'Borrowed prosperity on an epic scale'

With banks on the mend and stocks in London and New York bouncing, could the global economic recovery be in full flow?

    Banks on the mend, stocks in London and New York bouncing... looks like the recovery is in full flow, right?

    For David Stockman, a director of the Office of Management and Budget under President Ronald Reagan, all this apparent recovery is a myth built on borrowed money, and he's having none of it:

    The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing 

    Stockman under Reagan was an early champion of "supply side theory" and Friedman monetarism. But even four decades ago, when Keynesianism had been pronounced irrelevant, the business cycle declared dead and Republican politics seemingly ascendant, it didn't take him long to figure out the weaknesses in the basic thesis.

    Now, as the champion of defer-to-the-rich tax policies Arthut Laffer returns to peddle his old nostrums once again, Stockman is also back, to excoriate modern Republicanism and expose the self-serving politics masquerading as conservatism:

    Republicans used to believe that prosperity depended upon the regular balancing of accounts [...] But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance - vulgar Keynesianism robed in the ideological vestments of the prosperous classes.

    These two articles, and the tax status of America's mega-wealthy, may seem a little esoteric, but if, as many predict, the Republicans win big in mid-term elections, their relevance will become more apparent.

    A new power structure on Capitol Hill will see President Obama's already  struggling economic plans entirely re-written, and how the ideological elements Stockman tackles in his article are resolved will play a huge part in the world's economic future.

    Not to mention that the fears of economists like Paul Krugman will have even more likelihood of being realised.


    YOU MIGHT ALSO LIKE

    Meet the deported nurse aiding asylum seekers at US-Mexico border

    Meet the deported nurse helping refugees at the border

    Francisco 'Panchito' Olachea drives a beat-up ambulance around Nogales, taking care of those trying to get to the US.

    The rise of Pakistan's 'burger' generation

    The rise of Pakistan's 'burger' generation

    How a homegrown burger joint pioneered a food revolution and decades later gave a young, politicised class its identity.

    'We will cut your throats': The anatomy of Greece's lynch mobs

    The brutality of Greece's racist lynch mobs

    With anti-migrant violence hitting a fever pitch, victims ask why Greek authorities have carried out so few arrests.