The “Austerity Vs. Stimulus” distraction.

What seems to concern the media and politicians is only the fiscal policies of Governments. Fair enough you say, depending on your ideology you believe, austerity or stimulus is what going to get you back into a job or get your business moving again, so you can’t really blame people for focusing upon this.

Because people are focusing on this the media and focusing on this because they are just trying to sell, and because those people are voters politicians are focusing on this. I am not suggesting in this article that there is a conspiracy between the media, banks and politicians, this can be addressed in an entirely different another post.

GET ON WITH IT!

Oh yes where was I; the essence of my argument is the problem is structural not cyclical.

Left avatar: But you can’t say that if the Government invested more, there would be more jobs and the economy would have returned to positive growth faster, surely this is the problem?

This is true, in the short run at least, though I’ll let you fight it out with the right avatar about whether this should be done or not. I however am talking about how we can restructure the economy such it is robust and this doesn’t happen again.

Right avatar: The burden of debt is the problem if we didn’t spend so much in the boom, we would be in a better position to deal with the economy now. Surely the debt is the problem?

Well this is true, we would be able to have counter cyclical policies, if we spent less and also has counter-cyclical policies over the noughties. (However I will be discussing in another blog whether counter cyclic policies are part of the problem.) But this is exactly my point, the incentives are all misguided. It’s not that Labour politicians are¬†incompetent (well more that any other politicians), it’s just they want to be re-elected. Debt is a symptom of the broken economy not the illness itself. (Although you could argue by removing on symptom, you can see the others and more accurately asses the illnesses, as there are many.)

Okay, so I should be more worried about the economic system rather than Government fiscal policies. Didn’t the Vicker’s report sort this all out?

Well no the Vicker’s report by the time it’ll be implemented it’ll be so water down that… well I can’t think of a metaphor but type “watered down” into Google and the the sixth post is about the Vicker’s report. Secondly that’s not the point, A ring fence won’t cure the economy alone. There a a plethora of problems in the economy, this is only one small issue, even only one small issue in banking.

This is all well and good, but what do we do now?

I’m going to settle with you, I don’t have all the answers. I am prepared to discuss with you my potential ideas over the course of this blog, but to be honest I don’t know. Policy makers are going to have to experiment get data back and analyse what works. Experimentation never goes down politically well I know.

Robert May has shown that the banking system works like ecosystem. (May, 2011) but we can expand this looking glasses, to start thinking of the economy as an ecological process and through this looking network, complexity perspective (YAY buzz words) we can design a more robust sustainable economy.

Conclusion

The distraction of Austerity Vs. Stimulus means that the real issue of restructuring the economy is passing by the way side.
I think a case of Noam Chomsky’s idea applies:
“The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum”

I don’t blame people for being myopic, I don’t blame the politicians for responding to that, I merely hope that opportunity is not missed. We haven’t got a hope in hell of reforming the economy when it’s booming again, as people will see no apparent problem so there will be no call for change.
This is our chance let’s not miss it.

(May, 2011):

http://www.nature.com/nature/journal/v469/n7330/full/nature09659.html

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