All around the world, politicians and economists are rubbing their heads in desperation. The global economy has ground to something of a halt. We are in a slump. The International Monetary Fund, only today, has released a new, revised forecast for global growth… unsurprisingly, they have revised it down rather than up. There are various reasons for this, but the root cause was of course the Financial Crash of 2008. This crisis hit the world’s banking system hard, stressed whole economic regions to breaking point, almost defeated the world’s (then) largest currency and has yet to be, basically, sorted out.
Everybody has their suggestion. Economists of one school propose a certain set of remedies; proponents from different schools dismiss them and propose others. Politicians are no better – in fact, they are worse. Not only do the political ‘left’ and ‘right’ have almost contradictory prognoses for the problems of stagnation or slow growth, but they also have to appeal to the almost randomly varying desires and priorities of the voters they represent. Democracy’s greatest strength is also one of its main weaknesses – even in times of crisis, it is accountable to the people and only the people. Now is a time of crisis, and the people can’t agree on what is to be done.
Here, for what it is worth, is my suggestion.
It is one without too much economic literature behind it (I am not well read by any stretch of the most generous imagination) and almost no political doctrine. Thus, it might have at least a little hope of a broad-based, albeit hardly ideal, appeal to some of the various groups vying for influence over the directions which policy makers choose to take.
It is essentially a mix of slightly swallowing losses and slightly opening up the international economy. It might work to jolt the slow progress of growth a little, if taken all at once. The first part of the suggestion comprises of obliging the financial sector to write off a certain (not huge) amount of their bad debt, while also driving down the costs of doing business a little more at the same time. This could be done, for example, by reducing red tape that is useful but not essential for a limited – say, two year – period. Shops, producers and, for the sake of argument, service providers or wherever it might be would be obliged to take advantages of the changes, knowing that they would run out in a set amount of time. The combination of security and temporary nature of changes might just goad the private sector to awaken a little from its slumber.
The second proposal
Which, to be effective, would have to happen in tandem with the first – is to press ahead with free trade treaties. The Pacific and Atlantic free trade areas are a good place to start. These would require political will but that is not an impossibility.
Put together, these individually modest proposals might just be acceptable to the majority of pundits as a dull second favorite option… and even better, they might just work.
This is a guest post by Daniel Davies, a sociology expert who prepares case studies of human behavior for a number of magazines. His newest venture is mixing customer behavior analysis with marketing for creating the brand that will be loved – Star Domestic Cleaners.