Sunday, 27 January 2013

Economic Growth: Desperately seeking 'some thrilling and utterly unexpected change'

Cameron at Davos: (AP Photo/Keystone, Laurent Gillieron)

When I'm after some pointed comment on economics I often read Chris Dillow, the avowed Marxist who writes a column for Investor’s Chronicle and a blog (rather more noticeably Marxisant) called Stumbling and Mumbling. He posts a lot, always provocatively; but with the UK economy shrinking over another quarter – this piece from a US vantage in The Atlantic, ‘Britain's Economy Is a Disaster and Nobody Is Entirely Sure Why’, pretty well sums up the dismal mood - I'm reminded that I've kept revisiting a post on Dillow’s blog from August 2011, ‘The Growth Problem’, which still seems to these eyes to tell the whole predicament. There's no good bolthole for capital to flock to, the Eurozone isn’t buying, generous credit is for yesterday, the coming industries we ought to have nurtured and developed we lag hopelessly behind in, our austerity - whatever you make of its degree - isn’t working, because none of the conditions under which it’s worked previously are now present - and so on. Last week Dillow suggested he believes the economy is being further depressed by ‘irrational animal spirits that drive [investor] sentiment and capital spending.’

Another economics commentator I look to a lot is Merryn Somerset Webb at Money Week, who is not a Marxist, or at least I doubt she is. She ended 2012 on a note not so far from that Dillow sounded in 2011: 'It is perfectly obvious that, barring some thrilling and utterly unexpected change in our national circumstances, we should continue to be in a low growth environment for the foreseeable future. It is also pretty obvious that there isn’t much we can do about it.'

And there was me thinking I was a black pessimist... In the past I may have sounded sarky on this page about Ed Balls’ Five Point Plan, but then the leading critiques of it have argued that Balls isn’t indicating willingness to borrow/spend what it might take; and for various reasons, he’s not going to get a chance to do that. As for the government, I have in recent times been quite sympathetic to David Cameron’s arguments that the UK must ‘rebalance its economy’ and ‘pay its way in the world’, but now I think – trying to be charitable to myself – that I’ve been wasting my own time, talking a load of wishful rot. I guess these are nihilistic times. Here's to the surpassing of rock-bottom expectations, then - or else to that thrilling, bolt-out-of-the-blue change...

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