Editorial
A crisis with many questions but no ready answers
Political leaders are never without challenges, but their present economic dilemmas are more severe than usual. It is worth articulating some questions, even without being able to propose solutions, so as to emphasise the urgent but difficult decisions facing our leaders.
Along with many colleagues, the distinguished US economist Paul Krugman has recently argued forcefully that the currently widespread austerity measures threaten economic disaster. Cuts in public spending threaten many jobs including those of unquestioned social value. The declared intention is to cut unacceptable levels of public debt, relying on the ‘private’ (i.e. corporate) sector to provide the growth that is deemed necessary. However whole sectors of the population, already poorer because of the government cuts, may lose their jobs or fear to lose them, and often bear heavy family debt: therefore a consumer-led spending surge (even if desirable, as environmentalists might deny) is most unlikely. Politicians know this, and therefore hope for ‘export-led growth’.
Yet many countries are in no position to increase their exports in the short term, lacking any kind of comparative industrial or commercial advantage. Even countries better placed to boost experts rely on a condition that – almost by definition – is not currently met: that other countries can afford to increase imports. Continue reading
