Wednesday, 22 January 2014
The "Western" economic problem in tweny minutes flat.
Robert Reich was US Secretary of Labor under Bill Clinton and is presently Professor of Public Policy at the University of California, Berkeley. In a brilliant Lecture, given apparently without notes in July 2013, he tells us all we need to know about what's wrong in the British and US economies, with some strong indications as to how to put things right. His analysis and solutions are far from the received wisdom of the right, or, for that matter, Britain's Labour Party.
Here's a brief outline of four of his essential points:
1. Government debts/deficits are not (my emphasis) the cause of our current problems but a symptom. The cause is the fall in the share of national income going to wages (in the US the median wage has fallen in real terms by 8% since 2000). This has led to a lack of demand, leading to unemployment and underemployment. (Whoopee for Keynesian analysis)
2. All government expenditure is not (my emphasis) the same. Public expenditure on investment in the infrastructure, both physical and intellectual, is vital for future prosperity. And it is stupid to neglect it while interest rates are so low.
3. On Tax Policy , the wealthy are not (my emphasis) job creators: consumers are. Thus pandering to the super-rich by believing that they'll stop trying if we tax them at a reasonable level is a convenient (for them) nonsense. Unfortunately political parties indulge them by providing low tax regimes and failing to tasckle tax avoidance and evasion.
4. It takes a great deal of ambition to be an immigrant.
If I knew how to do it I would put this lecture on a loop and show it continuously at the Liberal Democrat Spring Conference in York.
If I were not a very law abiding citizen I'd kidnap the entire cabinet (or at least the Liberal Democrats in government) and force them to watch it.
Please take the necessary 20 minutes (you can ignore the rather tedious introduction.)
Use the link to You-tube above or this URL:
PS Sadly, after watching it myself I turned on the "Today" programme on Radio 4 and heard Rachel Reeves, Labour's Shadow Secretary of State for Work and Pensions, banging on and on about giving the unemployed "the skills they need." It's not skills they lack, M/s Reeves, it's jobs, and for there to be jobs there must be demand for the products.