Some neoliberal commentators claim the global economic meltdown is just a blip on the radar. It's just more ideological delusion from The Cult of Positivity, says James Ayers.
Free market, neoliberal, economic commentators would have us believe that 'there's light at the end of the tunnel', that the current global economic meltdown won't last and we will soon to be enjoying the prosperity that economic globalisation has long promised.
Economic globalisation was only ever going to bring prosperity to a few, mainly in the West, and the current recession is actually going to get worse. MUCH WORSE!
There sure is light at the end of the tunnel the global economy is heading down. It's a crash and burn train wreck called economic liberalism, better known as western capitalism. Sure, we haven't quite got there yet, but the wheels of capitalism are falling off faster than they can be replaced by the politicians and their financial masters. By replace, I mean of course, PRINT MORE MONEY!
But let us be clear why the world has gone so far down the dead end tunnel called the global free market. It is simply a strategy by the rich to allow transnational corporations (owned by the rich) to exploit and enslave the rest of us. It allows these corporations to move capital to wherever labour is the cheapest, environmental laws the laxest, public subsidies the most generous and taxes the lowest.
This is a race to the bottom for the vast bilk of the human race.
However the fee market economic blueprint for the world was never going to work - it was always fundamentally flawed.
Firstly take the self-regulation myth, like that followed by the financial markets. Self-regulation is to regulation, like self-importance is to importance, they just aren't the same. Like asking a fox to guard over the hen house, did we really expect the high priests of finance not to become drunk on their alchemy and seduced by casino money markets they played in?
Secondly the free market sets a global competitive field measured only by money, and therefore the rich win everytime. The rich minority gets richer, the poorer majority gets poorer. Eventually as we are currently witnessing, the poor stop buying the products of the rich and the global economy starts to crash.
Thirdly, contrary to economic theory, the free market creates some absurd inefficiencies. Nearly half of all international trade is the simultaneous import and export of essentially the same goods. For example many countries both import and export biscuits. Surely it would be more efficient to exchange recipes!
And, of course, for the last generation or two the global economy has only grown through the privatisation of publicly owned or gift areas of the economy (ie childcare, cooking, music, health, education, etc) as well as an consumption orgy funded by an exponentially growing mountain of debt.
Yet, despite the obvious failure of the fee market or western capitalism, it seems the only prescription being put forward in the halls of power fro this debt addiction, is MORE DEBT! The politicians are desperate to avoid a cold-turkey solution, paranoid about redesigning the system. the only solution for our current woe, is a redesign, to bring the money creation process under government control - currently it is controlled by the privately-owned banks.
So, apart from the above, why do I think the recession is going to get worse, here and globally?
Firstly the banks are about to suffer a new wave of losses, from credit cards and commercial property, on top of their ongoing residential mortgage loses and the black hole of financial derivatives. The global banks are already broke, and the Aussie owned ones here will soon follow.
Secondly, consumer spending is going to contract further. People are staring to realise they can't keep buying things they don't need with money they don't have. Their priorities now are going to pay off debt and start saving. Manufacturers and retailers are going to start falling like flies. This combined with public sector belt tightening, means unemployment will rise substantially, which results in even further reductions in spending, another black hole.
Any economic recovery will be slim and short-lived, the current actions of political leaders will ensure that. Trillion dollar bailouts and stimuli, absurdly low interest rates, lowering taxes and accounting standards will allow the illusion to continue for a while. God help us after that!
James Ayers is the Corporate Nemesis. Hear him on Plains FM 96.9, Christchurch, Tuesdays 11am or check out his podcasts on the Plains FM website.