Ann Pettifor: Off the deep end

By raising fears over government deficits, and by refusing to acknowledge that government spending pays for itself, these conservatives have set the economic and political agenda in all the British media,

Really? Government spending pays for itself? Amazing, the woman\’s in line for a Nobel any day now!

Hey, I\’m willing to believe that some government spending is worthwhile. I\’m even willing to entertain the idea that stimulus spending can be better than not stimulus spending in certain circumstances.

But I truly never believed that handing tax money to a Tory Grandee to clear his moat paid for itself.

Now I know better of course. Thank you Ann!

In April this year, consumer prices turned negative in the US, the UK, Germany and Japan. This may be good news for consumers, and may help lower food prices for the poor, but it is not good for the economy as a whole. Businesses cannot profit from negative prices, so they are bankrupted and lay off employees.

Eh? If my input prices fall and my output prices fall then I\’m in exactly the same position I was before, no?

And that\’s also rather ignoring technological advance which tends to make the priec of a standard product fall over time.

In fact, the statement that businesses cannot profit from negative prices (by which I assume she means negative inflation) is absurd. Real prices formanufactured items have been falling for three centuries. The price of food has been falling for some 10 millenia.

Jeebus!

5 thoughts on “Ann Pettifor: Off the deep end”

  1. View From the Solent

    I rather like the idea of government spending paying for itself. That means they won’t be taking any of mine, then.

  2. “government spending pays for itself”

    Is that going to become a legally admissible defence for tax evasion?
    If it is, I’m going to start evading….

  3. The thing is, the vast majority of people who express an interest in economics, particularly those with political power, believe the things stated here. The chances of meeting a politician, or mainstream economist, or “opinion former” who does not believe that deflation is an appalling peril to be avoided at all costs, is very small.

    We may laugh at this woman’s crackpottery, but must remember that this crackpottery is hegemonic and we, who believe otherwise, are generally believed to be the crazies.

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