Great Recession

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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)

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1. An strong crisis

We are currently in the midst of an intense,

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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

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The change with the emerging

countries

The aggregate global GDP data,

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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

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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.

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4. The end of the public sector

Reducing the tax burden on investment

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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

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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

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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

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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,

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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

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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

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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 –

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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

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Conclusion:

A real new vision

We need clear, strong, solid leadership.

Reorient economic action towards scenarios

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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

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Einstein’s words…

All crises bring progress. It is in crisis that

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Thanks for your attention.

More information at my recently book: The Great Recession. A Subversive View, Sussex-London School of Economics, London 2013

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