Published on openDemocracy, by Ann Pettifor, July 07, 2008.
Japan hosts the G8 summit in the northern island of Hokkaido on 7-9 July 2008 at a time when its prolonged period of deflation and economic failure have rendered its politicians impotent …
… It was central bankers – those “guardians of the nation’s finances” – that had been responsible for the turmoil in the first place. Again, central bankers – like the governors of the Federal Reserve in the 1920s and the Bank of Japan in the 1980s – had been persuaded by the ideologues of neo-liberal economics that if they repressed wages and prices, and simultaneously deregulated the finance sector, perpetual economic growth would be guaranteed, hedge funds would prosper, and the rich would be a whole lot happier. And so it proved – until, that is, 9 August 2007.
Today, decision-makers in the United States, Britain and Euroland are confronted by the same threats which faced their predecessors in America in 1929 and Japan in 1990. Although unemployment is starting to rise sharply in some countries – notably Spain – the European Central Bank (ECB) worries that wages might rise. So, on 3 July, the ECB applied a dose of interest-rate “viagra” to the weakening Euroland economy by raising interest-rates to 4.25%.
As Angela Merkel, Nicolas Sarkozy, and Gordon Brown stand alongside Yasuo Fukuda and other colleagues in Hokkaido, they might usefully ponder the impotence of Japanese politicians – and begin to look for better ways to repair the systemic dysfunction of an unsustainable global economy. (full text).