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Don’t shout at the telly: Economy Special


7 Don't shout econ

Economics journalist Stuart Simpson heads a frank on the sofa discussion on the economy, recession and who is responsible. Rather than the easy fat cat targets, Stuart points the finger at politicians, their failure to lead and managerial politics. He suggests that the South – North transfer of wealth which has financed Western debt is indicative of politician’s failure to allocate funds and productively invest in wealth creation for us all to benefit. Discussants show that engagement with the problems and solutions is perfectly possible, recessions, after all, are manmade.

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Related topics: Debates, Economy

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Nathan said:

Fair points made during the discussion, a few very important things touched upon. There was a huge amount of things discussed in the talk however, maybe too much things were talked about and the most important things deserved more focus than they received. First of all I’m not sure how much blame you can lay on the public for not being disinterested in or ignorant about the financial system. The complexity of many products in the financial system meant that not even fund managers or bank managers knew how they worked. How are the general public meant to understand the financial system fully enough to make an informed protest about it?

I agree that it is up to the government and the FSA to regulate the financial system on our part. They failed. Although, let’s not say that they are scapegoating Fred Goodwin. The guy deserves all the ‘scapegoating’ he gets. It’s not about shifting the blame from one group to another (eg bankers to the government). It’s about realising that everybody has made mistakes and ‘pointing the finger at politicians’ instead of ‘easy fat cat targets’ is hardly a noble shift in finger pointing.

I would have some reservations about agreeing that the American drive for financial reform and it’s economic package stimulus has been more focused. Just because he has put a ‘big package’ on the table doesn’t mean it’s a better effort than the UK’s. The UK actually has been quite bold in many of it’s attempts to weather the crisis al la recapitalisation and quantitative easing. You can argue that these haven’t really worked, but it’s difficult to establish a counter factual. Even if the americans were more focused, I don’t think that Obama has particularly aroused people’s engagement and interest in the financial system. He has increased people’s engagement in the political process maybe, but not the financial system. I still don’t think many Obama supporters are particularly engaged in the technicalities of financial risk management etc etc blah blah.

Fair point in some respects regarding the Idea that business cycles are an inevitable, inescapable force. The economy isn’t some mysterious power which we are powerless to control. We are the economy, therefore, we decide the path on which it grows. But you can’t ignore the historically the economy has fluctuated with contractions and expansions over a long term upwards growth path. In the past, the economy has been characterised by periodic peaks and troughs, therefore, the business cycle theory isn’t totally useless. It’s just important to realise that these fluctuations are not predictable, do not follow any patterns and are not inevitable.

I’m not too sure what ‘soft services’ are, but credit and finance seems to be scoffed at here. What they are is the life blood of any economy, finance and credit has allowed an extraordinary level of investment, growth and living standards in many parts of the world. I don’t think it is right that the UK have a weak technology sector. Yes there is competition from India and China on the technology front but the UK technology sector is strong. You talk a lot about the future of the UK industrial sector; this is the future of the UK industrial sector. Not looking backwards to the type of industrialisation in which developing countries have comparative advantage in.

Totally and utterly agree with the capital flows. To me, the better management and control of global capital flows is one of the most important conditions of development.