Thursday, 25 June 2009

Finally - a consensus on economic recovery

Too many people in recent weeks have concentrated on the differences between professional economists' thoughts about the recession and recovery. Are there green shoots? Is the economy still shrinking? Is it shrinking slower than it did? Is the rate of slowing of shrinkage increasing or decreasing? What does the historical record show, in contrast with the economic models of Keynes, Lucas or Krugman? Too much information!

I think it's time for a survey of non-professionals. These are people out in the real world, after all - none of your ivory tower theorising from them. I'm going to start with the comments on today's Robert Peston blog, which give some real insight into the political and economic factors behind where we are today.

  • Why do you think this great country is in this awful mess:-
    1. Labour Government
    2. Gordon Brown
    3. Prime minister Peter Mandleson

    The only way we can start to even think about recovery is by getting rid of the above.
    The banks are waiting, business is waiting, commerce is waiting, and no one trusts the current government hence they are holding on.
  • I tend to think that this restocking process is a natural reaction when stocks have been so run down, You either have to restock or you go out of business altogether. It's hardly a sign that the recession is over until sales stop falling.
  • The only way we are going to dig ourselves out of this Labour hole, is to get down to making stuff and selling it overseas. As "picking winners" does not have the best of track records by government, current OR previous, any tax breaks on R&D is vital especially at the moment.
  • The only way out of a recession is a revival of consumer led demand and we're not going to get that for some time. We all know that taxes will have to rise, and public expenditure will have to be curtailed
  • All I here from Peston is I, Me and My! Instead of thinking about building your own image, did you ever stop to think that your Gloom, doom and despondency helped to feed the recession and panic?? ...If you and other so-called Economic 'experts' got off your butts and did something constructive perhaps we'd all be better off.
  • This was an ideal time for the government to build the affordable housing that this country is crying out for. But they are home owners too and more houses would bring the value of their properties down. Can't have that can we ! Now the steel and building supply industries seem to be in dire straights. Well, if we could have built the affordable housing we are in dire need of...... and on it goes.....
  • Writing about green shoots is a waste of ink. Green shoots appear on the apple tree, then comes the blossom. And if the coddling moth get into the blossom there's your apple crop down the chute. [I especially liked this one, though I am poetically baffled by it]
  • Why isn't the weak pound helping more? Is it simply global lack of demand or creeping protectionism/foreign ownership closing the doors to UK manufacturing?
  • Recovery from recession is partly a function of time i.e. Consumption and profits come back as inventories fall to below demand levels, but there also needs to be 'confidence' that things will improve and this is dependent on there being a 'plan' at the macro level to prevent the recurrence of circumstances that caused the recession in the first place!
  • some measures implemented to mitigate the recession are begining to work; but we have to accept that these are palliatives and not actual economic recovery. This has still to come and there are many perils still out there that could reverse these measures and return us all to a further more deadly recession.

    We are at a time when we need to change our political behaviour. It is no longer a case of knockabout fun on expenses. This is now grown-up stuff about getting good people back to work, reducing costs and increasing value. The political class must step up to the plate or be condemned.
  • The weather system is Capitalism - once we understand that - we understand why it keeps crashing on to the rocks every 20 years or so...
  • Manufacturing again suffers, wake up! It's the one of the only sectors of the economy that adds value to an economy. Rocks into steel, steel into tools, tools allow you to make well, everything- Geddit?
As you can see, all we need to do to get out of the recession is to get the prime minister to resign, sales to stop falling, start making stuff and selling it to foreigners, consumers to start spending, experts to get off their butts, the government to build affordable housing, protectionism to end, to have a macro plan and wait, to (I guess) replace capitalism, and turn rocks into tools.

I am grateful to all blog commenters for the insights - and entertainment - they provide, and I do hope that the government is reading and will act accordingly. If only the real economists could get their act together and provide such a sensible and straightforward analysis, wouldn't we be better off?

Next in the series: an analysis of quantitative easing and its effects on the M2 money supply by the users of Youtube.

2 comments:

Anonymous said...

"Next in the series: an analysis of quantitative easing and its effects on the M2 money supply by the users of Youtube. "

Can't wait :)

PunditusMaximus said...

Please allow me to summarize:

"What this crisis proves, beyond any shadow of a doubt, is that my political philosophy is completely correct and my opponent's political philosophy has been conclusively shown ineffective."

Which is, if I remember correctly, what the most recent election, most recent stretch of non-crisis, most recent war, most recent avoided war, and most recent sunrise all also proved.

People are at where they're at. Thank God for undecided voters who haven't given the issue much consideration. At least they can change their minds.