Thursday 25 August 2011

The Economy - A Double Dip Recession?

Economic news from around the world is not good and is likely to get worse during the rest of the year.  In the UK the news is particularly bad.  Recent figures show that consumer confidence continues its downward slide, unemployment is rising, export performance is faltering and the UK is bottom of the growth league table.  Despite this our nasty government, with Chancellor George Osborne in the lead, continues with its Alice in Wonderland approach to economics.  Despite the shocking figures there is to be no plan B.  Instead we are to suffer even more cuts in public spending.
Alas, this short sighted and counter productive approach is not limited to the UK.  The rest of the EU, along with much of the rest of the world, is also mired in this dash to austerity.  There is very little evidence that this approach will work and much evidence from the past that it will most likely not work.  With great damage to most of us in terms of rising unemployment, loss of services and cuts in living standards.
A major question here is what will happen if the current policies are continued and things continue to get worse for more and more people?  Already there have been significant public protests in Greece, Spain and Israel.  Could these protests spread and get worse?  On this issue I feel that there is a substantial undercurrent of deep hostility lying just below the surface of public opinion.  In particular there is wide disbelief and resentment that none of the key people who were responsible for the current ongoing crisis have suffered or been punished in any way.  Most of this bitterness is quite rightly directed primarily at the bankers whose irresponsibility and recklessness got us into this mess.
So, unless things begin to improve pretty soon, governments will come under ever increasing pressure to change policy tack.  If they refuse this could lead to greater and greater social unrest.  How far could this go?  A lot will depend on how the various political parties respond to a worsening in the situation.  At the moment it is the right of the political spectrum that is making the running and right wing parties run just about all EU countries and since last year control the House of Representatives in the USA.  Alas, it is the right that is most vociferous in calling for ever more austerity.
With the right in power and economies in difficulties, this should be a time for the left to be leading the call for an alternative economic policy.  However the main left wing parties are hamstrung in their opposition, as most of them were in power during the run-up to the crisis.  Indeed none of the left parties showed any serious opposition to the deregulatory, laissez-faire approach to finance which got us into this mess.  And just as the leading bankers have not suffered, neither have the leading politicians in these left parties.  Unless and until they comprehensively reject their past and elect new leaderships willing to consider genuine alternatives to the current austerity, they are most unlikely to regain power.  And even if they did, what real difference would it make?  We badly and urgently need a new left alternative.

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