Apparently the solution to all our economic woes is that we should have a debt jubilee or 17. That according to Darius Guppy these days.
There is, as we’d expect, a certain oddity to his economic views:
This is a non-starter. Yes, when there are huge continents to open up, massive increases in productivity made possible by industrialisation, room on our planet for exponential population increase to occur and so on, then real economies can indeed grow at a pace which matches the expansion of the virtual economy of finance, or debt.
But those days, which began roughly four centuries ago, are gone forever and the brick wall of environmental reality has been hit. The end of growth has been the true problem behind all our other ostensible economic woes for several decades now and it is time to acknowledge this fact.
The inbuilt assumption there is that economic growth necessitates the consumption of more resources. Which, of course, it does not. For productivity growth means gaining the same output for less resource use – or more product for the same, that’s actually what it means. As it happens most to near all economic growth in the rich countries today is from that increase in productivity. Sure, we normally talk about the productivity of labour but that’s only a specific form of it. It is possible to have an increase in productivity of oil use, or energy, or copper – circuit boards use less now than they did meaning more computers for the same amount of copper, the same is true of gold – as well as time.
Even if we held resource use absolutely constant – not that we will but as a mind experiment – then economic growth could continue at whatever rate we work out how to add more value to those same resources was. Couple of percent a year would be my guess, double that if we shot the bureaucracy.
But I know these politicians. They are the followers of Adam Smith, David Ricardo, Friedrich Hayek and Milton Friedman when they should be guided by Thomas Malthus;
Very odd economics. When Malthus was right right up until the moment he sat down to write and has been wrong ever since. And I’m entirely willing to explore the idea that the other four will be proven wrong at some point – think it unlikely but willing to explore you understand – but it ain’t happening yet.
I mean which bit of Ricardo is going to be wrong? Comparative advantage? That traded goods will cost the same everywhere once transport costs are accounted for? Smith – that the division of labour adds to human wealth?
But the real core argument here is this:
best friends of the bankers.
The whole construct is that debt and interest are terrible things. This sort of call to abjure the bankers pops up in things like Chesterton’s economics, Belloc’s, where it’s really a thinly disguised complaint about cosmopolitans. Or, as a less mealy mouthed age put it, let’s get rid of the Jews.
Of course Guppy’s not doing that. I assume he’s just refound his familial Islamic faith and so rails against interest on those grounds.
It’s not very interesting economics though.