28 August 2013
Economists who support the economic theory developed by John Maynard Keynes sometimes refer to the story in the Bible of the Pharaoh who was troubled by a series of dreams to illustrate the active role that governments should play in the economy.
In its simplest form the tale and the comparison runs thus :
In the Pharaoh’s first dream, seven fat cows emerge from the River Nile to graze.
They were followed by seven lean and gaunt cows who swallow up the seven fat cows.
In the second dream seven heads of grain are growing healthily on a stalk .
Their growth is interrupted by the seven thin heads that appear on the stalk.
The thin heads devour the healthy heads.
The Pharoah seeks unsuccessfully amongst his counsel for an interpreter of the dreams, and he eventually summons the captive Israelite Joseph.
Expressed in today’s terms, Joseph told the Pharaoh that his dream was a forecast of cycles in the Egyptian economy :
Seven years of abundant harvests and good living to be followed by seven years of drought, poor harvests and famine.
To avoid the catastrophe, Joseph recommended that during the good years of harvest , some of the grain should be stored in granaries so that it could be used to feed the people when the drought came.
As the Bible relates :
“Let Pharaoh appoint commissioners over the land to take a fifth of the harvest of Egypt during the seven years of abundance.
“They should collect all the food of these good years that are coming and store up the grain under the authority of Pharaoh, to be kept in the cities for food.
“This food should be held in reserve for the country, to be used during the seven years of famine that will come upon Egypt, so that the country may not be ruined by the famine."
What Joseph was recommending is what good governments do in modern times – they intervene in the economy to smooth out the ups and downs of its cycles
In the good years through its taxation policy, a government should take in more revenues than it spends and save the resulting surplus.
This surplus should be used in the bad times to permit it to spend more than it gathers in through taxation.
Unfortunately what we have seen since 2010 in the UK has been the opposite – the active withdrawal of government from its responsibilities towards people – cutting back on the public sector in expenditure and jobs.
The result has been austerity with all its painful consequences for individuals, families , businesses and communities.
Lesley Brennan - The Economy : The Biblical Tale of the Pharaoh’s Dream http://t.co/5vD6gm8zaR— Dundee Labour (@dundeelabour) August 29, 2013