Tim Page
Perhaps this morning’s Guardian should have been subtitled ‘the growth edition’. It’s front page greets readers with the headline, ‘Boost growth now or face a global crisis, Obama tells EU’. From a domestic perspective, the TUC has been arguing for months that austerity is the cure that is killing the patient and with the UK back in recession, our worst fears are being realised. The European economy is suffering a similar fate, with Greece, and perhaps increasingly Spain and Italy, under heavy pressure to make excessive cuts, which can only result in negative economic growth and higher unemployment. Thank heaven that at least the ‘Merkozy’ consensus at the heart of Europe has now been broken. The Guardian reports that Barack Obama, with one eye on his own re-election campaign, will welcome the pressure for more expansionary policies from the new French President, Francois Hollande, as Obama highlights the dangers to the world economy of excessive austerity.
Then, in the ‘Comment and Debate’ section of the Guardian, the always-impressive Mariana Mazzucato debunks the argument that growth can be brought about by “structural reforms”, such as cutting red tape or making it easer to hire and fire workers. Mariana points out that those companies which invest in new technology, human capital and R&D, and are located in countries where public spending in these areas is high, are able to produce more competitive and better value products. She also highlights that Scandinavia, with its large welfare state and stringent labour laws, has been crisis-resilient because it invests in innovation. Mariana laments the irony that German pressure for austerity, which prevents weaker eurozone nations from investing, stops those nations from doing the very things, like supporting R&D, vocational training and “greening” the economy, that have made Germany so successful.
A head of steam is developing, against austerity and in favour of growth, and it couldn’t have come too soon. The TUC will be debating this issue at our conference, ‘After Austerity, on 26th June and we are delighted that Mariana Mazzucato, along with such speakers as Dean Baker, Ha-Joon Chang, Robert Skidelsky and our own Brendan Barber, will be contributing. Register here and join the debate
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