[経済学] Economics in 2015: Recovery vs. "There will be no recovery!"

hey this video is going to talk a little
bit about economic theory and economic reality toward the end of the year 2015 I'm responding to some statements made by a particular influential charlatan here in Canada a guy who makes his living talking about politics philosophy and economic theory here on YouTube I feel like I should give the guy some credit because it's a miracle that in a country with as little intellectual activity as Canada that anyone can earn their living talking about politics economics and philosophy so in that sense I'm happy for him and I'm happy for everyone gets engaged in these kind of debates and he's sincerely interested in and concerned with these fundamental questions on the other hand I'm now going to proceed to disagree with just about everything this guy says this first chart I'm going to throw up which as you can see is a very simple screen capture from his recent video he presents I'm going to look at just two of his charts here he presents this as self-evident proof not only that the American economy is in a terrible crisis but that there will be no economic recovery when I saw this the first time this was playing and I was doing some housework you know pay attention of the things I was hearing him giving this over-the-top narration about what this was supposedly proving or indicating it looked at the chart and i really laughed out loud because the chart shows the exact opposite this chart does not prove his point the bright yellow line on this chart there is the Dow Jones Industrial Average so the argument he's presenting the what he's inviting you to believe or imagine is that there has been no economic recovery since the crisis in 2008 and that there will be in the future no economic recovery that's what he's claiming and this chart shows the exact opposite here's a different chart of the same thing this is the Dow Jones Industrial Average it's just a little bit easier to read this one but this is the same thing that we just saw before as a bright yellow line the dow jones industrial average is an index so this is not measured in percentage points and it's not measured in dollars it's just measured in a unit of the index not worth explaining what that unit is for these brief discussion however back in January of 2009 I can see looking at the chart here that it dipped down to seven thousand units okay moving forward to februari of 2013 it had more than doubled and it continued to increase above fourteen thousand units so to me it's completely surreal that somebody giving a public lecture would present this as unquestionable evidence of an economic collapse from which there has been no recovery and will be no recovery when this shows the exact opposite this shows an economic recovery now the Dow Jones Industrial Average does not tell you everything about a society it is one useful statistic and one reason why people are interested in the statistic is that it does correlate to employment and unemployment pretty strongly when the Dow Jones Industrial Average is doing well that's normally a positive indication for people's chances of getting a job and keeping a job over the longer term but this is a positive indicator this completely disproves the guy's theory it hit a low and it recovered from that low and then continued to grow after that fact so let's be skeptical here though maybe my bete noire who I'm disagreeing with maybe he's still right maybe there has been no economic recovery well what are we looking at here this is the unemployment rate in the United States it's not perfect it's not ideal we don't live in an ideal world but as you can see there over time there was an economic recovery unemployment went from ten percent down to less than six percent in a fairly steady progression and what happened to bring about this change well a couple things happen of course just lately the price gasoline has gotten much cheaper but what policymakers and policy anos would indicate as being the the crucial decisions made by the United States was on the one hand embracing the quantitative easing program we preferred with qe1 qe2 qe3 and also embracing low interest rates now this guy am I'm disagreeing with this guy in criticizing here he presents this chart of American interest rates this is a benchmark rate one of several you could use to indicate how the US government is setting rates he again presents this as a self-evident sign of an economic collapse that is ongoing and from which there will be no recovery he does this simply through the use of poetic imagery which you know he's entitled to I'm not knocking his use of the English language he vividly describes this as being equivalent to a pulse monitor in a hospital of someone's heart beat tapering out because toward the the right hand side in the last few years since 2009 it is flatlining well yes if this were a human heartbeat that would be a negative indicator that would indicate that you're dead and he goes on a great lengths to indicate to interpret this as supposedly showing that the American economy is dead and there will be no recovery however that metaphor is completely meaningless and completely misleading interest rates do not resemble a human heartbeat in any way there's no meaningful comparison there whatsoever when interest rates are low it means that you can get a bank loan more cheaply now in reality it doesn't really affect ordinary people in the same way that it affects large corporations a large company that is looking to open a gold mine in Canada now really has an incentive to take on the debt and open that gold mine while interest rates are low a big project like that opening a new factory investing a lot of money for the long term when companies get deeply into that those are the types of that are really impacted by this type of near-zero interest rate so you know I think it's really worthwhile for everyone no matter where you are on the political spectrum to challenge yourself to give a lucid account not just of your factual claims but of the values that are lurking behind them so in this case it's just presented to us as if it were self-evidently terrible for interest rates to be low well why is that why would you think that's a bad thing now I i have my own biases and my own values there is a sense in which i'm sort of prejudiced against this style of economic intervention i I'm not a fan of the quantitative easing program that the United States elected to embark on I'm not a fan of what its outcomes were in Japan or the United States or in Europe were similar imitative economic interventions to place I have my own critiques and my own biases and I can discuss those in an open and responsible way however I'm not going to lie to you and say that because I'm biased against it it doesn't get results the United States cut interest rates to near zero and in many ways it got the results that the US government was hoping for showed that gradual decline in unemployment I may not like it I may have reasons why I might think some other economic policy would be even more effective or more ethical or would lead to greater social justice there is a real question of justice you know a question of responsibility and the part of bankers and you know people who are guilty of financial malfeasance in 2008 crisis those are all important questions they're not what we're addressing here this chart of interest rates being in near zero doesn't give us any of those questions may be worth talking about but getting at the kind of ethic underpinnings of our ideas about economics is tremendous important as you see in some ways the fashions in economics are comparable to religious beliefs beliefs in different religions come and go with time and people do fanatically and fundamentally believe in economic assumptions one of the great beliefs in our time and for the people who are now older than 60 years old the type of people who are prime ministers presidents bureaucrats technocrats almost all of those people who are in powerful decision-making positions in the government and in the banking sector these are all people over 60 years old if you're 55 and you're in a senior position like that the press remarks that you're young a young and upcoming politician age 52 so you know this is a world of gray haired people for that generation in power right now they really are the generation that lost their faith in Keynesian economics and the theories of John Maynard Keynes and that among other things really their new faith what's often called monetarism it's also called the efficient markets hypothesis these are different these are not those are not two different names the same thing so different ideas that became popular the assumptions of neoliberalism these are people who almost like an article of religious faith believe that low interest rates will help unemployment so it will increase employment will increase economic activity and will get people good jobs so in some ways yes that is like a religious belief if you really talk to government bureaucrats and you've elected officials boy you can sometimes feel the intensity of that being equivalent to religious belief but it's also fundamentally different from any religious idea in the following crucially important way in general economic theories that people may believe to be under all circumstances to be true globally and universally in general they're true under some circumstances and not under other circumstances that's totally different from anything in the world of religion that's totally different from anything in normal sort of democratic political discourse like you know someone who is Catholic who believes that abortion is evil they believe that's true under all circumstances but this type of economic belief one of the reasons why it can be so powerful is that there will be examples where the economic theory works and neoliberalism in terms of a playbook in terms of a an instruction manual for what to do with the economy in some circumstances it has had very positive results and in some it has been a total failure people like Christine Lagarde current head of the International Monetary Fund different leaders of institutions Europe I think they tend to ignore the negative examples and to focus on the positive examples we'll come back to that in just a moment okay one positive example that's sort of close to my own heart whether I love it or hate it something that's been a big part of my life is the island of Taiwan so this methodology of chopping interest rates engaging in quantitative easing and other manner other methods to maintain liquidity maintain the status quo with Bank players etc okay its associated primarily with Japan in some ways japanese-style economic policies it actually been more effective in Taiwan than they have been in Japan look at this shirt how did Taiwan respond to the economic crisis in 2008 well there you go they chopped interest rates down to near zero okay so what was the outcome of this economic policy in Taiwan there you go there was a crisis unemployment shut up to six percent not very high by Canadian standards but very high by Taiwanese standards they chopped interest and they had this recovery okay and as their economic situation improved they restored interest rates not all the way but they interested back up from a very low rate to a more moderate or reasonable rate okay so this is the neoliberal ideal okay taiwan's economy performed exactly the way a certain kind of monetarist neoliberal economic playbook would like the whole world to behave right unfortunately or fortunately the whole world doesn't pay that way now I'm not saying this is someone who loves Taiwan unconditionally I know the reasons why Taiwan has this type of economic strength and can bounce back that way the island of Taiwan is very different from the island of Ireland and it's very different from the economy in a place like Canada Taiwan is a miserable place to live for some obvious reasons you can't drink the water you can't breathe the air a pretty fundamental life on Earth the intensity of industrialization in Taiwan is horrific to behold it's awful you live on the south west coast where they have the shipping industry the steel industry a plastics manufacturing electronics manufacturing computer exports well that gives Taiwan a lot of economic resiliency in the post-2008 and recovering from this economic crash it also means you can't breathe the air you can't treat the water there are a lot of other social problems that come out of that they're dependent on importing cheap labor from Indonesia and the Philippines numerous social problems I could mention that are related even to the strengths of their factory system however on this chart looks pretty good and in terms of the people who are over 60 years of age who are sitting in power around the world they look at that and they think me too if you're the prime minister of Spain or France or Greece you look at this chart and think wow I wish I had unemployment under four percent probably the Prime Minister of Canada looks at this stuff and thinks wow I wish I had unemployment under four percent and they don't really think about the underpinning variables the deep institutional economic social assumptions for why this concave this way all right so here's Japan Japan this is a ten-year chart by the way this is not a short period of time being shown here Japan has had interest rates at zero for an absurdly long period of time again I want to come back to the basic premise presented by my bete noire here my great Canadian theoretician who I'm disagreeing with if interest rates were in any way comfortable to a human heartbeat then Japan would be dead and it's been dead for many many years right that's that's the ridiculous theory that this is a sign of an economic crisis with no recovery and not only no recovery past tense that there will be no recovery for in the future tense this period of time here looking at like 2008 2015 a few extra years in there I got to keep a real few I've lived in Cambodia if you were living in Cambodia during this period of time and you went to visit Japan let's say you lived there for a year you would think Japan was paradise on earth you would think wow what an amazing society what an amazing economy in every way the education system the drinking water public transportation from head to toe Japan would be and a very impressive society to you imagine if you went from athens in greece same scenario and you visited japan during this period of time do you think you would regard japanese society as a disaster I mean these are real questions if having interest rates near zero is a disaster then Japan as an example should affirm the supposes now there are serious social problems I'm not an uncritical fan of japan i'm not going to digress for each of these examples and all the things i dislike about the country but I am NOT sitting here as someone who's biased in favor of Japan I'm not someone who's presenting Japan as a positive example for countries like Canada and Ireland to imitate or emulate one of the reasons for that is that I don't think Canada can I don't think it's possible for Canada to reproduce the same positive outcomes that Japan gets from these policies and there are a lot of factors there some of them like the ones I mentioned just now for Taiwan having a massively industrial export-led economy export-oriented economy what we like to say canada doesn't have that Canada this is from memory but in last 15 years near 2000 year 2015 the percentage of our gdp that's occupied by manufacturing declined from eighteen percent to only ten percent we already were well into deindustrialization back in the year 2000 taking in the 1990s not a period of rapid expansion of manufacturing Canada so these same theories same playbook of how to handle 2008 financial crisis it won't have the same outcomes for country like Canada as it will for Japan and we're about to see it doesn't even have the same o comes for Japan as it does have for Taiwan ok and addie industrializing country that maybe only exports raw materials like Canada not exporting finish manufactured products in our case dependent on oil exports gold exports diamond exports but you know in Canada we drive a lot of Japanese cars in Japan they don't drive a lot of canadian car's we're not exporting a whole lot of cars from canada to japan's the other way around capisce um these are the factors well look I mean the others are you know labor mobility is so many factors to get into here that these abstractions don't really show you but hey what's the outcome for Japan if you think near-zero interest rates are such a bad thing what if you were sitting right now in madrid you were wringing your hands over the economic crisis in spain an economic planners say to you do what Japan did look at your pan they recovered from the crisis they brought unemployment from five point five percent down to below three and a half percent spectacular okay what's the point in saying there is no economic recovery there will be no economic rub in many of these countries there has been there already has been economic recovery so back when the u.s. made the decision to basically imitate Japan I was laughing I thought it was hilarious because the Americans have been snubbing the Japanese for decades about macroeconomic policy in Japan and then as soon as America has a crisis they're trying to imitate the Japanese a quant qe1 quantitative easing phase one did have some significant differences from Japanese the Japanese equivalent to quantitative easing QE 2 + QE 3 they're even even closer Japanese in America reproducing this Japanese strategy quantitative easing + dropping interest rates to zero but again you look at that chart for Japan you think hey this is a country that injured this type of economic problem while maintaining very low rates of unemployment a lot of people take that bargain okay canada already talked about it a bit same basic strategy not quite as rapid to drop to zero interest rates but in response to the 2008 crisis interest rates come down to near zero and then come back up again a little bit yep there's Canada's unemployment rate has there been an economic recovery yes it's a mediocre economic recovery in Canada's case okay Canada has not recovered I would say as well as the United States but on the other hand within my lifetime six percent unemployment seven percent unemployment that's about as good as it gets in Canada we have a lot of different factors to blame for that including the decline of manufacturing as already mentioned the decline of a lot of things in this country but that includes also are somewhat ridiculous labor policies we are we have a government here that wants to keep the cost of labor low by importing cheap labor from Latin America Asia all around the world at all times so that maintains a high rate of unemployment and relatively low wages creates a lot of dynamic inequalities in society that's also part of the sort of playbook of neoliberalism has it worked out for Canada in some ways yes in some ways no I would say the results here have been mediocre but as you're about to see not as bad as say Ireland right so for all of Europe they now have a European Central Bank and European Central Bank again same basic playbook let's do what Japan did but you could see actually back in 2009-2010 the european central bankers were actually a bit more um skeptical about jumping into the latest japanese fashion so it's not until 2014 that this benchmark interest rate really gets down to zero uh maybe it's only then they they recognize how desperate the situation is or that they're convinced to try to imitate something japan has done such a long time ago unemployment in greece twenty-five percent okay you want to talk about a situation where there has been no recovery there is no recovery there is no future does not describe the situation the United States at all the United States has had a recovery and that's obvious in the Dow Jones Industrial Average obvious in the unemployment rate there has been a very real economic recovery the United States not in Greece okay the Greek economy doesn't have any of the strengths of the Japanese economy doesn't have any the strengths the Taiwanese economy and it also doesn't have any of the strengths of the Canadian economy all right here in canada we can still just dig up gold dig up oil dig up a lot of natural resources and sell them we're still cutting down trees believe it or not um we are we're balancing our books to a large extent as we always have done since our colonial period through resource extraction now would I rather live in Greece or Taiwan a lot of people go on vacation in Greece for a reason for many reasons cultural heritage reasons as well as the natural beauty of the place and so on if you've been to any of the big cities in the west coast of Taiwan any of those great centers of industrial production they're pretty much hell on earth my impression from afar is that the towns along the coasts and harbors of Greece relatively Pleasant and beautiful places yeah olive trees and all that um so yeah Greece has some advantages anyone who's on the far left anyone who's a sincere communist sympathizer socialist far leftist you tell me when you're above twenty-five percent unemployment why don't you have a revolution a lot of talk out of the left if you were actually sitting and waiting for capitalism to break down so you could rise up in revolution as per Karl Marx's original three if you actually believe that theory then this would be it folks and if you want to know why the rate is dropping greece has a declining population one of the reasons why unemployment goes down is that people give up looking for a job and move to another country and the Greeks do have labour mobility they can pack up and move to Berlin they can look for work elsewhere okay of course when you have a long-term economic crisis like this you also get fewer people being born women choose to not have babies or delay having babies because same thing that happens in a civil war you get real demographic impacts ok this is the chart for Cyprus the island of cuprous another country have had some interest in over the years the numbers are not as astronomical we're here looking at about sixteen percent unemployment but again in real terms there is no recovery ok so this in this case pessimism is appropriate and in Cyprus I think everyone who could leave the country already has left the country before 2014 they have a fair bit of mobility especially links to England people going from Cyprus to London try to get a job and so on but this late date probably everyone who can leave already has left ok my heart breaks for Cyprus terrible situation not getting any better and in terms of the PlayBook of neoliberalism I'm not talking about a life here but this is really the type of nitty-gritty people should get into guess what the theory works great for one island taiwan doesn't work for many of these countries in europe including snipers spain i used to live on the border between France and Spain down in French Catalonia we had the refugees from this economic crisis coming across the border and a lot of the local jobs were being held by Spanish citizens were you know generally Catalan rushing across the border to get any job they could fixing up the streets and what have you and plenty them were miserable and we're vowing they would going to Germany because they hated France so much well everyone's a critic look this is a real crisis against pain you know population decline you have unemployment decreasing partly just because people are leaving the country entirely people are no longer having as many babies etc so this is a profound crisis with no recovery in sight ok but not the United States hot those charts were looking at earlier right finally it is tragicomic to me is both tragic and hilarious that christine lagarde has held up ireland as a positive example of the theory working of the in this is a much more elaborate theory of government austerity combined with a checklist of neoliberal policies ireland has had some decline in its unemployment but i don't want to go on for ever hear anyone who's taking any time to look at the social political economic reality of what's been happening ireland last few years you tell me if there's any cause for optimism ultimately christine lagarde holding up ireland as a positive example is totally self-defeating because even if she were correct even if my cynicism were misplaced here and ireland really were a tremendous a positive example of an economy that has bounced back guess what the population of ireland is less than the population of a medium-sized city in china more people live in see amin china then live in the whole country of Ireland so even if you know the policy works on one that Ireland has bounced back a little bit with unemployment only at ten percent now she'll be delighted to have ten percent unemployment right it's a moot point all right I can't believe how long it took me to make what's such a fundamentally simple point here look I mean from my generation I'm old enough to remember the world as it was before 1989 and I'm young enough to have really been sensitive to the shock waves of fad economic theories that spread around the world primarily through the internet around the time of the Occupy Wall Street movement okay the ridiculous theories about let's get back to the gold standard and demonizing central banking in general and you know this weird mix of libertarianism and incoherent social Marxist critiques of neoliberalism Occupy Wall Street for me was really kind of a crossroads of you know bad ideas about economics that nevertheless you know captured public sympathy because of the social context of real fear and apprehension about the outcomes of still ongoing economic and financial crisis economic theories are different from religious beliefs in that even the worst economic theory is going to be true under some circumstances and the theories that currently rule the world I personally partly because of a difference in values I'm biased against them and I disagree with them but I recognize that those theories are true and valid and effective under some circumstances the fellow have chosen to frame this video as a disagreement with he doesn't really explain what his problem is with low interest rates but even if you really feel that having near-zero interest rates is a problem ethically or economically you still have to be willing to recognize that in some circumstances that theory get the desired effects look we had a whole generation of people who believe that everything John Maynard Keynes taught was wrong was discredited and of course they followed right after a generation of economists and politicians and social leaders who thought that everything John Maynard Keynes taught was right now Keynes was one person he was one economist there's a whole category of social policies and economic theories that we call kings Ian under the influence of Keynes anyone with a detached attitude looking at the same evidence or just say well Keynes was right about some things and he was wrong about some things and he set down economic policies some of which are true and effective and useful under some circumstances and others not so much but people do tend to believe in these things with a kind of religious fervor and they also tend to be disillusioned with them in the same way that a religious believer loses their faith so yeah we got to see the roller coaster of Keynes Ian economics and now in the aftermath 2000 a crisis I guess we're seeing a similar sort of disillusionment with some of the fundamental assumptions of neoliberalism I am very far from being a fan of Japanese economics but when you think about it logically perhaps the first country where we will really see a next step beyond neoliberalism might be Japan precisely because Japan was the first country to adopt what's now international phenomenon of quantitative easing etc the sort of late neoliberal playbook for bailing out your economy so it would make sense if Japan now under the leadership of a [ __ ] Enzo might become the first country to turn that next corner and start really thinking critically about what aspects of neoliberalism has to be reconsidered what aspects jettisoned you