As loyal follower Chris rightly points out (see his comment to "100 Economists and Plan B [1]"), the 100 may be a slight overstatement, as two of them, Prof Malcolm Sawyer of Leeds and Dr Pritam Singh of Oxford Brookes, appear on the list twice. However, as my former students and colleagues will acknowledge, I have never claimed that economics is all that precise a science: we look for trends and tendencies. The French, as usual, have a word for it,une centaine, which means "about a hundred."
The centaine make five specific proposals for their Plan B:
1. reversing public sector cuts:
2. directing quantitative easing to a green new deal;
3. increasing (welfare) benefits;
4. a British investment bank;
5. the introduction of a financial transactions tax.
I'm proud to say that, although I have never claimed to be a leading economist, all but the last of these appear in my own Plan B, posted on the 9th August. In a fit a absent-mindedness I seem to have failed to mention a financial transactions tax, but have advocated that on several other occasions so, though now retired, and never at the "cutting edge," I do feel reasonably "up to speed."
I do quarrel, however, with the leading economists' advocacy of quantitative easing, even if it is specifically directed at a green new deal. I should prefer direct government expenditure. Both that and quantitative easing risk fuelling inflation, but, of the two, direct expenditure is more subject to control.
It is heartening to see, in a letter to yesterday's Guardian, that a group of leading Liberal Democrats have also at last come to the conclusion that "enough is enough," that we should stop supporting the coalition's disastrous austerity programme and support the Compass Plan B.
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Well - the other point to note from what I posted was of course that many of that list were most certainly not economists; some were in fact Labour Party hacks (press officers, social policy wonks and the like). A little disingenuous of the authors!
ReplyDeleteI'm pleased to be back in the fold; thank you for the welcome. It seems as ever we come down to the fundamental choice between Keynesian and more free market economics; I'm curious, did I ever share the following video with you?
http://www.youtube.com/watch?v=GTQnarzmTOc
A good one for breaking the ice and conveying the ideas to younger entrants to the subject, perhaps?
Incidentally - as followers of Mrs Thatcher's career will attest - it's not the first time that a large number of economists (even real ones, sometimes) have written to a national newspaper protesting government policy; history shows they're not always right ;).
It may be interesting to look back at the letter to the times by 364 economists in 1981. The 1981 Budget, which precipitated the letter, was also a turning point: from 1981 there was continual growth, falling inflation and eventually, employment growth. If these lessons were not subsequently forgotten there would be political consensus in favour of stable prices and fiscal prudence.
ReplyDeleteTo Chris: I'm not sure how we define a "leading" economist but I see no reason why someone can't be both a leading economist and al Labour party hack - Ed balls for example. The leading signatory, Ha-Joon Chang of Cambridge University, is certainly at the front of the pack. His "23 things they don't tell you about capitalism" (Penguin 2010) is a highly recommended and relatively easy read.
ReplyDeleteI've watched your video - great fun and would make a superb introduction for a seminar on the subject, when the various distortions could be examined in more rigorous detail.
To both: I don't have detailed figure of the early 1980s to hand, and am too busy to search them out (retirement life is so full of exciting but time-consuming treats.) True, I don't recall any so-called "negative" growth, but what there was was slow compared with the rest of the world. This growth was presumably in the service sector, because one fifth of our manufacturing sector was destroyed - something all political persuasions now bitterly regret.
True also that inflation fell, but only at the cost of huge and unacceptable levels of unemployment: a result that anyone could have achieved. The real skill would have been to achieve price stability along with full employment. Pre-Thatcher unemployment had been in the region of 200,000-300,000, and when it rose to 500,000 (which it did when when Michael Foot was the responsible minister) alarm bells rang. One of the tragedies of the Thatcher legacy is that we have been schooled to see between one and two millions of our fellow citizens wanting jobs but being unable to get them as acceptable. I isn't. It is a particular tragedy that almost one million of those at present are under 25. We are in danger of creating yet another "lost" generation when we are more than wealthy enough to avoid it.