Some thoughts on secular stagnation

Via Paul Krugman, I saw that Larry Summers had given a presentation on the topic of secular stagnation at the IMF conference (admittedly, I wasn't invited this year, well, the letter must have been lost in the post ;-) ). If you'd rather read than watch, Krugman's summary is a nicely written one, and adds a few comments which can be interesting in themselves.

Well, I have not usually been inclined of late to say nice things about Larry Summers, although that was probably more about Summers the political persona. His academic research deserves more credit. So, much of it is interesting, although some of the conclusions he derives (and here Summers the neoliberal may be showing, for instance when he suggests that proper financial regulation may be a bad thing in the context of stagnation, which is bonkers) appear to either be there purely for provocation sake, or to be pre-conclusions looking for a justification. Still, I would have a few things to add, and I believe that the conclusions fall short in a couple of ways.

A graph that says it all

This is a simple graph (via Paul Krugman) plotting industrial production in the Eurozone since the beginning of the crisis, and in the 30s, from the start of the great Depression.

Actually, Excel graphics make it look better than it really is: in the 30s we only had one point a year, and Excel will plot that in the middle of the interval -which is why the 30s curve does not start from the origin.
In other words, it is lagging by 6 months. So to really get a comparable point to now, you'd need to add 6 months of rebound from the 30s. We are actually much lower, not slightly lower, than at the same point 80 years ago, and of course the momentum is taking us further apart.

Amazing. And the Austerians are congratulating themselves. Hard to argue against that fitting the definition of sociopathy.

The real sovereignty breach

As so often, George Monbiot is a very welcome voice in sounding the alarm.

As we have come to know, the case for free trade agreements had been hyped, and even the honest assessments overstated -Paul Krugman is a notable case of a major enonomist observing that the outcome had been less positive than he had envisaged, in great part because very little if anything was done to address the distributional effects, and also because free movement of workers is mostly an illusion.

But at least you could make a case for it and put it forward as a policy option.

This is not the case of adding to the free trade agreement the creation of secretive (debates are not revealed to the public!) courts, where judges are corporate lawyers, that have power to supersede governments' decisions with no possibility of appeal.
This is pure Corporatist transfer of power slipped in a bill that was sold as facilitating transactions -ie, stealthily renouncing sovereignty. Democracy is becoming Corporatism without the people having a say.

Not what we need. And, I must admit from reading the example that George Monbiot exhibits, the consequences are even worse than I would have thought (for instance, a mine is by essence local. Forcing exploitation has nothing to do with free trade, it is a completely different thing from having deliberately restricted standards to prevent sales of foreign products).

Despite all the posturing about the EU (and it has, indeed, created huge problems in the way the Eurozone was created, but that's not what you hear from the UK press, for instance, since they are not in the Euro), the sovereignty threat is not so much between national and supra-national, but in this establishing a Corporate power that is becoming stronger than the States'.