“Plan A” is an appeal to a kind of lumpen right-wing core feeling that austerity will bring the world back to where it was. I think people view this much as they would on realising their household was overspending and deciding to cut going out, fashion, Chinese junk and holidays – making the car last a couple of years more than usual and that sort of stuff. Much as this could work for a household, it’s dullardism in economic thinking. No politicians can believe anything they tell us on this and they are all up to their ears in the cheating that led to the mess. My guess is the politicians think the truth is too much for our tiny little minds and know they can poll our votes as they always have with the same old lines. I’m hearing nothing I didn’t in the 1970s, though the jargon has changed and phrases like ‘balance of payments’ have all but disappeared.
“Plan A” is all about a spreadsheet of Treasury models. If you know anything about spreadsheets you’ll know you can change figures all over the place and the software will reconcile all the figures and outcomes. My first use of such stuff was in chemistry and later manufacturing. In both, if you have the conceptual model wrong, they just produce useless shite. They work very well and are very useful when the theory of what is linked to what and in what proportion is right – approximation can be good enough.
It is possible to think of a “Plan B” by shoving other numbers into the existing model. In chemistry and manufacturing this is often done by putting real test numbers in. Generally, chemicals and manufacturing processes don’t screw about with you like bankers and accountants interested in outcomes linked to their bonuses.
The problem with austerity is that the cutting back (like not taking a holiday) is to cut back on the nation’s “earnings” as GDP. You’d take that holiday if any savings in not doing so were wiped out of your own account. We all don’t take holidays or even feed ourselves and so there is less trade, and the thought of less trade makes productive investment unattractive. We use things like business cycles to make sense of fluctuations in demand and write business and strategic plans. The idea is to have product and product capability for the return of demand. We take on debt in order to invest in order to get a higher return over time than our costs. Simples! It’s not and some business plans are so barking it would be better to do nothing and put the money in the bank and take the interest.
The problems with any “Plan B” offering is that it will be based on “spreadsheet A” – I can shell these out faster than peas from a pod. The Japanese are 20 years ‘ahead’ of the game on this one and up shit creek with a very aged population that is shrinking, about to lose prized jobs to its manufacturing in developing countries. Speadsheet A relies on growth forecasts that are wrong as they hit press and assumptions made long in the past.
We need a spreadsheet with other assumptions and outcomes built into it. The essential problem here is not in constructing one but tearing the old one down. To start this we have to realise we’ve been conned and put trust in ourselves. This is more or less impossible because we have no model of rational dialogue in our public life. A quick look at the amazingly awful GOP candidates or half an hour of PMQs is enough to tell.
There are still questions to ask about what our governments are currently up to. The US and UK have refinanced their banks to a much larger extent than Europe as a whole. We don’t know what the Euro is – it increasingly looks crackpot and a third German invasion, with the US and UK waiting on the fringe for it to go tits up and then going in for the fire-sale kill for assets that will produce rent. All the basic “answers” rely on an upturn in innovation and new private sector jobs – this message is more than 30 years old and has a history of failure. I would rather be German in terms of adaptation to this model than British, but the more insular and xenophobic Japanese are now in great trouble despite trying hard with it.
Times aren’t tough enough for most of us to give a damn. A few are collecting in the streets with no real message and even less reporting. In the UK these have taken the form of picnics with police, stealing some signed copies of celebrity-donated books and little else. In the States more former soldiers are involved and more are more badly affected and there is more disruption and violence.
Outside of a few academic and market interests there is little of any alternative around and it’s more or less impossible to translate any of this into ordinary speak, In fringe economies like Portugal, government is stealing from pension pots as surely as Enron and Maxwell; we currently get them delayed or reduced. We’er so dumb the fact that a tiny rich have most of what money-value can be put on hasn’t dawned on us as we are told there is none for us. In laughably “workshop Britain” even the effort on soccer pitches isn’t British. The vultures aren’t just circling, they’ve landed in Iceland.
The answer is a limited debt jubilee, though when RBS is 30% exposed to Greece and all UK banks might lose 80% of core capital in a continental run, this can’t be a simple one as so many times in the past. This would only be a start. The next bit is to avoid fighting a war for the rich and taking them on instead. The basics in this concern re-organising money so that it is fairly earned and deployed by utility banking. To get even this far we have to reject the existing model of consumption and that means re-writing what life is about. Bugger! It’s tough. Greater Lancashire UDI floated on our shale gas looks easier! After all, we did the industrial revolution up here and produced George Formby. We’ve already started with the County Championship and a fracking-induced earthquake at Old Trafford will produce another (by making us play on grounds where it doesn’t rain 24/7 365.
You can see why people give up on plan B. One reason OccupyX isn’t saying much yet is that we wouldn’t understand anyway. You’ll know when you and your kids are skint or dying in Iran.
Your view is that we face debt peonnage or revolution against the elite, particularly the corrupt banks and chief executives, even those in public services. I’m surprised at the extent of this position across the Internet. How do we know this ‘stuff’ (to use one of your words) is any sounder than the lies we get from more central news? I know you say that you can find support for almost any view. This is what I find. I’ve even decided you are right. I just don’t get why.