Is there any such thing as a non-layman when it comes to economics? If there are people out there who claim to know 'what's going on', how did we get into this mess? More to the point why are we still listening to these people. The word austerity has become very notorious lately. Popping up in speeches and news reports all over the place. Maybe if we had a cut on the utterance of this word people would, on the whole, feel a bit happier.
The banks are also getting some rough publicity at the moment. This is hardly surprising seeing as the general consensus is that the role of the bank is to just throw lots of money at a baying crowd of shopaholics who go off and buy lots of gadgets and clothes and then declare bankruptcy a few years later. Maybe it's a case of once bitten, twice shy. They are not lending and for good reason. The last time they did they pumped up a 7 trillion dollar bubble in the US housing market which popped and brought us to our current predicament. All the recent actions of the major banks can be understood when you think about their actual role which is to make money. This is not a cynical point I'm making. It is enshrined in law and because they were 'too big to fail' we bailed them out. They learned the lesson and we hate them for it.
Sound pretty right wing don't I? How can anyone possibly defend the banks in all of this? Don't worry this is just the pragmatist in me trying to look rationally at the situation. If only we had done the same 30 odd years ago. The 'neo-liberal experiment' as it is often called by its detractors, centred around a simple notion which was: the wealthy and advantaged need incentivising to make more money. Everything else was just rationalising around that point. Suddenly it was patently obvious that wealth trickles down from the top like a wonderful champagne fountain. The entrepreneur was canonised and the efficiency of the market was cast into stone as the bedrock of a new faith. What was one of the easiest ways to incentivise the wealthy to make more money? Give them public assets at knock down prices. Because private industry is exposed to the efficiency of the market they must be able to do a better job and make money whilst doing it. Now when inflation is a big concern we have energy companies putting private profit over public welfare - again as they are legally bound to do, and there is nothing we can do about it.
The solution to this mess? It's hard to say after all I'm not economist, if I were I'd probably be in charge of Italy. We have Europe in major trouble with back bench tories ringing their hands in glee, whilst America is chasing its tail with the tea party just vetoing anything Obama does to try and stimulate the economy. I think a change in attitude from the government would be a good start. It needs them to recognise that the wealthy and advantaged don't need incentives to make more money. In fact it is the natural tendency of private power to exploit the weak and that the role of a benign and liberal government is to protect the weak from the strong and powerful. Maybe with that as a guiding principle not only would we find a solution to the economic mess, politics might reconnect with the public.
The banks are also getting some rough publicity at the moment. This is hardly surprising seeing as the general consensus is that the role of the bank is to just throw lots of money at a baying crowd of shopaholics who go off and buy lots of gadgets and clothes and then declare bankruptcy a few years later. Maybe it's a case of once bitten, twice shy. They are not lending and for good reason. The last time they did they pumped up a 7 trillion dollar bubble in the US housing market which popped and brought us to our current predicament. All the recent actions of the major banks can be understood when you think about their actual role which is to make money. This is not a cynical point I'm making. It is enshrined in law and because they were 'too big to fail' we bailed them out. They learned the lesson and we hate them for it.
Sound pretty right wing don't I? How can anyone possibly defend the banks in all of this? Don't worry this is just the pragmatist in me trying to look rationally at the situation. If only we had done the same 30 odd years ago. The 'neo-liberal experiment' as it is often called by its detractors, centred around a simple notion which was: the wealthy and advantaged need incentivising to make more money. Everything else was just rationalising around that point. Suddenly it was patently obvious that wealth trickles down from the top like a wonderful champagne fountain. The entrepreneur was canonised and the efficiency of the market was cast into stone as the bedrock of a new faith. What was one of the easiest ways to incentivise the wealthy to make more money? Give them public assets at knock down prices. Because private industry is exposed to the efficiency of the market they must be able to do a better job and make money whilst doing it. Now when inflation is a big concern we have energy companies putting private profit over public welfare - again as they are legally bound to do, and there is nothing we can do about it.
The solution to this mess? It's hard to say after all I'm not economist, if I were I'd probably be in charge of Italy. We have Europe in major trouble with back bench tories ringing their hands in glee, whilst America is chasing its tail with the tea party just vetoing anything Obama does to try and stimulate the economy. I think a change in attitude from the government would be a good start. It needs them to recognise that the wealthy and advantaged don't need incentives to make more money. In fact it is the natural tendency of private power to exploit the weak and that the role of a benign and liberal government is to protect the weak from the strong and powerful. Maybe with that as a guiding principle not only would we find a solution to the economic mess, politics might reconnect with the public.
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