17 November 2009

Some thoughts on the TUC's "Beyond Crisis" conference

Spent an enjoyable day at the TUC yesterday for a one-day conference called Beyond Crisis. Very interesting selection of speakers.

Rowan Williams was thoughtful, incisive, and about as radical as his position allows him to be. I think the Pope is doing him a favour by offering to take all the extremist nutters off his hands. Just one thing he said in the Q&A session I didn't understand, so I'll raise it here in case anyone can clarify: there seems to be a problem with the employment rights of Anglican clergy in that their employer is not the Anglican, but God(?) So they can't have normal trade union representation? I don't really understand this - how can your employer be an entity whose existence is disputed? That would mean that if God didn't exist you wouldn't have any employment contract at all. It would seem much simpler to just say that the Anglican Church employs priests. Anyway, it's not a point that's relevant to the rest of this post, but I found it bizarre so I'll mention it anyway.

The morning panel session with Ann Pettifor, Gillian Tett, John Kay and Dave Prentis was also v interesting. John Kay has moved from someone who was a mainstream Conservative in the 1980s to a radical now and that is really quite amazing, given that - as with other former establishment stalwarts such as Meryvn King and Adair Turner - he's not the first person you'd expect to man the barricades. John Kay's main point deserves reiteration here so I'll summarise (vidcast available here). Like Paul Krugman, Kay sees the current crisis as the latest in a series of asset price bubbles, followed by collapses which have been addressed by governments flooding the financial system with liquidity - thus reinflating the bubble a few years later. Phase 1 was the Asian crisis of 1997-8, Phase 2 the dot com bust of 2000-01 and Phase 3 the credit crunch of 2007 and following.

Because policymakers have been either too unimaginative, too in hock to the financial sector, or too stupid to reform the financial system, John feels we are now headed into Phase 4 of the crisis - which could well be the terminal phase. Another collapse could lead to the breakdown not just of the economic system, but a number of national political systems as well, as people will (rightly) be hopping bad with the bankers, but their anger will be directed towards populist solutions. If the left doesn't emerge with a coherent response to the crisis in terms of major institutional reforms (Kay recommends separating utility banking from investment banking), the extreme right could benefit instead. In other words we're looking at 1933 all over again. Apocalyptic stuff perhaps, but it would certainly fit in with what the more intelligent sections of the left have been saying about this crisis for a long time now.

I'll probably refer back to more from this conference in posts to come over the next couple of weeks as it was such a good analysis of where we're at at the moment. Well done for the TUC for putting it all together. I must start regularly reading John Kay's FT column.

1 comment:

Van Patten said...

I think I would have to agree that the reintroduction of something along the lines of the Glass/Steagall act has to be at the top of the priority list for any administration, be they UKIP, Cameronite or New Labour.

Im not sure anyone in the Financial Sector really understands the level of anger tht is likely to ensue if bonuses are paid, especially to those in partly nationalised undertakings. I recll John Kay well from the Telegrphs of the late 1980´s and early 1990´s. His analysis, although slightly leftist for my tastes is quite compelling. The only problem with you hypothesis is tht I don´t think the left has yet shown a credible policy response which doesn´t involve propping up extraneous public expenditure or raising taxes which would argubly be an even greater risk. Indeed is not the very notion of a coherent response from people in hock to either Beijing or Pyongyang slightly oxymoronic?