« Doubts about wage-led growth | Main | An infantile disorder »

October 07, 2011

Comments

Keith

On the other hand if the Government and lots of economists and bankers say everything must be cut and there is an "inevitable" depression coming worse than the 1930s, business men might conclude that they should stop investing. And they would be right although they are helping to apply the self fulfilling prophecy. What I want to know is why the world ruling class have convinced themselves that there is an "inevitable" collapse on the way culminating in the fall of western civilisation to the rest of the world. Maybe they should DO SOMETHING constructive rather than wait around for the fall of Civilisation? Also far be it for me to defend BAE but if the State buys less munitions for example it will be necessary for firms that make munitions to sack workers and scrap capital. That is a rational response to demand falling and the result of political choices. Once a few of the big firms selling to the state have to cut back thats Investment knocked on the head. Less sales means less profits. So less Investment. That is no different to workers spending less as they fear unemployment is coming. Nothing irrational for the specific firm or worker.

Dipper

well we talked ourselves into an unsustainable consumer boom ...

Dipper

... and why do commentators ignore any international perspective.

Our economy has been imbalanced, sucking in imports at an unsustainable rate. We need to rebalance, stop consuming as much, and export a bit more. Unfortunately the rest of the world isn't growing so we are stuck until the rest of the world picks up.

Having another drink may get rid of the symptoms of a hangover, but we all know that in the long term that isn't the answer.

Paolo Siciliani

This is even more telling considering that there is a Tory-led coalition in power, which supposedly should be more in tune with execs...
Anyway, Chris, isn't this contraddicting something you posted last week about the income elasticity of consumer spending being lower than that of investment? If it is true that animal spirits are more pernicious for investments decided by execs than for consumers then the income elasticity of investments (due to further corporate tax cuts) should be nevetheless lower than the income elasticity of consumer spending...

Anyway, animal spirits are for people that can afford to hold on spending plans...and certainly those in power have more slack than ordinary citizens nowadays.

The comments to this entry are closed.

blogs I like

Blog powered by Typepad