Not Learning the Lessons
As unemployment ticks higher again, I find myself thinking of the below quote:
Blame for unemployment lies more with finance than with industry. Mass unemployment is never the fault of the worker; often it is not the fault of the employers. All widespread trade depressions in modern times have financial causes; successive inflation and deflation, obstinate adherence to the gold standard, reckless speculation, and over investment in particular industries…
The view is now widely accepted outside the ranks of the Labour Party, by most economists, by many Government officials, by many businessmen, even by some bankers…
Finance must be the servant, and the intelligent servant, of the community and productive industry; not their stupid master.
The Labour Party, ‘Full Employment and Financial Policy’, 1944.
I worry that we’ve forgotten much of what we once knew. As Larry Elliot says today:
Even assuming the Bank of England gets it right, all that happens is that we return to a fundamentally flawed model. The return of property inflation, asset bubbles, private equity deals and the whole big swinging dick culture that pervaded Britain back then does not signify real economic recovery: it is evidence of a deluded and chronically sick nation determined to learn nothing and forget everything from the crisis.
Deluded because the over-reliance on debt-driven consumption, speculation and financial engineering was what got us into this mess in the first place. Chronically sick because each of the recessions of the last 30 years has ripped a bit more out of the UK’s industrial base and hence aggravated a problem ever-present since the second world war: we consume too much and produce too little.