It must be nice when you can retire from public life and finally say what you really think. Lord Mervyn King isn’t cheating himself. The former head of the Bank of England has written a book. It’s being serialised in the Telegraph. It looks like a real page turner.
Not much has changed since the world economy nearly went over a cliff in 2008, according to king. He writes that “Another crisis is certain, and the failure… to tackle the disequilibrium in the world economy makes it likely that it will come sooner rather than later.” That sounds bad.
King says that since the last crisis, “governments and regulators have been hyperactive at the national and international level.” However, “bankers and regulators have colluded in a self-defeating spiral of complexity.”
By ‘hyperactive’ you can assume that King means the contortions central bankers and politicians have gone into trying to produce growth through lower interest rates and deficit spending. Yes, I know it’s going to start sounding like a broken record. But the problem ought to be self-evident by now.
What is the problem? The problem is all these people (including myself sometimes) take themselves way too seriously. Governments and central bankers don’t produce anything but gas. Certainly not growth. Free enterprise, the market system, and increased in productivity give us the world we live in. The politicians simply take from what’s produced and give to whoever votes for them.
The remarkable thing is how much prosperity the market system still manages to produce, despite being so badly hobbled and hijacked by crony capitalists and democratically elected Robin Hoods. King is probably right. A complexity catastrophe looms.
Category: Economics