Staff review by Chris Saliba
Esteemed economics commentator Satyajit Das argues that the end of economic growth may well be upon us.
A Banquet of Consequences is Satyajit Das’s third book on global finance, following Traders, Guns and Money and Extreme Money, and perhaps his most sobering. Despite the business as usual model that politicians, bankers and pundits continue to rely on, lulling us into thinking that everything is travelling quite smoothly, Das convincingly argues that the global economy remains in deep trouble. The hoped for growth that could bring the world out of the doldrums has not materialised. Hope, it seems, is the only strategy our leaders are banking on.
There are many reasons why the global economy has not bounced back after the 2007 financial crisis. A mixture of far too much debt, low interest rates promoting risky investment and inequality within nations reducing consumer spending. One of the main strategies that countries are pursuing to get themselves out of debt is to grow their economies, but that growth has not happened. Another is to hope for inflation so that the debt will be eroded. But inflation has remained stubbornly low. Adding to these problems is the issue of natural resource depletion. The world’s food and water supplies are under pressure. Global warming is another pressing issue, one that if dealt with honestly will mean a dramatic cut in living standards.
The way Das describes it, the world is stuck in a massive policy drift. No one really knows what to do. He likens the global economy to Waiting for Godot. Policy makers are simply making it up as they go. In one staggering part of the book, Das describes German Ministers being completely unaware of how much money their treasury is issuing in bailouts for other troubled economies. We all place so much confidence in our financial experts, but as Das asserts, most don’t know anymore than you or I.
One of the more sobering arguments of A Banquet of Consequences is that the perpetual growth economies have enjoyed since the Industrial Revolution may be a one off occurrence. Over humanity’s longer history, before the 19th century, economies remained static. A static economy was the norm. Maybe, Das argues, we have had our one chance. As he highlights, the carbon we’re taking out of the ground took millions of years to create. We’re burning it in a couple of hundred. We don’t realise its precious nature. Perhaps the internet revolution can replace carbon? (Ironically, the internet is heavily dependent on fossil fuels because of its high energy dependency. It takes a lot of electricity to run all those server farms and individual devices). Das argues the internet won’t have as powerful an economic impact as the invention of electricity. The much feted sharing economy is a race to the bottom, reducing wages and standards.
Is there a way out? The book points to increased democratic participation. We need better and more honest leadership. Not only that, we need our leaders to be more honest with themselves about their lack of answers to our current dilemmas. While we are always told that the future will be one of more consumption, Das argues that the most honest way to deal with our economic problems will be to embrace a far more frugal lifestyle.
Satyajit Das offers much to ponder in this often starkly confronting book.
A Banquet of Consequences, by Satyajit Das. Published by Viking. ISBN: 9780670079056 RRP: $34.99
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