A progressive economy

 

Today I'm sharing the most important article abut the economy. I hope that it will helpful to prepare Pakistan Affairs and current affair topic. 

A growing economy. 

In 2023, a recession is anticipated in both the US and Europe. For what it's worth, the head of the International Monetary Fund anticipates that a full third of the world will enter recession this year. Why do central banks around the world keep raising interest rates, a policy that will slow economic growth, result in lower wage increases, and create fewer jobs, and what has been causing the upward trends in inflation? The Covid-19 pandemic, geopolitics, corporate profit margins and markups, and pure capitalist logic and interests are the reasons why central banks are raising interest rates to combat inflation. Several factors are at play in the price surge.

These were some of the conclusions reached by progressive economists who attended an international conference on "Global Inflation Today" from December 2-3, 2022, which was put on by the well-known Political Economy Research Institute (PERI) at the University of Massachusetts Amherst.

To begin, Robert Pollin, Distinguished Professor of Economics and Co-Director of PERI at UMass Amherst, and Hanae Bouazza co-authored a paper that convincingly demonstrates that the Federal Reserve and other central banks do not have any reason to aim for an inflation target of 2%. In point of fact, their research reveals that there is "no consistent evidence supporting the conclusion that economies at any income level will achieve a significant benefit to GDP when they maintain inflation within the low single digits, i.e. between 0 and 2.5 percent." Furthermore, "evidence... suggests that, in general, economies are more likely to achieve higher GDP growth rates in association with inflation ranges in the range of 2.5–5 percent, 5–10 percent, and, for the most part, 10–15 percent," according to the report.

These significant findings raise serious concerns regarding the objectives of macro policy. In point of fact, what is the primary objective of a policy that aims to lower inflation if doing so does not encourage economic growth? Pollin and Bouazza suggest that corporate profitability should be the primary goal of inflation-targeting policy, citing the work of scholars who have conducted extensive research on this topic, such as Gerald Epstein, Professor of Economics and Co-Director of PERI at UMass Amherst, and others. Epstein noted in a recent joint interview with Pollin that the Fed has aggressively tamed inflation by raising interest rates for the purpose of "protecting the wealth of the wealthy."

Obviously, the mainstream economic paradigm doesn't talk about these things, and it doesn't answer the most important processes that affect how the real world works or the most important issues that affect working people's lives.

It is true that mainstream economics did a terrible job of dealing with the financial crisis of 2007-2008; therefore, why is it any different now when it comes to understanding the rising rate of inflation over the past 18 months?

A paper co-authored by Asha Banerjee and Josh Bivens of the Economic Policy Institute identifies the Covid-19 pandemic and the Russian invasion of Ukraine as key factors in the inflationary surge of the past 18 months or so, but argues that profit mark-ups greatly contributed to inflationary pressures over the same period. In regard to the actual causes of inflation in 2021 and 2022, Equally significant is the fact that the authors provide more than adequate evidence to refute the prevalent economic viewpoint that attributes the rise in US inflation to the American Rescue Plan. In point of fact, the data that they provide, both domestically and internationally, does not lend credence to the assertion that excessive fiscal spending caused economies to overheat and fueled soaring inflation.