Monday, May 4, 2009

An entertaining irony

John Gray observes in the New Statesman:

One of the more entertaining ironies of the global financial crisis is the United States government demanding that the rest of the world follow its lead in implementing radical Keynes­ian policies. It is not just that after the events of the past months few people take American pretensions to financial leadership seriously any longer. More to the point, no Keynesian policies of any kind had a place in the economic orthodoxy – the deservedly forgotten "Washington consensus" – that US officials preached to the world, and imposed on various countries through the IMF and the World Bank, during the decades that preceded the outbreak of the crisis. Then, sound money and balanced budgets were the touchstones of economic virtue – not, of course, for the US, which has always displayed a fine disregard for these neoliberal dogmas in its own case, but for everyone else, and most particularly for the world's poor countries.

Now, the United States is promoting cheap money and deficit financing as global panaceas while doing nothing to change the neoliberal policies that it did embrace, such as the deregu­lation of banking by the Clinton administration. In a parody of the government-controlled crony capitalism that Washington has relentlessly criticised in emerging economies, the Obama administration is doling out vast sums to chosen banks while allowing them to continue to act as hedge funds. The result is that the US has itself become a kind of hedge fund, and of the more highly leveraged and less well-managed variety that has fared so badly recently.

The quote above is from John Gray's review of Meltdown: the End of the
Age of Greed
(London, 2009), in The New Statesman, April 23, 2009.