Larry Elliott (Guardian Unltd): New world disorder

[Jack Rabbit]

From the Guardian Unlinited (UK)
Dated Thurdsay October 9

New world disorder
It's 30 years since oil prices soared and monetarism triumphed - and there could be more upheaval to come
By Larry Elliott, economics editor

Some say the 1960s ended with Woodstock in August 1969. Others date the decade's demise to the break-up of the Beatles eight months later. Both are wrong. The 60s died 30 years ago this week when, on October 6 1973, Egypt and Syria chose Yom Kippur, the holiest date in the Jewish calendar, to launch a surprise attack on Israel.
The twin offensive was quickly halted so, in response, the Arab-dominated oil-producers' cartel, Opec, announced price increases, production cutbacks and an embargo on Israel. If the intention was to inflict pain on the west, it worked. By early 1974, oil prices had risen fourfold and a golden age of prosperity came to a halt.
The Yom Kippur war thus provided a hinge between the two halves of the post-1945 period. Up until 1973 came the era of social democracy; years of expansion in which governments, armed with Keynesian economic ideas, pursued full employment. After 1973, the pendulum swung to the right in favour of governments wielding free-market policies aimed at tackling inflation . . . .
Instead of putting their petro-dollars to good use at home, oil states put them on deposit in the world's money markets. From there, they were recycled as loans to poor countries eager for capital to finance development. The result was not economic take-off but - thanks to reckless lending, corruption and a stagnant global economy - a debt crisis that is still burdening poor countries.
Shockwaves from the Yom Kippur war were equally strong in the west. The first-wave effect of higher inflation was followed by a second wave of higher unemployment, as companies faced spiralling costs. The third-wave effect was the triumph of a right that was committed to shifting the balance of power in favour of capital. Egalitarianism, tax-and-spend and nationalisation were out; trickle-down, balanced budgets and privatisation were in.

This is as good and succinct analysis of why we have had to suffer the likes of Reagan, Thatcher and Bush in the last thirty years while the good guys have failed as can be seen.

[Kenneth ken]

1. thanks

here's the scarier part, "...Argentina's collapse, the Enron fraud and the self-delusion of the dotcom bubble are warning signals of a political and economic paradigm running out of juice. "

Given the brutish aspects of these right-wing paradigm-supporters, what choices will they make in order to try to stave off collapse?