Guardian article: “Three myths that sustain the economic crisis”

Larry Elliott, the Guardian’s economics editor has an article very worthy of your time.  Here’s the conclusion…

There is no real comparison between the past five years and the half-decade after the Wall Street Crash in October 1929. In the 1930s, a quarter of the American workforce was out of work and industrial production fell by 50%. A better historical parallel may be the Great Depression of the 19th century, a slowdown in growth and deflationary pressure that lasted from 1873 to 1896.

The reason the crisis has been so long comes down to three myths. The Anglo-Saxon myth is that big finance is a force for good, rather than rent-seeking and corrupt. The German myth is you can solve a problem of demand deficiency with belt tightening and export growth. The right policy involves tough curbs on the banks, international co-operation so creditor countries increase domestic demand to help debtor countries, and a measured pace of deficit reduction governed by the pace of growth rather than arbitrary targets.

The chances of this happening are slim. Because there is a third myth – that there was not much wrong with the global economy in 2007. But the old model was financially flawed as it operated with high levels of debt, socially flawed in that the spoils of growth were captured by a small elite, and environmentally flawed in that all that mattered was ever-higher levels of growth. It is possible to move on, but only when it is recognised that the genie will not go back into the bottle.

Please do send us articles that catch your eye. Over the coming days and weeks, we will post articles from the Financial Times and other (very!) mainstream sources questioning the mantra of growth…

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