Thursday, October 29, 2009

New Statesman - wrong in new and inventive ways

New Statesman - wrong in new and inventive ways

In some ways it’s vaguely reassuring that the New Statesman has so publicly disavowed any notion of its being anything other than a propaganda sheet.  It makes it easier to dismiss it when it makes up stories about Barack Obama, or decides that all Tories are irredeemably racist for one thing.  But it’s still a little sad when a political magazine loses its credibility to such an extent that it ends up contradicting itself within the same paragraph.

More wrong still have been the Conservatives, whose economic policies have been as ill-informed as they have been gauche and naive. They have opposed interventionist government and fiscal and monetary stimuli. They have opposed quantitative easing. They have opposed the cut in VAT. They have opposed more government spending. They are obsessed with the growing Budget deficit and advocate paying down debt and cutting public spending, here and now, with immediate effect. True to their Thatcherite inheritance, they have announced that the management of the economy should be through interest rates alone, in defiance of all other mainstream political parties in western Europe.

Well, for a start it’s a tough order criticising the Conservatives for gaucheness at the same time as criticising them for their upper class, Etonian entitlement.  Gauche means lacking in social savoir-faire – not an accusation normally levelled against David Cameron (Eton and Brasenose) If you’ve seen James Macintyre at any social function you’ll have a good idea what it really means – or perhaps if you’ve seen Gordon Brown on Youtube.  I suspect that someone’s ‘how to be a journalist’ book mentioned the importance of the rule of three, and they ended up a bit stuck for a third.  Confirmation of that comes in the very next sentence.  If it is true that the Conservatives have opposed “interventionist government and fiscal and monetary stimuli” (check the three), then how can they have announced that “the management of the economy should be through interest rates alone”?  Reducing interest rates is a monetary stimulus you blithering economic halfwits.

Those who aspire to government should read J K Galbraith's The Great Crash. The echoes with today are unsettling. In the 1930s, world governments cut back on stimulus too soon, with catastrophic consequences. The result was what economists call a double-dip recession, with an intensification of hardship just as optimism was returning.

I’ve commented before that I am effectively an economic ignoramus.  However, here I stand in the presence of a master.  I have read (and have a copy of) The Great Crash, and it’s an excellent book.  But it is an analysis of the, spook, Great Crash of 1929 and not of the Great Depression that followed it.  Hence, its conclusions and maxims do not include a prescription for a Governmental fiscal stimulus.  If that’s what you want read Keynes, with the proviso that you include his requirement that Governments run a surplus during boom times.  Is it too much to expect that a newspaper leader exhorting you to read a particular book should themselves have understood it?


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