Bank of England’s Carney: First ‘Lost Decade’ Since 1860s
Dec. 10, 2016 (EIRNS)—Bank of England Governor Mark Carney, in the Roscoe Lecture at John Moores University in Liverpool on Dec. 5, titled "The Specter of Monetarism," said that we have just experienced the "the first lost decade since the 1860s." Blaming both the curent and last "lost decade" on the supposed "technological revolutions" in both eras, and proposing nonsense, such as "redistribution of wealth," using the internet to expand "cottage industries," "greening" the workforce, and more such drivel,—Carney never mentions the bankruptcy of the banks or the massive bailouts and QE, let alone Glass-Steagall or the New Silk Road development process.
But he has no choice but to identify the current disaster, since he and his fellow Olympians are getting crushed everywhere by what the spokesmen for the British Empire love to call "populist" upsurges. Here are some quotes from the embattled dinosaur, braying against new paradigm. He opens:
"Real incomes falling for a decade. The legacy of a searing financial crisis weighing on confidence and growth. The very nature of work disrupted by a technological revolution. This was the middle of the 19th century. Liverpool was in the midst of a golden age; its Custom House was the national Exchequer’s biggest source of revenue. And Karl Marx was scribbling in the British Library, warning of a specter haunting Europe, the specter of communism. We meet today during the first lost decade since the 1860s. In the wake of a global financial crisis. And in the midst of a technological revolution that is once again changing the nature of work. Substitute Northern Rock for Overend Gurney; Uber and machine learning for the Spinning Jenny and the steam engine; and Twitter for the telegraph; and you have dynamics that echo those of 150 years ago. Then the villains were the capitalists. Should they today be the central bankers? Are their flights of fancy promoting stagnation and inequality? Does the specter of monetarism haunt our economies? These are serious charges, based on real anxieties. They merit sober, objective assessment."
He then proceeds to drunken, subjective analysis:
"I will focus on the underlying causes and consequences of weak real income growth and inequality across the advanced world.... Monetary policy has been keeping the patient alive, creating the possibility of a lasting cure through fiscal and structural operations. It has averted depression and helped advanced economies to live to fight another day, so that measures to restore vitality can be taken."
With only a passing reference to China, he claims:
"The deepening of the symbiotic relationship between global markets and technological progress has lifted more than a billion people out of poverty."
It’s the internet that did it, he asserts. But,
"Despite such immense progress, many citizens in advanced economies are facing heightened uncertainty, lamenting a loss of control and losing trust in the system. To them, measures of aggregate progress bear little relation to their own experience. Rather than a new golden era, globalization is associated with low wages, insecure employment, stateless corporations and striking inequalities. These anxieties have been compounded by the twin crises of solvency and integrity at the heart of finance. When the financial crisis hit, the world’s largest banks were shown to be operating in a heads-I-win-tails-you-lose bubble; widespread rigging of some core markets was exposed; and masters of the universe became minions."
But, Heaven forbid:
"Turning our backs on open markets would be a tragedy, but it is a possibility. It can only be averted by confronting the underlying reasons for this risk upfront."
Globally, he says,
"overall activity [is] 9% below its pre-crisis trend nine years on. Even by these standards, however, advanced economy recoveries have been unusually tepid, with their current level of activity around 13% lower than the pre-crisis trend. In the U.K. the shortfall, at 16%, is even worse. Over the past decade real earnings have grown at the slowest rate since the mid-19th century.... In recent decades, as global inequality has fallen markedly, it has edged ever higher in most advanced economies. In Anglo-Saxon countries, the income share of the top 1% has risen notably since 1980. Today, in the U.S., the richest 1% of households receive 20% of all income.... Such high income inequalities are dwarfed by staggering wealth inequalities. The proportion of the wealth held by the richest 1% of Americans increased from 25% in 1990 to 40% in 2012. Globally, the share of wealth held by the richest 1% in the world rose from one-third in 2000 to one-half in 2010."
In the U.K., he notes: "A typical millennial earned Â£8,000 less during their twenties than their predecessors."
- Under the subhead "The Way Forward," he makes three proposals:
- Economists must acknowledge the disaster underlying the "populist" upsurge ("Given their recent experiences, it is not surprising that people are largely ignoring pieties about the virtues of open markets and new technologies, and that they discount assertions that they’ve never had it so good");
- Grow the economy by "rebalancing the mix of monetary policy, fiscal policy and structural reforms";
and give everyone a stake in globalization.
This, he concludes after tons of statistical gobbledygook, proves that: "In the end, monetary policy isn’t a specter but a friendly ghost."