Austerity to reduce spending and decrease the need for imports, and liberalization reforms to reduce real wages and promote internal devaluation have been going on for a while in the European periphery to promote rebalancing, that is, to reduce the current account deficits and allow for continuous servicing of the debt.
Is Growth Still Possible?
Paul Krugman has recently pointed out a very pessimistic, but very provocative paper by Robert Gordon, about the possibilities of long run growth. Gordon suggests that the “rapid progress made over the past 250 years could well turn out to be a unique episode in human history.” In his view, long-term stagnation is a very possible outcome. He asserts that the reasons for this are the effects of technical progress on investment.
If we want food to remain cheap we need to stop putting it in our cars
Yes the global community is facing a food crisis but biofuel production rather the rising demand for meat-based protein is to blame, and the solutions are relatively straightforward.
Coverage of the US drought and the run-up in corn, soybean, and wheat prices has been extensive and welcome. It has also been prone to the repetition of falsehoods and the perpetuation of myths about the causes of the food crisis – and the solutions. A recent Guardian article, “The era of cheap food may be over,” is a case in point. Specifically, it perpetuates the myth that the main driver of food price increases is demand for meat in fast-growing developing countries. This effectively downplays the full impact of biofuels and ignores two problems underlying price volatility: financial speculation and the lack of publicly held food reserves.
Why the Global Economic Crisis is Here to Stay
In his article published on 5 August 2012, “Three myths that sustain the economic crisis.” Larry Elliott, Economics Editor of the British newspaper The Guardian, suggests that there are three myths that are prolonging the current world economic crisis:
- The Anglo-Saxon myth that big finance is “a force for good,” rather than “rent-seeking and corrupt.”
- The German myth that “you can solve a problem of demand deficiency with belt tightening and export growth”.
- The “old model” myth that there was not much wrong with the global economy in 2007, before the advent of the financial crisis that initiated the Great Recession, even though “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.”