Commentary on Political Economy

Thursday 11 August 2011

The State Is the Problem - Vittori

This single sentence by Vittori at 'Les Echos' just about says it all:

Il y a trois ans, l'Etat était la solution à la crise bancaire. Aujourd'hui, l'Etat est le problème.

(Three years ago, the State was the solution to the financial crisis; today it is the problem"!)

That is absolutely precisely positively what we have tried to say on this site. So, what is the solution? Obviously, the State has to try to improve its budget to pay for the (formerly "private", NOW "PUBLIC") debt. But as soon as it tries to do that two funny things happen: first, the debt gets bigger because revenue is lower; secondly, social resistance (just take a look at Britain and Greece - it's only a beginning! see what will happen in China!) makes the entire operation politically catastrophic.

The only "solution" is "inflation, inflation and yet more inflation". In other words, the State has to take up even more of social industrial activity than in the past. But this only serves "to politicise" so-called "economic activity" (incomes, investment, use of social resources). - Which is where we come in. Let us play!

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