We need to get real about the coming economic tsunami

There’s a withering John Maynard Keynes quote for almost any conceivable economic situation. Naturally, most of them are apocryphal, including – probably – the one that seems most cuttingly appropriate for our current Covid-addled nightmare. Still, Keynes’s alleged Depression-era anxiety that “the market can remain irrational longer than you can remain solvent” must surely carry an uncomforting echo of reality for national accountants and business owners alike.

Yet not even this gloomy perspective quite does justice to the strange world of pandemic economics. Keynes’s great achievement was to forge a consensus, hegemonic in democratic societies for a generation, that economic demand both could be managed and that Government’s should be doing it. This consensus unravelled eventually of course, but every time we face a crisis on the scale of the Depression and War from which Keynesianism emerged, then the old theories get a dusting down.

Well, not so much this time. To be sure, the lifeblood of demand is absolutely what our economy and businesses so desperately crave. However, in a pandemic stimulating demand can also stimulate danger and death. In that terrifying context our markets are far from irrational – that would be an easier problem to fix. It is more that for vast swathes of the economy, the market simply no longer exists.

 
Συνέχεια ανάγνωσης εδώ

 
Πηγή: capx.co