My Burning Ears:
I do hope that someone not utterly hare-brained has an idea how to get us out of our current one. Have the central banks actually been following some kind of long-term masterplan to that end, or have is what we’ve seen so far just a dance between periods of fire-fighting and spells of trying to gradually pull away from the fire-fighting without the steps necessarily belonging to some grander underlying scheme?
So far it’s been firefighting and hoping. Peeps keep trying to raise interest rates to get back to “normal” and the economy deflates again.
The problem is difficult.
The actual answer is economic growth. Well, yes, D’Oh. But the generation of that, well. Actually, this is an area where Ritchie is partly right. Monetary policy isn’t going to solve that problem. It can – and has – prevented deflation and thus negative growth. But actual growth?
Fiscal policy isn’t it either, although it can help. Reducing the UK tax burden to something like Singapore’s would help, certainly. And while I can dream no, that’s not a serious suggestion.
The other bit is government. Reduce the regulations preventing growth. The 1930s, for example, saw a housing led boom in the economy. But then back then it didn’t take 5 years to get from field to breaking ground with planning permission. REACH, as properly insisted upon, means you should pay up £250,000 for making even lab bench amounts of some new chemical to show that it’s not harmful. That slows down chemical research a bit, no? The entire economy is festooned with these restrictions that slow down economic growth.
One reason that it’s been computing – and online manifestations – that have been growing so much is that it’s all new. There are no regulations to stop you experimenting with whatever. You just can’t do that in any extant area of the economy.
The actual way out of the current slow growth and low interest rate world is laissez faire. Within the usual Common Law strictures of don’t kill the customers etc. But just leave markets and capitalism free to get on with experimenting.