2012 Economics New Wine in Old Wineskins

Joshua Konov 2012

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The ongoing most recent economic success of the US economy/market may well be considered consequencual of breaking all rules suggested by the majority of the modern day Economics e.g. :
Counter-austerity measure Direct governmental intervention in business such as AIG and General Motors Expanding unemployment benefits Infrastructural projects expansion Quantitative easing and money printing Directly aiding of the middle class by using programs for lowering interest rate in refinancing,

Instead of enforcing heavy austerity measures and easing business environment to prompt productivity and trickle-down business growth, particularly of the Transnationals that historically most benefit from such governmental interference, the administrations exceeded the Keynesian economics and went into more mike total governmental economic/market intervention, indeed. The Obamas administration has been acting under the pressure of high unemployment and sharp economic decline contemporaneous of the 2007-2009 Recession, which should be considered emergency circumstances with events prompting immediate action ignoring economic theories of the neo-liberal zeal. The US political structures compare to the fragmental European Union such, have given more power to the administration to explore unorthodox economic approaches, not being subjected of the scrutiny invoked by the EU national divisions and multiple interests. Finally, the results were.. good? E.g. in the last Quarter the US economy grew with an exceeding the expectation growth of 2.8%, the unemployment went down to 8.3%, with an overall positive business outlook. Even the declared for destruction US Dollar is coming up, and up, and up? Simultaneously, the EUs economic/markets mess is bringing marginal, if any, economic growth, total Fiscal meltdown, while the austerity measures have been methodically enforced, reducing the governmental expanses in all possible sectors of Medicare, infrastructure, administrative, social and education, following the trickle down economics to the point?

What is wrong with this picture, and why the liberalism failed? Is it the Future, for governments to take over and manage business? What is going to happen in the next recession, how far the governments should take over? Is it any better way out of recession by using free entrepreneurial markets approach?

Unfortunately, for the theory of liberalism and fortunately for the US Economy, the Administration did not follow economic a priory ideologies, but their sense and the innovative American spirit took over? However, if the inept governmental

involvement in business has helped the US to get out the economic/market upheaval of the 2007-2009 Recession, what would happen if the micro and macro economic insufficiencies that provoked the recession in first place had been outlined and fixed at the first place, is it possible anyway? Maybe, the cyclical downhill that Karl Marx was talking about is unavoidable? Is it anything wrong with the system, anyway? Until now, the way economies/markets work had been considered somehow predictable, the cyclical recessions were suppose to reduce excessive market redundancies, such as production of excessive goods, exacerbated services and bureaucracy, thus bring economies/markets down to their means of market balance between mostly Industrial production and Fiscal expenses. Recession had been considered very important economic tools for adjusting economies/markets to the financial realities, thus not allowing the exacerbations to reach points of total economic/market collapse. However, the Chinas industrialization, aided by overall Globalization and rising Productivity has created economic conditions of deindustrialization of many markets, and non industrialization of others, which process has taken on the fundamentals of a priory trickle down economics by practically establishing global market conditions very new and adverse for expecting recessions to be fixed by self-adjusting economic/market forces. (see: http://mpra.ub.unimuenchen.de/34588/1/MPRA_paper_34588.pdf) It is obvious that neither industrial production on a global scale could grow to a point to employ these in the US or EU, or those in the developing markets (China, Vietnam, Brazil, India excluded, but even there the shrinking industrial labor is in a process). As is well established, the capitalism is founded on industrial production, rising productivity and relatively high interest rate, which fundamentals are very inept under these new emerging economic/market conditions (see appointed link) What differs from the past also is the role Transnationals and Large Investors play and could play under these new emerging economic/market conditions, where the main employment should come from Small and Medium Enterprises instead, the main wealth distribution should come by market exchanges through Small and Medium Investors, instead the Large Investors of the past, and the role Infrastructure and Social Expenses should play, which instead of being pure expenses should partially change into equities. However, for these different agents and tools of economics to work some micro and macro economic tools may have to change and others to evolve (see: appointed link). Another way for managing economies/markets is to give governments progressively more power that I consider marginal and incoherent, no third way could be projected, indeed.
By Joshua Konov

http://bx.businessweek.com/market-economy/ Joshua.konov@gmail.com