For the past 25 years, and especially since the financial crisis, the global economy has taken a disastrous wrong turn for which we are about to pay a hideous price. In one of the gravest intellectual errors since communism, many of the world’s cleverest people thought they had discovered the secret to perpetual prosperity. Forget about hard work, deferred gratification, tackling post-industrial wastelands or actually earning one’s keep by creating, building and exporting: there was an easier way.
Cheered on by politicians, central banks kept interest rates low, favoured borrowers over savers, printed money with abandon and engineered an artificial boom in house prices, tech firm stocks, crypto-currencies, bond markets, art and more. This ersatz “wealth” was meant to encourage spending and investment, the tax receipts would fund a generous welfare state, low rates would allow rising government debt, and there would be no need for difficult conversations on ageing, science, tax, competitiveness, incentives or productivity.
Yet it was a Potemkin economy, a facade, a con. Much of the “growth” and wealth weren’t real. The UK was stagnating, not booming. House prices “enriched” the haves while infuriating the have-nots. It was a bubble at best, and a Ponzi scheme at worst, keeping zombie projects alive and fuelling obscene malinvestment. Edward Chancellor’s The Price of Time is a brilliant primer on this tragedy.
This madcap experiment is now ending,…
