Tuesday, 11 September 2012
Listen to the brothers and sisters.
Whilst most of the country were into the Olympics this summer a poll conducted by Bill Clinton’s polling guru Stan Greenburg was published. It was conducted to find out what the British thought was the cause of their economic woes.
And who do the public blame, but the bankers.
Almost half of those questioned (45%) blamed the “greed and recklessness amongst bankers on Wall Street and in London” was most responsible for the deficit and growing national debt, with 43 per cent blaming “the failure of governments to properly regulate banks and financial institutions”.
The spending options in the poll all received significantly lower scores - 28 per cent blamed “overspending on benefits and immigration”; 19% “overspending on the wars in Iraq and Afghanistan” and just 3% blamed “overspending on schools and hospitals”.
So there we have it, most of us rightly place the blame on the bankers and politicians. The former for causing the crisis and the latter for not regulating them to prevent their reckless search for profits bringing the whole house down.
So the cause of the mess is quite clear. What doesn’t seemed to have been figured out is how to get out of the mess.
Whilst there has been a modest amount of tinkering with bank regulation, who can say with hand on heart that a similar situation with the banks could not arise again. There hasn’t been a root and branch change in banking merely a bit of tinkering at the edges.
But perhaps the biggest lesson of all hasn’t been learnt. And that is, you don’t get out of a recession by cutting down on public expenditure.
It’s all about demand, stupid. An economy doesn’t grow without people spending on goods and services. So a simple lesson, you don’t cut further at a time of recession, you spend.
Labour when in power should have trimmed back on the expenditure budget when the economy was growing. The Tories should be increasing expenditure when the economy shows no growth.
Freezing pay and benefits at such a time amounts to economic illiteracy. As the political conference season starts lets hope that the message from the TUC conference is heard loud and clear by all the Westminster parties.