David McWilliams and The Slump

Remarks concerning comments by David McWilliams
Paddy Hackett

“It is crucial now that the world - and Ireland- creates
inflation, not deflation. If we haven’t the stomach to print money
(which would be by far the easiest exit route), we need to turn on
the taps through government borrowing” (This Is Not The Time To
Panic by David McWilliams: Sunday Business Post 15th March, 2009)

In his comments on current economic conditions David McWilliams
suggests that under the present economic downswing the Irish state
can liberally borrow funds to compensate for the steep fall-off in
revenue from taxation. It also suggests that this wholesale
borrowing will largely relieve the Irish economy of the problems
it has been experiencing as a result of the economic downturn. He
also claims that this mass borrowing will prepare the Irish
economy for taking advantage of the pickup in the global economy
when it comes.

David is a victim of the illusory way in which capitalism
presents itself. He seems to think that the Irish economy can essentially
avoid the effects of the global economic downturn by borrowing. If
this is the case then there need never be recessions since
economies can merely borrow their way out of them.Borrowing then
is the the agency that prevents economic recession. But it is just
this borrowing that has largely helped turn boom into bubble with
its current deflation. The very borrowing of the banks and private
companies in Ireland and elsewhere was a factor in intensifying
the economic conditions that created speculative practices.
It is only at a particular stage in the downswing that the
injection of cash into the economy can precipitate recovery. At
this stage the economic slump has effectively bottomed out
rendering it ready for take off.If it was as easy as David suggests
there would never be recessions and there would be no need to
abolish capitalism and replace it with communism.