Thursday, May 06 2021

Biden’s rescue package may fuel growth in US but ‘global finance’ will ensure the Third World suffers- National Herald

US President Joe Biden’s $1.9 trillion rescue package is an ambitious measure to revive the US and, with it, the world economy. On top of Trump’s $2trillion package last year and a further $900 billion package in December 2020, it seeks not just to provide relief from the pandemic but to start a new boom in the US with global spillover effects, despite the protectionist measures in the US under Donald Trump. It will also raise the US fiscal deficit to GDP ratio to an unprecedented level.

The long post-second world war boom was sustained in the capitalist world by active State intervention through fiscal means. The continuation of such a boom however became impossible as finance became globally mobile: its usual opposition to fiscal deficits and to taxes on the rich for financing expenditure by national governments thereby became decisive, since globalised finance was now facing a nation-State which feared that not doing so would precipitate a capital flight, i.e., if any State persisted with active fiscal intervention, then finance would simply leave that country and go elsewhere.

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