Friday, November 14, 2008

A Long-Term Trend Toward The Depletion of Fiscal-Macroeconomic Slack in the World Economy? (Postscript)

The global financial crisis would seem an obstacle to the return to rapid, long-term growth suggested by some of the economic data from 2004 on (and quickly seized on by "optimists" like Fareed Zakaria). Oil prices are 60 percent off their record-breaking summer prices, but it remains to be seen how long that case of affairs will last, and with what effect on the global economy as a whole. My expectation, however, is that the first decade of the twenty-first century, like the 1980s and 1990s, will on the whole prove to have been one of slow (and in many ways, hollow) growth, especially if judged by the same criteria.

Where neoliberalism is concerned, many observers have suggested a backlash may be underway, pointing to more statist policies in Russia and Latin America, and even to (weak) signs of change in the advanced industrial countries, from the rhetoric of French president Nicholas Sarkozy to the election of Democrat Barack Obama (and a predominantly Democratic Federal legislature) in the United States. Nonetheless, one should not make too much of these signs; in Sarkozy's case, rhetoric has yet to be followed by action, while in the U.S. one would really have to strain to read into the recent election some referendum on the broad thrust of economic policy. Besides, the end of neoliberalism (and neoliberal globalization) has been prematurely declared on so many occasions before that one should take any such prediction with a grain of salt at this point. Watch what is done, not what is said.

-Nader Elhefnawy, November 2008

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