Brown and Obama are not the leaders for a major economic crisis

Globalisation gives rise to an economic system which is highly efficient most of the time, but it is also prone to minor crises roughly every decade, and major ones roughly every 50 years. Lacking economic insight, Gordon Brown claimed he had conquered “boom and bust” so that volatility on a large scale had gone for good. Now he joins Obama in an attempt to resurrect the General Theory of John Maynard Keynes, with its claim that shortfalls in private consumption and investment should be compensated with increases in government expenditure funded by borrowing. The fact that these patent remedies for the last Great Depression ultimately got the Western world into the mess of the 1970s is now overlooked. The result will be continuing distortions imposed on the world market by “big” government. In fact a small but “smart” state could more effectively regulate the interaction of globalisation and social change than the old Keynesian model. The ascendant Left needs to understand that social stability should not be sacrosanct. It is more important to avoid stasis. We need to distinguish between an orderly society, in which crime and other forms of disorder are kept to a minimum, and a rigid society, in which order is achieved at the expense of social mobility. The Left has clearly seized the moral high ground on the issue of public spending. It should be a matter of concern that governments of the Left on both sides of the Atlantic are currently presiding over explosive increases in public expenditure, public debt and public employment. The short-run benefits of this activity are almost certainly overestimated. The medium and long term costs are truly frightening.

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