I’m back in the United States for a month, so it’s only fitting to write an American piece. There’s a statistic out there that should put fear into the hearts of those of us who practise, either professionally or as a hobby, the art of statecraft. The implications of this statistic are vast for the health of the American economy and the American democracy.
Category: Economics
Concerning the nature of man and the economic system, and how best the latter can be structured to augment the former.
It’s a Trap!
In the rush to come up with a plan of spending cuts and tax hikes, both democrats and republicans have missed the essential detail that makes our current economic circumstances different from any we have previously experienced since World War II–it’s a trap. A liquidity trap, that is, and it’s going to make any spending cuts and tax hikes the US government enacts mean serious pain for millions of people.
Misconceptions: “America is Like Greece”
The other day I found myself in conversation with one of my fellow students about whether or not the British government had too large of budget cuts too soon in the economic recovery. I argued that it was fairly self-evident that it had done so, considering the superior economic performance of most nations that had refrained from issuing cuts or embarked on a policy of stimulus. The response he gave me was an interesting one–he argued that the advantages being enjoyed by the stimulus countries were short term, and advised me to look at France, a country that had refrained from austerity and has recently had its credit rating reduced by Moody’s, is seeing stagnant growth rates, and has a host of other problems. I responded that Eurozone countries were in a different kind of economic crisis from countries like Britain and America, and that different rules applied–this was met with scepticism, as if I were trying to weasel my way out of the point. So today I would like to make the broad argument that the economic problems being experienced in non-Euro countries like America, Britain, Japan, and Canada are of a fundamentally different nature from the kind being experienced in France, Spain, Portugal, and Greece. So different, in fact, that comparing the former to the latter is intellectually useless.
The State’s Role in Investment and Innovation
It is often said that the state spends money inefficiently–or at least, less efficiently than the private sector spends it. The old Hamiltonian argument, in favour of the state as an investor, an engine of growth, technological development, and innovation, often falls on deaf ears as the opposition points to Solyndra, the “crony capitalism” of investment centred states like France or Japan, and so on down the line. Today, I would like to challenge this dismissal for being much too flippant and much too anti-historical.
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Occupy Wall Street and the Rolling Jubilee
I have been a long-time sceptic of the Occupy Wall Street movement–its reluctance to coalesce around any specific issues or solutions to said issues, its lack of structure, hierarchy, and organisation, and its fondness for Rousseauian direct democracy all have been and remain major turn-offs for me. There’s reason we remember Gandhi, Martin Luther King Jr., and Mandela; good protest movements require good leadership, specific goals, and specific means. However, I have discovered one strand of OWS that is not completely useless. In fact, it may provide an answer to one of the most serious problems afflicting our economy–high levels of household debt and governments unwilling to do anything about it.
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Benjamin Studebaker 