THEM & US: POLITICS, GREED & INEQUALITY

[Michael Grove]

In 1996 Will Hutton wrote The State We're In, setting out his vision of Britain's future as the then ascendant Tony Blair prepared to take power. The new dawn didn't break. With Them and Us, he turns his persuasive efforts on the coalition, from whom he has accepted a job to review public sector pay. Here he argues that fairness should not be sacrificed to austerity, and tries to reconcile radical principle with political pragmatism. The result is a tract for our times, passionate, erudite, with much common sense.

Robert Skidelsky The Guardian

[Michael Grove]

Not that Wolf's prescient book focuses on the UK very much. He completed it in the autumn of 2007, as the credit crunch was bursting and so the focus is not on the events of the last 12 months but on the build-up in the decades beforehand.

Wolf may not have seen the collapse of the western financial system, but he foresaw that the forces behind the great boom were unbearable. The United States was in the red abroad and running an unsustainable credit and property bubble at home, but that was because it was forced to be the world's spender and borrower of last resort. And in the summer and autumn of 2007, it was obvious that it could not go on much longer.

The problem, as Wolf describes it, was and is that Asian countries and oil exporters refused to allow their exporting strength to be reflected in a rising exchange rate. They pegged their exchange rates against the dollar, ran up huge surpluses and recycled the cash they accumulated back to the US. Thus the poor lent their savings to the rich. The US could solve the problem by creating an American recession, thus stopping the Asians earning surpluses. Or it could use the money it was being lent at absurdly low interest rates to create a long boom.