Policy-making, then, requires more than (very mild) stimulus and the hope of return to business as normal. We must think about ways of increasing trend growth.
It should be obvious to anyone not blinded by ideology that the right's ideas here - of reducing the power of the working class - no longer work. Instead, Duncan Weldon, Stewart Wood and Ha-Joon Chang are right; the left must think about supply-side socialism.Stumbling and Mumbling
The Need For Supply-Side Socialism
Chris Dillow | Investors Chronicle (UK)
Short translation: Injecting stimulus to increase effective demand is insufficient given the economic conditions and state of crisis in the UK. Business is not investing to expand and create jobs and is unlikely to with demand side stimulus alone. Therefore, stimulus must be injected from the supply side in order to promote non-financial or "real" growth.
Government needs to increase spending on public investment — infrastructure, R&D, education and other public goods that will increase economic effectiveness and efficiency and promote innovation and productivity gains.
Actually, the British economy is way to dependent on its financial sector's contribution to GDP, especially when finance contributes nothing productive itself and its expansion has not resulted in non-financial real growth, which is the actual economic function of finance, rather than merely increasing savings.
2 comments:
Don't much care for the phrase "supply-side socialism." It seems to me that the side with all the supplies already have the "socialism." What Dillow is talking about sounds more like elements of Listian state-capitalism or as it was once known "American System." And, yes, we could use some more of that.
A basic job income guarantee would restore the oxygen of aggregate money demand circulation stimulation to precisely the unmet effective demand starved areas that need it the most so filling the output gap matching total demand with total supply capacity.
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