John Cassidy: Back to the Thirties? Now It’s Britain’s Turn
[John Cassidy has been a staff writer at The New Yorker since 1995. He has written many, many articles for the magazine, on topics ranging from Alan Greenspan and Ben Bernanke to the Iraqi oil industry and the economics of Hollywood.]
For the past year and a half, I have been in the unusual (for me) position of being relatively optimistic about the U.S. and the global economy. While Nouriel Roubini and other pessimists banged on about a W- or L-shaped recession, I was reasonably confident that the extraordinary policy response to the financial crisis of 2008—bank bailouts, near-zero interest rates, and sizable stimulus programs—would be sufficient to turn things around. So it proved. The U.S. economy is about to end a fourth straight quarter of growth, and, according to the O.E.C.D., the global economy will expand by more than four and half per cent this year. Given the internal momentum that capitalist economies possess, the prospects should be for more growth next year and beyond. Now, though, I am not so sure.
Tomorrow, George Osborne, the new British Finance Minister, will reprise the role of Philip Snowden, one of his most notorious predecessors, embarking on a program of fiscal retrenchment during a global economic downturn. In 1931, with more than two million Britons out of work, and with the international financial system tottering, Snowden tried to cut unemployment benefits in order to bring down the budget deficit. In the ensuing row (several ministers refused to back the cuts), the Labour government collapsed, and the Prime Minister, Ramsay MacDonald, formed a national coalition that enacted Snowden’s measures, only to see the economy get worse—much worse....
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Read entire article at The New Yorker
For the past year and a half, I have been in the unusual (for me) position of being relatively optimistic about the U.S. and the global economy. While Nouriel Roubini and other pessimists banged on about a W- or L-shaped recession, I was reasonably confident that the extraordinary policy response to the financial crisis of 2008—bank bailouts, near-zero interest rates, and sizable stimulus programs—would be sufficient to turn things around. So it proved. The U.S. economy is about to end a fourth straight quarter of growth, and, according to the O.E.C.D., the global economy will expand by more than four and half per cent this year. Given the internal momentum that capitalist economies possess, the prospects should be for more growth next year and beyond. Now, though, I am not so sure.
Tomorrow, George Osborne, the new British Finance Minister, will reprise the role of Philip Snowden, one of his most notorious predecessors, embarking on a program of fiscal retrenchment during a global economic downturn. In 1931, with more than two million Britons out of work, and with the international financial system tottering, Snowden tried to cut unemployment benefits in order to bring down the budget deficit. In the ensuing row (several ministers refused to back the cuts), the Labour government collapsed, and the Prime Minister, Ramsay MacDonald, formed a national coalition that enacted Snowden’s measures, only to see the economy get worse—much worse....
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