Wednesday, 27 April 2011

Economies correct themselves!

Any idiot (and that includes Gormless George) who has studied basic economics, knows that economies and markets self correct without interference. They have in built mechanisms that mean that any shock will have a reaction that will balance it out. When people and in particular governments interfere, they create a shock which will have a knock on effect somewhere. Regardless of what the shock is, the market creates a balance somewhere else. So, if an economy overheats (usually between 10-15 years) it will have a recession ( usually between 2-3 years) that will ensure it can grow again. The more you interfere, the more you affect this cycle.

Society on the other hand, has no correction system. It is entirely man made and requires interference in order to correct itself and develop in the correct manner. This is where governments should be concentrating their efforts more. Focusing on (and taking credit for) the economy is a waste of time. Politicians should spend more of their energy on policies which actually have a chance of making a real difference and worry less about how much it costs. Many policies that generate social change take many years to prove effective, particularly when we discuss health and education. If we change the way we start to educate our under fives today, it will take twenty years before we start to see any direct change. It may take another twenty years of concerted effort to bring down the binge drinking trend and another twenty years to get parents to take responsibility for educating their children correctly. You cannot put a price on these and many other goals as the rewards and gains from these could far outstrip the investment if given the chance.

This is where we need to focus our efforts now. We should punish the banks and bankers - not only to recover the money they squandered but to generate a banking system that acts in the interests of society rather than self centred bankers.
We should reduce spending on the armed forces not to try and produce a business like army but so that we reduce the amount of conflicts we are involved in and become a peace keeper again.
We should invest in looking after the weak and the needy in society and leave the wealthy moneymakers to fend for themselves.
We should increase spending on encouraging a healthy diet and lifestyle and encourage people to develop a personal discipline that keeps them healthy, the benefits in the future cannot be measured - so don't try.

Most economic history that has been written has shown that nearly all, 'economic poicies' had counter effects that severely reduced the impact of those policies and it will also be written of the policies that the current bunch of idiots are pursuing. It may even be written that the policies stunted growth severely, but what should be written is that the economic policies paled into significance against the social improvements that were generated through honest social change.

Very few governments have been brave enough to attempt this so far, even fewer have achieved it. I doubt this present government has the intelligence, integrity and honesty to try and change society for the benefit of all. I hope I am wrong!

I finish with a quote in reply to a commentator who said 'Only Conservatives act in the long run interests of the economy'.  Keynes once said, 'In the long run - we are all dead!' He knew a thing or two.

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