Yet the government is spinning us a different line: this is a global recession, every country is suffering, there's nothing we could have done about it. Call me naive but if a bank can manage its affairs well enough to post a 10-figure profit in a year like 2008, then it takes quite some credulity to believe our government and economy is entirely powerless in the face of global market forces.
It's also a handy get-out clause: if it's not our fault, then we don't have to admit to being wrong about anything. It's good politics, but the one who fails to learn from the mistakes of history is doomed to repeat them. Meanwhile Gordon Brown can export the blame across the Atlantic, whilst taking the credit for putting together a rescue package.
But isn't credit the problem? Would we have a less severe housing crash if steps had been taken to dampen down prices a few years ago, and to restrict irresponsible lending by banks? Is it sustainable to continue build an economy on debt. Consumer debt is a bet on future income, we are spend money which doesn't yet exist. Our economy has been running like a nightclubber on Red Bull - propping itself up on the artificial stimulant of credit, and only now the effects have worn off are we realising that the body economic is completely knackered*.
The economic slowdown is now starting to hit really hard - Corus, Barratts, Woolworths, etc. It seems like a harsh time to be asking difficult questions, but they've got to be asked at some stage or we'll end up here again. Robert Peston talks of needing to 'reconfigure' our economies, but so far all we've seen is scaffolding to prop up the old structure. Here are a few questions I have, which may all have perfectly sensible answers. Not being an economist, or an expert in global trade, all I can do is ask the questions. Some may be dumb, unrealistic, naive etc. And if that's the only reason others aren't asking them, then I'll shut up:
- Is consumption the only way out of recession, or is it just a short term fix?
- We've been living beyond the means of the planet for some time now, is it time for some creative thinking about how our national economies can be smaller, how we can function with less consumption of resources rather than a constant increase?
- Can work be shared out more evenly across a population (why are some working 50-60 hour weeks and some 0?), or across a lifespan?
- Is it possible to sustain a modern economy without mind-boggling levels of debt? Can capitalism reinvent itself, or does market capitalism, with its constant reliance on the creation of new demands through advertising for the market then to 'satisfy', always end up consuming itself?
- Is modern capitalism compatible with the constraints of a finite planet, or does it need a major overhaul? Is this a one-off blip, or the first of a series of recurring shocks which show that our global economic and environmental RPM's are in the red zone?
The old chestnut about crisis and opportunity being 2 sides of the same reality has probably been overdone, but it's often only when everything falls apart that we ask questions about what we had to begin with. Most alcoholics only start on the path to recovery once they hit rock bottom, and recovery involves a very different set of principles and practices to what got them into trouble in the first place.
*In 2008 personal debt overtook GDP. We now owe more than the economy produces in a year. To put it another way, we are trying to run a year ahead of our capacity. The only way for the burden of debt to fall is for spending to reduce below income, so that we can use the remainder to pay off debt. So the choice is: reduce debt (= recession, because spending will fall), or try to maintain debt at current levels, or higher (which is what the govermnent seems to be aiming at).
For a different angle, try 'the good recession' (ht Tim Chester)
If you are familiar with sumo wrestlers, they gain hundreds of pounds. These men are huge. And they do this by eating tons of food and literally train their bodies not to feel full. They literally stretch their stomachs, massaging their intestines to make room for food. Isn’t that gross? And they do this to reset their definition of a normal meal so they can gain hundreds of pounds. In a similar way, our definition of need, when it comes to possessions, is completely out of proportion. We’re like those sumo wresters that have redefined their needs so that we can take in more and more.
Useful help sites
Matter of Life and Debt (CofE resource page)
Care for the Family resources on money and debt.