John Plender has an article in the FT this morning under the title ‘Deflation is a rising threat for markets’ with the subheading ‘The world is prey to the growing problem of deficient demand’.
I could not disagree more on the second point. The world is full of demand, for education, housing, jobs, security, health and social care and so much more.
What the world is prey to is a growing refusal of politicians to meet the demand that is within their capacity to supply because to do so would require redistribution of income and wealth and a growing role for the state. We face economic problems for that reason, and no other. There is more than enough demand to go round.
Fascinating, isn’t it? Our all round leading economist and political thinker is not in fact the Keynesian he claims to be. Or, possibly, doesn’t actually understand what he is saying that he believes. The basic point about Keynes and Keynesianism being that our current economic situation is explained by a lack of effective demand. And yet here’s Ritchie telling us that there’s plenty of demand around.
My best guess is that he’s simply not got the wit to put the two points he’s separately making together and thus seeing that they are incompatible, exclusionary even.