of several problems. From the Euro crisis flawed in it’s very design to the the rapid switch of economic power from the west to the developing east and south. Combined with these a fundamental problem that our economy is based on a debt financed capitalism model that basically didn’t work.
Old fashioned Keynesian economics is ill-placed to deal with these complexities and it is almost certain JM Keynes would have realised this. It may be that our solution will only come when we begin to accept that perpetual growth in our economies is perhaps impossible to achieve.
Whatever the solution, Keynes certainly has much to teach us and I recommend the show Masters of Money to you without reservation – Masters of Money, it’s well presented by the Beeb’s Economic Correspondent Stephanie Flanders. It’s up on Iplayer for a few weeks so catch it soon – if you are outside the United Kingdom and have trouble watching, this post should help – http://www.onlineanonymity.org/uk-tv/how-to-watch-uk-tv-in-usa/. It demonstrates how to use a proxy to watch these shows wherever you are based, watch the video half way down for a simple example.
If you access via an iPad then this post is also useful.
If we’ve learned anything from the history books, we will know that getting Europe back to some sort of prosterity is not going to be straight forward. In Greece, many politicians have been poiting out that in 1990s many African countries had their debts cancelled so that they could start again. I’m sure the Greek people would take that situation n a heartbeat.
In Africa the change came from a programme called HIPC ( Heavily Indebted Poor Countries) which provided aid to those countries who had completely collapsed. The idea was that this reward on;y came on the back of some sort of plan to reform the economy and it’s spending. Obviously these strategies can be of many different ilk – but for Africa an austerity strategy would cause so much more harm than a growth one.
Avoiding austerity is obviously a popular option and many countries report that there are significant benefits. Even Germany at the end of the war where they were defeated has seen better terms. In fact there was significant protections and reduction in crime levels when the Marshall Plan was implemented.
There are some long term difficulties though between Germany and Greece stemming from World War 2. Many Greeks would not have a problem letting Germany face the bill if their ecoonomy failed completely. Many economists have surmised about what would happen if a latterday Marshall Plan was implemented.
If you’re interested in this stuff there some fabulous theories doing the rounds. Of course you can keep up to date with the local tabloids but to be honest the best and most useful source of information from me is the environmental shows. It’s definitely worth checking out the BBC and if you live outside the border areas you’ll need a proxy site, This is a way of hiding your location when you are writing in an essay. Some sort of infnatry are still in service – Bring ’em home I say.
I was talking to the owner of a company which sells luxury gift baskets, luxury trips and even a few high end watches to his loyal clientele. I was trying to get a handle on the upcoming Presidential election and how the economy might play a part. Of course, there is a lot of self interest going on here-some people don’t believe that even when earning close to a million dollars a year, that they can afford to pay any more taxes. Seems strange doesn’t it?
Anyway, it turns out that most high end business people I spoke with have a pretty good understanding of where our economy is and where it is likely to be going. While that’s comforting on one level, much of what he said wasn’t that comforting. I guess the high end of most markets is off at least 50% from its peak and that’s only when you take into account a partial rebound over the past couple of years. Imagine if there is another downturn!