Is it possible to have a stable economy?
Discussion
After today's financial problems, and the blame being spread around everyone from the public shopping around for better mortgages, to the financial sector selling offal as prime steak (Thanks timmy for analogy), I was wondering: Is there an inevitability about these boom and bust periods or is it possible for a government to run a successful economy, or are we just stuck with the least s
t incumbents and these periods of flux for ever?
t incumbents and these periods of flux for ever?ewenm said:
Depends what you mean by stable. Compared to many economies, we are pretty stable. At the extreme is somewhere like Zimbabwe for example. Having a free(ish) market means we'll always be subject to fluctuations, good times and bad IMO.
To use a science analogy, an absence of high amplitude fluctuations - such as we are witnessing today. The sort of thing that gets lots of column inches and sees high numbers of people out of work.I was just wondering whether it is possible, or are there simply just too many variables to consider, so that whichever government claims to be "in-control" is just either lucky or unlucky as to whether they come into power during a good period and thus appear to know what they're doing.
Edited by rhinochopig on Monday 15th September 15:52
The problem that I see is that there are so many traders and the like all hunting a healthy and quick profit at the moment. This forces a massive amount of volatility into the market and hence causes some of the rather drastic things that are happening at the moment. There are lots of instances of manipulation of the markets, much more than normal.
We have also see the massive oil price rises on the back of a number of things, including investors wanting to profiteer or stabilise their money after the housing market problems. There is more to come and its going to be a very rocky ride for some time. When the traders and dealers calm down and start concentrating on the important things then we might see a return to a bit more stability. Until then, its like riding the white water rapids.....
Also, we expect our major businesses to make massive profits - and these record profit levels are simply not sustainable. So we need at least another round of results before we can start to shake out the massive amount of pressure first....
We have also see the massive oil price rises on the back of a number of things, including investors wanting to profiteer or stabilise their money after the housing market problems. There is more to come and its going to be a very rocky ride for some time. When the traders and dealers calm down and start concentrating on the important things then we might see a return to a bit more stability. Until then, its like riding the white water rapids.....
Also, we expect our major businesses to make massive profits - and these record profit levels are simply not sustainable. So we need at least another round of results before we can start to shake out the massive amount of pressure first....
The economy is like a broken watch which tells the time only once in every 24 hours.
Between every period of boom and bust there is that second of stability then it's up and running again. Obviously there will always be minor ups and downs as the "watch" gets a knock now and again to see if it's running but generaaly it's a slow process and we can see it coming either way. This time it's all happened just too fast to keep track of and the speed of information exchange that we now take for granted as part of our daily lives mean that repercussions have a much quicker and farther flung effect than the days before the good old "interweb"
I think!
Between every period of boom and bust there is that second of stability then it's up and running again. Obviously there will always be minor ups and downs as the "watch" gets a knock now and again to see if it's running but generaaly it's a slow process and we can see it coming either way. This time it's all happened just too fast to keep track of and the speed of information exchange that we now take for granted as part of our daily lives mean that repercussions have a much quicker and farther flung effect than the days before the good old "interweb"
I think!
rhinochopig said:
ewenm said:
Depends what you mean by stable. Compared to many economies, we are pretty stable. At the extreme is somewhere like Zimbabwe for example. Having a free(ish) market means we'll always be subject to fluctuations, good times and bad IMO.
To use a science analogy, an absence of high amplitude fluctuations - such as we are witnessing today. The sort of thing that gets lots of column inches and sees high numbers of people out of work.I was just wondering whether it is possible, or are there simply just too many variables to consider so that whichever government claims to be "in-control" is just either lucky or unlucky as to whether they come into power during a good period and thus appear to know what they're doing.
The media take joy (well, make money) in reporting bad news. When the markets climb sharply it's all seen as good, rather than perhaps a sign of over-confidence or over-valuing. If you want a stable economy you also eliminate any big rises - not something that's possible (IMO) in our market structures where confidence and speculation play a large part in the movements up and down.
AIG for example, was it every really worth $90/share or was that hugely over-valued? Is $10 a more realistic valuation of the business?
plasticpig said:
Not in a capitalist society no. Theoreticaly a state controlled economy (communism) should be stable. The problem with this is it is also tends to be stagnant.
So in that respect, every UK government is effectively doomed to failure before they even get into power. Bit of a Sisyphean task being an MP then.rhinochopig said:
plasticpig said:
Not in a capitalist society no. Theoreticaly a state controlled economy (communism) should be stable. The problem with this is it is also tends to be stagnant.
So in that respect, every UK government is effectively doomed to failure before they even get into power. Bit of a Sisyphean task being an MP then.A fluctuating economy is a feature of a healthy capitalist society. The "holy grail" of steady gentle growth over long timescales without any losses is an impossibility.
ewenm said:
rhinochopig said:
plasticpig said:
Not in a capitalist society no. Theoreticaly a state controlled economy (communism) should be stable. The problem with this is it is also tends to be stagnant.
So in that respect, every UK government is effectively doomed to failure before they even get into power. Bit of a Sisyphean task being an MP then.A fluctuating economy is a feature of a healthy capitalist society. The "holy grail" of steady gentle growth over long timescales without any losses is an impossibility.
The job of the government as I see it is to buffer the effects of the bad times. At its simplest level this is save money when times are good so you have got something in the piggy bank to give out to help people and the economy out when times are bad. Unfourtunately for the UK Gordon Brown dosent seem to believe in piggy banks. ewenm said:
Why is it seen as failure to have a fluctuating economy? impossibility.
Because as soon as we get a bust cycle starting everyone starts baying for blood, including the opposition supporting press. I don't think a fluctuating economy is a failure in real terms, but the press and public perceive it as such.
rhinochopig said:
ewenm said:
Why is it seen as failure to have a fluctuating economy? impossibility.
Because as soon as we get a bust cycle starting everyone starts baying for blood, including the opposition supporting press. I don't think a fluctuating economy is a failure in real terms, but the press and public perceive it as such.
)... like now...jeff m said:
Simpo Two said:
Communism?
Feudalism?
I think feudalism sounds good. Bagsy me Lord of the Manor
That would be ok 'til you impregnated Wilf the Blacksmithes daughter and the serfs are outside with pitchforks and flaming torches.Feudalism?
I think feudalism sounds good. Bagsy me Lord of the Manor
rhinochopig said:
jeff m said:
Simpo Two said:
Communism?
Feudalism?
I think feudalism sounds good. Bagsy me Lord of the Manor
That would be ok 'til you impregnated Wilf the Blacksmithes daughter and the serfs are outside with pitchforks and flaming torches.Feudalism?
I think feudalism sounds good. Bagsy me Lord of the Manor
Edited by ewenm on Monday 15th September 17:05
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