Is austerity the solution? Or is it the problem? Should we be looking to stimulate growth as well? Or instead? By now, as one political mantra drowns out another, it’s clear that governments are whistling in the wind when it comes to resolving the world’s economic problems.
It worries me that they might not even be addressing the right question. What if the economy has become so globalised that it is actually beyond the control of national governments? What if conventional monetary strategies no longer apply?
For some time now, jobs in the more advanced economies have been lost to the technological revolution and cheap competition from the growing economies in China, India and Southeast Asia. Western governments have responded with unaffordable borrowing and wasteful spending leading to massive deficits. The prosperity we enjoyed was in fact a debt-fuelled illusion.
There’s an assumption that every country’s GDP should keep growing. But what if the growth has become cancerous and is threatening the survival of the entire global economy? We might just need a brand new paradigm for the 21st century.