GREAT RECESSION: A GRAVE CRISIS
NO DIFFERENT FROM ANY OTHER.
12 simples ideas from an heterodox view
I INTERNATIONAL WEEK FACULTY OF ECONOMICS AND BUSINESS (11-15 May, 2015)
1. An strong crisis
• We are currently in the midst of an intense,
Global GPD Growth, 1970-2010
Global GDP Growth, 1970-2010
0 1 2 3 4 5 6 7 8
70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
The change with the emerging
countries
•
The aggregate global GDP data,
2. New challenges
• The crisis that began in 2007-08 has much in
common with previous eras, and therefore some of its defining features were also present in the crises of yesteryear.
• But it is also true that the size and depth of the
3. New (?) vision
• American economic policy since the 1980s has
given rise to a new vision and approach that have come from academia.
• The crux of his argument is simple and blunt.
4. The end of the public sector
•
Reducing the tax burden on investment
5. The economics of hypocrisy
•
They talk about “cutting back
the size of the state” as the
key to tackling the economic
problems of competitiveness
6. Three lines of action…
Past experiences ought therefore to show us that three lines of action are vital, given the instability in the crisis:
•The ECB should become stop speculative attacks against sovereign debt.
•Speculative capital flows should be recorded. Financial losses should not all
be lumbered onto the working and middle classes. We need quotas that correctly establish the economic reality and the procedures undertaken by leaders and speculators motivated only by a financial greed that is a far cry from the realities of economics.
•We need an aggressive plan of public investment in Europe, a kind of new
7. Bad jobs
• Overcoming the crisis will still leave us with
many unemployed people for whom it will be difficult to find jobs.
• Nevertheless, the new opportunities will not be
8. We need the public sector…
•
The market alone will not solve such a
deep, difficult problem. In the interest of
basic fairness, stimuli will be urgently
required to ensure society does not
become too unbalanced.
•
Is considered another form of investment,
9. The Germany’s power
• Germany has been the country that has
benefitted most from monetary union, based on official figures on changes in the balance of payments and economic growth.
• It is therefore unacceptable to propagate this
10. Europe without leadership
• The determining factor in the multi-speed Europe is
the absence of a clear German leadership as the driving force behind the European economy.
• Germany has acted too locally, too domestically, and
11. The demand’s problem
• I believe it is becoming increasingly clear,
based on macroeconomic variables for 2008-15, that this results in a drop in demand, and even a big rise in bank liabilities.
• The drop in demand – a factor being ignored –
12. Simples ideas
• In this respect, current economic policies seek
to reduce the role of the state, assuming the market works better.
• The simple, rigid ideas are based on a very
clear ideological line: that the markets seldom fail, and it is the markets, through private-sector initiatives, that provide jobs.
• Government policies need only create the
Conclusion:
A real new vision
• We need clear, strong, solid leadership.
• Reorient economic action towards scenarios
Crises as an opportunity
• New agendas must also be taken aboard that are
tangibly concerned for senior citizens, children’s living conditions and improving the role of women in the labour and professional markets.
• We therefore need a reformed shared social welfare
supported by effective, efficient government bodies and progressive fiscal policies.
• Crises are, after all, opportunities to redesign routines
Einstein’s words…
•All crises bring progress. It is in crisis that
Thanks for your attention.
More information at my recently book: The Great Recession. A Subversive View, Sussex-London School of Economics, London 2013
