Saturday, 31 August 2013

I blame Adam Smith

Really, its all Adam Smith’s fault. After all, the founder of modern economics was a Professor of Moral Philosophy and its similarly impossible to understand the dominant attitudes towards the current crisis other than in moral terms. Here’s some examples:

  • The tosh about skivers vs strivers and associated notions of fairness? That’s a (supposedly) moral argument that is.
  • The troika, well the German for the most part, approach to Greece? Is a moral stance; they made this mess with their spending and tax dodging, so now they have to pay the price for any aid they get so they do.
  • No additional public spending today because it would be at the expense of tomorrow’s youth? Yup, that’s a largely moral stance that is.
  • More generally, what I’ve personally encountered is the sense that because we had a credit fulled boom we deserve the current bust, because that’s only fair, isn’t it? Like we deserve it, really. And anyway, we need to repay the debt because you can’t go on borrowing forever.......

A big problem with such notions of morality is they’re so utterly half-arsed i.e. not thought thru. Rather, they typically operate as instincts or what adherents, if challenged, dress up as “common-sense”. Except, they’re not, they're more simply statements of ignorant prejudice.

Take skivers vs strivers; researchers have actively gone out hunting and failed to find almost any of the multi-generational unemployed households that get the Daily Mail so excited. In the meantime, the benefit cuts are clattering the incomes of the disabled and the working poor as well as the unemployed who are almost all actively seeking work.

Greece? Well, I don’t think destroying an economy via the terms attached to French and German funded bailouts that helped the French and German banks that had lent to Greece in the first place is teaching Greek people the lesson France and Germany thinks it is.

Spending more today would hurt the youth of tomorrow? If proponents of this argument were actually bothered about the youth or even the "yout" they should perhaps reflect upon the massive rise in long-term youth unemployment seen across Western Europe and the associated permanent damage this is doing to future, productive capacity (and individual lives).

As for us all somehow deserving the bust, well current UK monetary policy is geared to protecting the heavily indebted via super low interest rates whilst using quantitative easing to boost asset values. Guess what caused the credit crunch here  – no it wasn’t casino banking, it was the bursting of various cheap credit fuelled asset bubbles, which here primarily meant commercial property and company values, things yer average punter had absolutely nothing to do with.

Credit did serve a useful political purpose though in that it papered over the stagnation in average real wages seen in the run up to 2007 and the associated rise in economic inequality. I’m not sure why that’s something most people should feel especially guilty about though. Oh and the notion that a country can’t borrow forever or at least for a very long time is simply dumb.

The problem with morality is that its a big dogmatic-y i.e. engrained and purely reflexive in a lets not let dull stuff like facts get in the way. And its creating big problems. What are nasty prejudices masquerading as common-sense appear so deeply engrained, widespread and popular are having a huge influence on government policy. Right now, we really are shooting ourselves in both feet whilst blaming someone else - the disabled and the poor for the most part - for the pain.

No comments:

Post a Comment