15 May 2013

French double dip recession challenges social liberals

News that France has returned recession poses problems for those - like the Social Liberal Forum (SLF) and indeed Ed Balls - who believe that government action can create economic demand (and jobs).

That such an explicity interventionist government as that of Francois Hollande is unable to stem the tide of Eurozone recession is surely evidence that in such a globalised world - where multinational corporations are bigger than many economies - the power of governments to change much (at least in the short term) seems pretty limited.

And that is also the failure of the SLF and others who call for plan Bs (or Cs or whatevers).  By failing to recognise the limits of government and putting too much trust into a 'benign' state they perpetuate remote  bureaucracies, overweening and overeaching politicians and allow the state to centralise economic and other power in too few hands.

In the end economics - like politics - is about people and how they interact with others.  And so Liberals should look for a new economic strategy - one that truly understands the limits of state action and the importance of people. 

A good place to start might be David Boyle who seems to be streets ahead of the SLF in defining a new liberal ecomomics - fit for the reality of the 21st century - and not simply a rehash of the failed post war certainties of the SLF and Ed Balls.

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