When I was nine, Nigel broke my train set. Because he was four years older than I, when he said “I broke it, so I know how to fix it”, I agreed. Last week, 60 or more years on, I came across the train set in the attic, still broken, still unfixed.
Before the banking and economic disasters of 2008, a very small number of economists, financial journalists and politicians warned us that we were heading for the rocks, that our financial institutions and markets were in danger of collapse, and that our economies were not sustainable. The majority, in thrall to the fantasy fairy tales of the Washington Consensus, mocked them, assuring us that all was well. “We have said goodbye to Boom & Bust!”
Then the Big Collapse, the inevitable slide into recession and worst. Were the bankers, economists and politicians who got it wrong in any way abashed?
Well apparently not. Instead of donning sack-cloth and ashes, and showering us with their remorse, they rushed forward to present themselves as our saviours. “We broke it,” they said, “so we are the ones who know how to fix it.” Fools that we are, we left them in charge, to get on with it.
So, six years on, how have they done?
Not very well.
Learning nothing from the lessons of the Great Depression, they now applied most of the remedies that failed then, and – surprise, surprise – they have failed again. Instead of spending their way out of trouble, creating growth that would fund the cost of borrowing for recovery; they opted for austerity and contraction, created an even more uneven playing field than before. Rising unemployment, low or no growth, cruel cut-backs, and victimisation of the poor and weak. Probably most offensive of all, the further enrichment of the already over rich, many of whom helped get us into this mess (The Davos Crowd) and also some members of the criminal classes of the former Soviet countries, the Middle East and the Asian tigers. Lots of talk about “trickle down”, but very little trickling down. These are just a few of the adverse symptoms of the austerity merchants solution.
But surely there’s an up side? Yes, some growth, in some places. Some recovery, in some places. But it’s very little, and very patchy. Importantly, for most of us there is no feel good factor.
The recent elections across the EU, European Parliament and municipal, have produced an interesting, and chilling, popular verdict on how the “Economy Breaker-Fixers” have performed. Austerity and recession always trigger off the anxiety, stress and fear that requires us to identify a class, some ‘other’, who we can blame for our current pain. It’s the politicians sticking their noses in the trough; it’s the greedy foreign bankers (never our own?); it’s the EU, the immigrants, the Romanians.
So it’s no surprise that extreme far right, and extreme far left, parties are doing well; just too, too predictable. It is no surprise that over 30% of British people today admit to being racially prejudiced; just too, too predictable. It is no surprise that a number of xenophobic and racist party leaders in the European Union are going around today, smirking. It was just too, too predictable.
Not just predictable, but predicted. When the EU countries opted for extreme austerity, the same very small number of economists, financial journalists and politicians who warned us of financial collapse before 2008, warned us that this would happen if we took the path we did. And it did!
Today, I guess, they have earned the right to say: “Told you so!”