Date: 25‑08‑2020
Source: Project Syndicate by Robert Skidelsky
Robert Skidelsky, a member of the British House of Lords, is Professor Emeritus of Political Economy at Warwick University. The author of a three‑volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.
The argument that public investment invariably „crowds out“ private capital is wrong both theoretically and empirically. States have always played a leading role in allocating capital, either through direct investments, or by deliberately encouraging certain types of private investment.
LONDON – Three economic effects of COVID‑19 seem to be generally agreed upon. First, the developed world is on the brink of a severe recession. Second, there will be no automatic V‑shaped recovery. And third, governments will therefore need to “support” national economies for an indefinite period. But, despite this consensus, little thought has been given to what private firms’ prolonged dependence on government support will mean for the relationship between the state and the capitalist economy.
The main obstacle to such thinking is the deeply entrenched notion that the state should not interfere with long‑term capital allocation. Orthodox economic theory holds that public investment is bound to be less efficient than private capital. Applying an oversimplified logic then leads to the conclusion that practically all investment decisions should be left to the private sector. Den Rest des Beitrags lesen »
NEW YORK – This past May and August, escalations in the trade and technology conflict between the United States and China rattled stock markets and pushed bond yields to historic lows. But that was then: since then, financial markets have once again become giddy. US and other equities are trending toward new highs, and there is even talk of a potential “melt-up” in equity values. The financial-market buzz has seized on the possibility of a “reflation trade,” in the hope that the recent global slowdown will be followed in 2020 by accelerating growth and firmer inflation (which helps profits and risky assets).