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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

the decline of the west? « Previous | |Next »
September 4, 2011

John Lancaster has an article in the London Review of Books on the global economy and its future prospects. He argues that best-case scenario for the aftermath of the crash is already dead.

The best-case scenario is one in which governments muddled through to economic growth, cutting public spending in the process, enjoying the already mentioned rebound which tends to follow recessions, and the developed world went back to partying like it was 2006. This prospective version of events had a big hole at the centre, about the way the financial sector should be reformed; in any case, it now looks very unlikely to happen.

BrownD Bankreform.jpg

Lancaster says that the next scenario – the one we (ie., the West) are on course for at the moment – is modelled on what happened to other parts of the world over recent decades, from Latin America to Russia to South-East Asia, as they underwent debt crises and consequent economic collapse. It is one of years of economic stagnation.

In all [the above] cases, the relevant economies recovered, after about a decade of hard times and widely shared economic pain. In this model, the debts are gradually paid down, the economy is slowly and miserably rebalanced, and eventually things grow back to where they were when the bubble burst. There is a general sense of baffled incomprehension in the West at the idea that this should be happening to Us, instead of to Them; it turns out that this trajectory of crisis and slow recovery is a lot more bearable when it happens to other people, ideally in far-away countries of which we know little. But that is what we look to be on course for at the moment.
Lancaster adds that the west (Europe and the US) are on course for relative decline, compared to China and India and the developing world; indeed, we are already living through it, with China now the world’s second biggest economy. A decade-long slowdown would accelerate this shift in global wealth and power and would be a grim thing to live through
| Posted by Gary Sauer-Thompson at 10:51 PM | | Comments (3)


I just love the quote: "...widely shared economic pain".

Widely shared? Has the GFC worldwide led to widely shared pain? Have the top one percent really suffered at all?

Surely the divide isn't between the "Western" (which really means white) nations and the rest (which really means black/asian); it's between the rich and the poor.

Widely shared?????

Interesting Treasury report at the weekend to the effect that it was the Rudd stimulus that helped Australia weather the first impact of the GFC. The self-proclaimed heroes of the mining industry in fact played a minor role compared to retailing. You had to look closely to find the report in the media (Ross Gittins' column in the case of the 'Sydney Morning Herald') and I don't expect it to be acknowledged in any of the political arguments about future public policy.

"Widely shared?????"

It is so very tough on the fat cats in the too big to fail banks.

They say that there is no need for reform (regulation) as the system will correct itself. We can trust the markets’ assessment of systemic risk. Financial markets can be relied upon to transfer retained earnings into efficient investment, finance consumption expenditures, build affordable homes, finance development or raise the monies needed for restructuring the world’s various national infrastructures to come to terms with global warming and other environmental limitations.

David Harvey says that:

we live in a society where capitalism itself has become rampantly feral. Feral politicians cheat on their expenses, feral bankers plunder the public purse for all its worth, CEOs, hedge fund operators and private equity geniuses loot the world of wealth, telephone and credit card companies load mysterious charges on everyone’s bills, shopkeepers price gouge, and, at the drop of a hat swindlers and scam artists get to practice three-card monte right up into the highest echelons of the corporate and political world.

The odds of getting caught are low. The "animal spirits" of entrepreneurial capitalism are celebrated and glorified.