According to my morning paper, Mark Carney, the Governor of the Bank of England is “about to slash bank rate in order revive economic growth”.
I’m amused by the word “slash”. Bank rate is already as low as 0.5%. Reducing it to 0.25% or even all the way down to 0% is hardly slashing it.
More amusing still, if it wasn’t so tragic from the government’s point of view, is that Carney is hoping to lift economic growth from the present 1% to something more decent like 2.5% or 3%.
What will it achieve? Nothing. There are no uniquely new mass consumer goods in the offing to stimulate spending and saving. Of course, there could be — never say never — but there has been none since about 1980 and there are none on the drawing boards of the major corporations.
And this must be set within the wider context of world-wide trade which, following the laws of physics, is heading towards a steady-state. It would take massive additional injections of energy from oil, gas and whatever else to jog it onto a higher level.
But in any case what consumer goods would the Second and Third World countries manufacture and export that are not already made by China? What sophisticated services could they supply that are not already available from the advanced countries?
Now that the advanced countries are heading deeper and deeper into an era of automation, why should we have constant economic growth every year? To take care of international warfare why doesn’t each country make a proxy by improving its manufacturing and services software from year to year? At individual level, what’s wrong with spending more time on social and leisure activities?