Sunday, February 14, 2010

No good thing ever came from the crooked timber of partition.

John Quiggin, who is listed in the side column of links is a well known Australian economist who often writes on a blog called Crooked Timber.

At the moment, as noted by Paul Krugman, John is writing a book on Zombie economics. Basically the trust of the book is going to be ideas that should have been canned by history are proving really persistent and instead of staying buried are rising again.

The neo-liberal, chicago school or free-market crazies who made such a mess of things have seen the world economy steered away from disaster by huge govt. interventions. Something which they thought should never happen.

Perversely it seems the success of the Keynesians priming the pump is actually giving the neo-liberals room to survive and regroup.

As Krugman says "Now that we seem to have avoided a full replay of the Great Depression, a large part both of the economics profession and of the political establishment seems ready to pretend that none of it happened."

In sth Ireland though we have no such debate. Instead Fine Gael are keen to try out the same old ideas as FF . Fianna Fail is proposing a deflationary solution thats sucking life out of the economy (look at those tax returns) and Fine Gael spent months telling everyone how they were going to cut jobs in the public services. Michael Taft notes "the effect of cutting 17,000 public sector jobs - as measured in the ESRI simulation in its working paper 287 - is fiscally irrelevant but economically damaging. By the 4th year, the borrowing requirement falls by only 0.1% of GDP but the GDP falls by 0.7% (the effect on the domestic economy is even worse - at 1%). However, the effect on consumer spending (-1.1%) and employment (-0.8% or about -15,000 jobs) makes the cut extremely damaging."

Recently this type of Fianna Fail-Fine Gael approach was labelled a death spiral for the country in the Wall Street Journal of all places.

In America the debate is oscillating between two schools of thought. Here there is only one school of thought with two parties pushing it. Whoever will win the next election will lead to little change as many have long known.

George Lee for all his faults eventually saw this and decided he couldnt stick with Fine Gael. He couldnt stick with a party pushing deflation just like Fianna Fail. He should have spotted it earlier but sure no one is perfect.

If Lee wants to do the country some service then he can start to show how Fine Gael and Fianna Fail are the two sides of the one coin pushing a deflationary death spiral.

Welcome the real world George.

You have just joined the growing group of people who know that Fine Gael and Fianna Fail offer no useful solutions to our current problems.

1 comment:

  1. AN the question is why would Labour really wish to be the junior partner in a Fine Gael government?