As Menzies foresaw, we have had economic anarchy, and both security and progress have disappeared.
A spirited contest of ideas has already started regarding how we emerge from the coronavirus shutdown. The Prime Minister is talking about ‘snapping back’ to what we were before. Some would like to use the crisis to jump to essentially an authoritarian corporate hegemony. Others would like to see a more sharing society with a more active government and embedded in a healthy natural world.
We are highly unlikely to just snap back, but if we want a more caring, equitable and durable society then we need to get clear about what needs to be done. Some are allowing that neoliberalism is dead, but few seem to be clear about what might replace it. Going back to something like our postwar system might be a good start, but we can do better.
Why would the Government buy bonds as it sells bonds? Why would it borrow money when it has its own money?
Various explanations have been appearing lately that purport to explain how the Government is raising the money it is suddenly splashing around to support (some) people through the Covid-19 shutdown. There are also explanations of how the Reserve Bank of Australia is engaging in ‘quantitative easing’ (QE) to support the economy through the shutdown and beyond.
It seems there may be at least three things happening: the RBA is buying bonds in order to inject extra money (‘liquidity’) into the financial sector and keep interest rates low; the RBA is funding some spending by the Government; the Government is borrowing money from the private sector by selling bonds.
We can’t allow growth to continue forever, simply because the Earth is finite. But can we stop it? And if so how? And anyway, growth of what?
Not only do many people agree we need to change our economic system, many are already doing really good things, like forming cooperatives or firms with a social purpose, promoting repair and recycling, growing healthy local food, reducing greenhouse gas emissions and so on. But all these good efforts struggle against the ever-rising tide of ‘growth’. What if our economic system supported the good things instead of subverting them? Could that be possible?
The problem with the housing bubble is not a shortage of housing, the problem is an excess of money. The solution is to restrict the amounts banks can loan. The solution is a credit squeeze. But it would have to be done carefully and the government would have to be willing to spend.
The housing market is rebounding. It is through the slump. The downturn is over and the market is making gains. So say the media reports, written by the property industry. Rising house prices are good.
[This is a talk given to the Canberra Hub of New Economy Network Australia, 23 June 2019 on the topic ‘What could our economy look like in 2030?’ Check out NENA, I think it is a very promising network.]
At present our economy is structured and managed in ways that subvert the many good things people like us are trying to do.
I think it is possible to change that, so the larger economy supports clean, local, healthy living, strong communities and a thriving planet.
First, a few examples of good things that are already happening and just need to be promoted, examples involving food and energy: Continue reading →
A recent exchange between Jason Hickel (and here and here) and Dean Baker (and here) on whether humanity can have a viable future and still have ‘economic growth’, nicely highlights the way old concepts and words can trap us in unproductive debate and action.
The way forward is to recognise the need for a fundamental re-framing of the nature and purpose of our societies, and their economies. The terms growth, GDP, capital and capitalism are so ill-defined, confused or inappropriate they only hinder debate.
The economic ‘reforms’ of the 1980s are supposed to have set Australia up for an unprecedented run of prosperity: 27 years, and counting, without a recession. The economy’s robustness is supposed to have saved us from the Global Financial Crisis. In fact our economy has been unstable, and its performance has been mediocre verging on anaemic. Any appearance of robust prosperity is due to a huge run-up of debt, some direct intervention, high immigration, overwork, selective blindness and over-active imaginations.
I attended the New Economy Network Australia conference in Melbourne recently (19-21 Oct). There I met in person Karl Fitzgerald who does a spot call Renegade Economists on radio 3CR , and with whom I’d done an interview a few years ago. We didn’t manage an interview at the conference, but did one by phone a couple of days later.
I found NENA to be a very diverse group very engaged with each other. They even listened to my pitch about The Little Green Economics Book and bought copies. There are so many people and groups doing good things, my impression is that NENA is likely to spread rapidly and link us into a more powerful movement. It was just their third annual conference.