Skidelsky in Madrid

Last week the Economics Society at King’s here in Madrid organised a trip to the Ramon Areces Foundation where Lord Skidelsky gave his talk “A Keynesian Perspective on the Slump of 2007-8 and How to Recover from It”.

He argued that contractionary fiscal policy will not lead to growth at a time when there is not enough aggregate demand. What policy makers need to focus on is growth through effective government spending, not cuts, as a means of reducing the debt burden because with economic growth, the debt to GDP ratio will naturally fall.

Skidelsky’s recovery strategy involved a coordinated growth plan whereby glaring trade imbalances be allowed to gradually correct themselves, reform of the global monetary system and the euro project be saved by a more proactive ECB and a more collaborative, less mercantilist Germany.

He spoke of other reforms that would need to be enacted to avoid the conflict of interest that exists between Washington and Wall Street in reference to what appears to be a revolving door between the big banks and government where senior managers of the investment firms walk into positions in the Treasury and then back again.

He was not optimistic about there being sufficient political will for such reforms to take place as they “rely on readjustments that are too large to be voluntarily undertaken.” Skidelsky also pointed out that “political leadership was not up to the idea of forging a global growth compact.”

The lecture can be downloaded as a podcast from here.

Econ Society member and A2 pupil Felix Muriel has made his write up of the event available to anyone who may be interested via this google doc.