The Economy: it’s inequality, stupid

Whatever happened to the roaring twenties? When the world economy was meant to bounce back from Covid-19, and we would all be living in sunlit uplands, as if the era of Blair and Clinton had never gone away. But as Larry Elliott of the Guardian[1] points out, things are about as far from that Golden Age as they possibly could be.

Larry’s litany of woe is long. About one third of the world will be in recession this year. Prices are rising faster than wages, which in turn depresses consumer spending, which in turn depresses demand……and on it goes. Meanwhile hopeful new starts like cryptos and tech stocks have been falling quicker and faster than Russian businessmen from windows. No one has seriously invested for a long, long time, despite the oceans of cheap money that were flowing around following the Crash of 2007-2008. We had to look long and hard through our textbooks of Economics to find a mess like this. Funnily enough, it was the last lot of twenties, particularly in the United States. Then a business friendly Republican Administration presided over a regime of low wages and a gilded age for the very rich. Demand slumped, and the glut of stuff piling up in warehouses led to the sudden crash of 1929. The poison of inequality, you might say.

Which brings us back to the current lot of twenties, and Larry’s conclusion. The way out of the interwar malaise was actually less inequality. Keynesian and Social Democratic policies, pursued more or less in conjunction across the USA, the UK and western Europe, led to sustained and rising standards of living, investment and general welfare. Elliott contends that we need a strong dose of this common sense now. But why not click on the link below, and read for yourself-you have the technology.

[1]https://www.theguardian.com/commentisfree/2023/jan/04/global-recession-investment-innovation-equality-productivity-policies

#larry elliott #john maynard keynes #roaring twenties #investment #inequality #economics

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