ECONOMIC NOTES

Income Decline before the Pandemic

THE pandemic and the lockdown are certainly causing an absolute shrinkage in the gross domestic product of the Indian economy. But these tend to obscure something very serious that was happening even earlier, namely a real income decline for vast numbers of working people.There are several pointers to this fact. The rate of chronic unemployment in 2018-19 was the highest ever in the last 45 years at 6 per cent compared to the usual 2 to 3 per cent.

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.Two grossly erroneous propositions

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.How ridiculously low this figure is can be gauged from two facts.

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.

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.

The World at Crossroads

THE Financial Times of London is one of the most “respectable” bourgeois newspapers in the world. Even this newspaper has now come to recognise something which the Left has been saying for quite some time. In an editorial on April 3, 2020, it wrote: “Radical reforms in reversing the prevailing policy direction of the last four decades will need to be put on the table. Governments will have to accept a more active role in the economy. They must see public services as investment rather than as liabilities and look for ways to make the labour market less insecure.

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