Gad Lerner On the site I found the translation of this article by Immanuel Wallerstein (pictured him beside his young master Fernand Braudel), about a year ago. I can still interesting, so I propose it here. Good reading.
Every day I read another economist, journalist or public official who opines on how best to achieve recovery of the economy in one country or another. It goes without saying that all contradict each other remedies. It seems to me that almost all these gurus are living in the world of fairies. Really seem to believe that their remedies work relatively quickly.
The fact is that the world is only the beginning of a depression that will last a long time 'and will become much worse now. The immediate problem for governments is how to recover, but how to survive the growing popular anger that all, without exception, are facing.
start with the economic realities of the present. Over the past 10-30 years in more or less everyone - governments, companies, individuals - have been living beyond their means, and they did borrowing. The world is drunk with inflated earnings and inflated consumption. The bubbles have burst. Now it exploded (or actually exploded several bubbles). It is became aware of the impossibility to continue on this road, and suddenly everyone is afraid of being left without real money - governments, businesses, individuals.
When fear takes over, people stop spending, or to provide. And when spending and loans decreased significantly, companies end or slow down production. Could close its doors entirely, or at least lay off employees. This is a vicious circle, since shut down or lay off leads to lower real demand and further due to reluctance to spend or lend. It is called depression and deflation.
For the moment the U.S. government, which is still able to borrow money and to print money, will put into service a bit 'of money again. This might work if the government put an enormous amount in circulation, and wisely. But in all likelihood will not do it wisely. And in all likelihood put into circulation the amount that might work would amount to little more than create a new bubble. And then the dollar could collapse very much faster than other currencies, lowering the final major support of the world economy.
Meanwhile, 90% in the bottom of the pyramid of the world population there are less and less money for the daily consumption of each type (and even 10% of the top things are going so well). People are getting nervous. Only last month we saw people on the streets to protest economic hardship in a growing number of countries - Greece, Russia, Latvia, Great Britain, France, Iceland, China, South Korea, Guadeloupe, Reunion, Madagascar, Mexico - and probably many others that have not been noticed by the world press. However to date have been relatively mild protests, but all governments have the nerves on edge.
what governments do when their primary concern is to address the turmoil inside? In fact they have two choices - shoot the demonstrators, or calm him down. Shoot only works up to a point. To begin with the same agents the police, because they are willing to do so must be paid well enough. And for the schemes is not so easy to succeed when there is a severe economic downturn. So
schemes begin with appeasing their populations. How? First of all, with protectionism. All have begun to complain to the protectionism of other countries. But all those who complain they're their own practice. It will do much more. Liberal economists tell us all again that protectionism worsened the overall economic situation. It is probably true, but politically it is completely irrelevant when there are people on the streets who wants to work - now! The
second way in which governments are willing, when there is something going through measures of social democratic welfare state. But do governments need money. And governments obtained the money from taxes. Liberal economists tell us all that raising taxes (all types) during a contraction of the economy worsens even the overall economic situation. It may be true, but in the short term this is also irrelevant. In fact, a decline in tax revenues collapse. The government can not even meet current expenditure, not to mention increases in expenditure. So in one way or another taxed. Or by printing money.
Finally, the third way in which willing, and with a healthy dose of populism. Over the past thirty years the gap between the real income of 1% on top of the pyramid and the bottom 20% has grown enormously, both within countries and worldwide. The gap is now reduced to the more "normal" that existed in 1970, which is still huge, but a little 'less shockingly large. Then you have governments who now speak of "income ceiling" for the bankers, like the United States and France. Or you can prosecute people for corruption, as in China.
It's a little 'how to be in the path of a tornado. Governments can fall suddenly worse. When this happens, they have only a few minutes to take refuge in the cellar. Then the tornado passes, and if one is still alive out to examine the damage. The damage will prove to be vast. Yes, you can rebuild. But then starts the real debate - how to rebuild, and how fairly they will share the benefits brought by the reconstruction.
How long will prevail this gloomy picture? Nobody knows or can not be sure, but probably will be for quite a few 'years. In the meantime, governments face elections, and voters will not be kind to those who are in charge. Governments protectionism and the welfare state serve as a social democrat cellar during a tornado. The quasi-nationalization of banks is another way to take refuge in the cellar.
What I think we need people and we must prepare ourselves is what we'll do once we emerged from the cellar. The fundamental question is how to rebuild. That will be the real political battle. The view will not be familiar. And all our past rhetoric is suspect. It is crucial to realize that rebuilding can take us in a much better world - but in a much worse. In any case it will be a very different world.
Immanuel Wallerstein
translation of Luke Tombolesi
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