With the recently released data that the Eurozone’s 2017 growth rate was 2.5%, the Eurozone has officially achieved a “lost decade”: its average annual growth rate from 2008 to 2017 was 0.6%.
Wow…that’s bad. That’s even worse than “Japan Lost Score” bad.
Japan’s two “lost decades” both actually surpassed the Eurozone’s recent performance:
Japan 1991-2000: 1.4% growth rate.
Japan 2001-2010: 0.7% growth rate.
Computing these numbers, in the internet age, required about 10 minutes of searching and the use of 4th-grade-level math.
Nobody doubts that Japan had a “Lost Score”, but this is likely the first article which has clearly stated that one “lost decade” is forever in the books for the Eurozone. How is that possible, when the mainstream media had hundreds of opportunities to put two and two together?
The message from the English-language mainstream media instead was – invariably, universally, almost amazing in its apparent conspiratorial coordination/delusion – “Eurozone growth hits highest figure in a decade.”
Essentially: who cares about 2008-2016? Don’t live in the past – 2017 was a decent performance, so focus on that!
It’s as if – after 40 years of neoliberal economics – 2017 was finally the year that wealth started trickling down for good!
Yeah, well…the 99% cares about 2008-2016, so shame on the mainstream media for not knowing how to report on economics with even a modicum of responsibility towards the average person.
Am I being unfair?
Is the annual economic growth rate the best way to determine if there is a “lost decade”, or not?
A fair question, as there is no agreed-upon definition.
Certainly, capitalist media is more obsessed with annual GDP growth than any other statistic, and the Eurozone is as (corrupt, undemocratic) capitalistic a bloc which can be found. Therefore, I am doing them a favor by playing by their preferred measurement.
Frankly…I think that pro-capitalists should just accept my use of growth rate and not push their luck, because it looks much worse with more appropriate gauges.
GDP per capita is a slightly better statistic than GDP, and it should also be close to a capitalist’s tiny heart: The Eurozone average was €29,400 in 2008, and soared by some €33 per year all the way to €29,700 in 2016. That is 0.1% annual growth. Of course, with year after year of austerity in the Eurozone – which passes the buck for social services from the government to the taxpayer – it’s laughable that €33 more per year was enough for the average person to stay afloat.
What about nominal GDP, which is better than real GDP because it includes inflation? It went from €14.1 trillion in 2008 all the way down to €11.9 trillion in 2016. That’s a whopping 16% drop, ouch!
How about another favorite capitalist instrument, debt-to-GDP ratio. It’s a stupid statistic because it makes no distinction between good debt (education, R&D, more efficient infrastructure, etc.) and bad debt (banker bailouts, compound interest payments, etc.), but let’s use it anyway because the Eurozone’s capitalists are getting hammered: The bloc’s debt-to-GDP ratio stood at 68.6% in 2008 and – despite all those years of austerity for all us everyday, profligate Eurozone sinners – has ballooned up to 89.2% in 2016. Certainly not a lost decade for the bankers – who (compound) profit from this huge increase in debt – that’s for sure.
Yes, I have not compiled all the 2017 data for these statistics, but (spoiler alert) there will not be a miracle which magically pulls all these numbers in the right direction, or even out of the red in many cases…even though that is rather how the mainstream media reported on the “banner year” of 2017, LOL!!!
Journalists used to know good GDP rates from bad GDP rates
(I’ll tell you what happened: they started firing the experienced, bold 50+ year old journalists who starting talking about pensions and replaced them with cheap, dumb 25-year olds….)
In my work as a daily reporter I occasionally have to interview high financiers. I have recently taken to asking them: “Is meager 2% growth on a long-term basis now acceptable?” And the answer was, invariably, “Sure it is.”
No it’s not. But high finance does not care if growth remains slow because their sectors – finance, insurance, real estate (the FIRE sector) – have been completely untethered from the economy thanks to the deregulation of neoliberalism. I may as well be asking them if 3% growth in green tea production in Shangdong Province is good enough for them – they do NOT care because it is not relevant to their world.
All they care about right now is that Quantitative Easing/bailouts go to their FIRE sector and not to improving the life of the average citizen…and we all know they are. Bonds, stocks, real estate, luxury goods/valuables like da Vinci paintings – are all at insanely record highs…which is proof that they are truly untethered to the real economy reflected by economic growth rates.
Sadly, these high financiers own the private media in the Eurozone. And they now also own Europe’s governments. Many mainstream journalists have no idea about these realities…the ones that do know they cannot really talk about them if they want to keep their job.
Even though it’s the best rate in the last decade, 2017’s 2.5% is, quite simply, not good enough…and we used to all know that in journalism. (Sidebar: It won’t even be sustained at that level – Eurozone contraction to 2.4% predicted for 2018.)
In fact, 2.5% used to be considered near-recession-level growth. From 1975-1987 the US, UK, Germany and France all had between 1.8-2.5% annual average growth, and this era is universally considered a recession era.
France gives us a good example of why their 1.9% national growth rate in 2017 – which had some (rather clueless) journalists wondering who should “claim the credit” – is similarly not good enough: France has had near-record unemployment for years, and economists say that 1.5% growth is needed to even start creating jobs. France surpassed 1.5% and yet their employment rolls still increased by 3% in 2017 (nobody in France besides me seemed to report that correctly either, LOL).
Yes, 2.5% growth is actually very weak! It is barely maintenance level, and I mean: barely enough to maintain infrastructure, and certainly not enough to build new infrastructure. All one has to do is look around the countries of the West over the last few decades to see that this is true.
What is a good enough rate?
Well, the old people know it, because they’ve seen it: For example, from 1945-1975 France’s growth rate dipped below 4% in less than a handful of years.
It’s a common ploy to blame the post-1975 Western economic slowdown on increased oil prices, but if you can show me proof that oil prices alone are responsible for taking a combined 100 points off a nation’s GDP (2.5 points annually for 40 years), then please enlighten me in the comments section below.
The real reason is not the higher price of oil and those damned Muslims – the reason is the neoliberal agenda, which began to be implemented starting around 1980. But this is something which can never be said in the mainstream media, because they couldn’t even properly define what “neoliberalism” is if you asked them – all they know is TINA: there is no alternative. And they may not be able to do 4th-grade math. (Also, blaming Muslims sells more papers/gets more viewers.)
When can we agree that capitalism produces lower growth rates than socialism?
What is a rate which should be expected?
As a socialist and anti-capitalist, I point to a much different model. One which relies on central planning, which avoids the rocky crises that are guaranteed in capitalism, which aims to uplift the poorest first, which considers speculation of all kinds immoral, which sees capitalism only as a means to an end and never the end – I point to the economic model of socialism, and I suggest simply looking at the facts in an intelligent manner.
Let’s start with the elephant in the room, for which you have no explanation other than “they are secret capitalists” – China:
During the Mao era of 1949-1978 – or rather, the “early Chinese socialist era”, because Mao was no authoritarian ruler but the leader in a democratic-socialist model – China’s growth rate was 7% annually. That was on par with the US over their same blockbuster era, and despite being subject to a brutal blockade, and also despite not having all of the cultural and financial advantages already enjoyed by the US, and despite not having the stolen wages/goods of neo-imperialism. From 1978 to 2012, despite more international opposition and the West’s two long recession eras which slowed global growth, China centrally-planned their way to 9.4% annually.
The early Chinese socialist era was characterised by a superb Gini coefficient, which measures income inequality levels in a society. The post-Mao era has seen a worsened Gini coefficient, yes, but socialist planning has led to the massive lifting of the nation’s poorest thanks to a 17% increase in manufacturing wages since 2002. Neoliberalism has ensured that not only are the West’s wages not exceeding their paltry annual economic growth rate, they have remained flat or falling for 4 decades (except for the 1%). Thus, China created the world’s largest middle class just as the West’s middle class lost their share of the pie.
I have China’s growth rate from 2008-2017 at 7.4%. I thought capitalists were supposed to make more money, goods and services than inefficient, lazy socialists?
“Ah, but China is different,” you’ll say. “Why China’s GDP Growth Rate Tells Us Nothing About Its Economy”, and its many variations, can be found in many a capitalist media like Fortune (skip to 3:35 for a Chinese person’s view on why that headline is nonsense – Fortune’s journalists don’t even read their own bull!). LOL, should we now hold our breath waiting for an article titled, “Why the Eurozone’s GDP Growth Rate Tells Us Nothing About Its Economy” from Fortune?
You capitalists never want to play by the rules, even when I use your rules! There’s no winning with you guys, unless you win, LOL! But, yes, the continent of China is different: it is well-run.
Iran is different, too. They have what I call an “Iranian Islamic Socialist” model, and they have produced 3% growth over the last 10 years, which is 5 times better than the Eurozone. And Iran’s growth has come despite the incredibly immoral (and anti-capitalist) strengthening of a truly murderous international blockade which Iran does not have the resources to combat anywhere as much as China did.
Cuba is another country which is different, and which has even less resources than Iran to combat an incredibly immoral and truly murderous international blockade…and they have averaged 2.8% growth over the last 10 years.
Take the foreign-imposed shackles off Iran and Cuba – which are expressly designed to create economic hardship, foment civil war, and re-install imperialist puppets – and there’s little doubt that their economic philosophies would have led them up to China’s stratosphere.
The superiority of the socialist economic model is obvious to all, except to the capitalist 1%. And to the media, which they own…which is probably why nobody is talking about the Eurozone’s “Lost Decade”.
But it’s already done.
I predict the term “Lost Decade” will be used for the Eurozone, and not just Japan, once the Eurozone Sovereign Debt Crisis reappears. The irony of the mainstream media’s bad reporting is that it is leading them to openly encourage the European Central Bank to end its policy of Quantitive Easing. However, QE has to end this fall, per the Eurozone’s rules, and per the fact that they will have literally run out of bonds to buy.
Last fall I published a 7-part, 130-page examination of what will happen when the ECB stops QE (all 7 links are at the bottom of this article). You can even skip to the middle, to part 4 – “The Eurozone: still as primed for collapse as ever” – but for those who don’t have time I will sum it up briefly here:
Because the ECB’s QE has not created economic growth in the “real economy” (as evidenced by this official “lost decade” of poor annual growth rates) and has instead fuelled record bubbles in stocks, bonds and real estate (the domain of the 1%), I conclude that the Eurozone, the world’s largest macro-economy, is no fundamentally different from where it was at during the peak of the European Sovereign Debt Crisis in 2012. Indeed, QE has only paid for a temporary stay of execution from the 1% and the speculators, but the reckoning is coming. This reckoning is compounded by the atrocious, truly murderous policies of austerity and QE, which have been forced bloc-wide since 2012. Sadly, things are actually much worse in the Eurozone than in 2012, despite the absurd propaganda that 2.5% is a sign of great economic health. When bond rates start to rise this fall it will affect everyone, but the capitalist countries most of all.
There is central planning in capitalism – it is done by the 1%. In the various forms of socialism – Chinese, Cuban, Iranian, etc. – whatever you may thank of those countries, at least their planning is not done by the 1%, and their superior results are obvious.