ECONOMIC NOTES

What Could Be Wrong With a Fiscal Deficit?

I HAVE written about this in the past, but since bad economics comes thick and fast from the representatives of finance capital, especially the Bretton Woods institutions located in Washington DC, there is no harm in my repeating myself.

The issue relates to a fiscal deficit and has acquired urgency at present because revenues of governments everywhere in the world, including India, have declined owing to the pandemic-induced lockdown, while the need for government spending on relief and healthcare has escalated steeply, necessitating larger fiscal deficits.

Deception on Poverty

THERE is much self-congratulatory back-slapping among governments, the World Bank officials and many economists about the “decline in poverty” that is supposed to have occurred between 1990 and the onset of the recent pandemic. This decline is claimed on the basis of an International Poverty Line (IPL) of $ 1.90 a day (at 2011 Purchasing Power Parity) worked out by the Bank, which basically defines poverty across the world as lack of access over one day to the bundle of goods that $1.90 would have bought in the US in 2011.

The Hindrance to a New Deal Today

WHAT had been only a suggestion by several prescient members of the capitalist establishment till now, has become official policy, at least in Britain where Prime Minister Boris Johnson has announced that his government will undertake public investment to stimulate the economy, as FD Roosevelt had done under the New Deal in the 1930s in the US. In fact, Johnson specifically referred to Roosevelt’s New Deal, and expressed his intention of increasing taxes on the rich if necessary.

The Absurdity of Hiking Oil Prices

BETWEEN, say December 25, 2019, and June 23, 2020, world crude (brent) oil prices have fallen by nearly 37 per cent. They had fallen by over 60 per cent between end-December and mid-April, but there has been some price-recovery since then; even so, the decline in world prices till June 23 has been quite dramatic. In India however, over this very period, petrol and diesel prices have been going up sharply and are now higher than ever before; in fact diesel prices have increased even more sharply than petrol prices and the difference between the two has largely disappeared.

A Stock Market Boom amidst a Real Economy Crisis

SOMETHING very odd is happening in the United States. The coronavirus toll keeps rising with no end in sight. The economy has virtually collapsed with more than 40 million people filing for unemployment. Thousands are out on the streets protesting against the rampant racism that marks that society. Relations with China have reached a nadir. Altogether, as philosopher Cornel West put it, the US is showing every sign of being a “failed social experiment”. And yet there is a veritable boom in the US stock market.

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