In which we praise the perspicacity of Ann Pettifor

Forty years of systematic de-regulation has inflated the banking sector’s “total balance sheet to more than four times (the UK’s) annual GDP”, according to the commission. Simultaneously, and because of the finance sector’s unrestrained usury, greed and speculation, Britain’s productive, manufacturing and agricultural sectors have systematically shrunk as a share of GDP.

I don\’t know how she does it you know.

Such insight, such brilliance.

As one sector grows as a percentage of the economy other sectors shrink as a percentage of the economy. The way this happens you\’d almost think there\’s a limit on the size of all the shares together. Some sort of mathematical law or something.

5 comments on “In which we praise the perspicacity of Ann Pettifor

  1. Why is she comparing a balance sheet to GDP? That stocks vs. flows thing Tim is always banging on about?

  2. It’s not per se wrong to compare stocks and flows, as obviously stocks need to be repaid from flows (mortgages are granted as a % of income, not assets).

    Winston – it’s less true over the last 25-30 years (or something like that) though. Not that I hold any special love for manufacturing and think there’s a right level. I do think that as we run a continual current account deficit there might be a inbalance (I think Tim double-counts when he says its of no consequence) but it’s hard to be sure.

  3. It might not be wrong ‘per se’, but it’s generally a sign of muddleheadedness, as in this case.

    As for mortgages: they can be given a value, but they also represent a flow of income (which is why they can be given a value). Pettifor’s example is more like comparing the value of a house unencumbered by borrowing with the income of the occupant. Shock horror: little old lady is holding on to assets worth 30× her income!

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