Cole to Cable

 For Cable's response to John Cole's original letter see previous post.

Dear Dr Cable

Thank you for your letter of 26^th July, in reply to my earlier letter.  I am grateful that a busy cabinet minister finds time to respond at some length.  I do not wish to extend this exchange beyond your patience or time constraints.  However, I make the following points:

1 I have now re-read your NS article of March 6^th which is more nuanced than your remarks in Manchester.  Shall we agree that the article represents your thinking better? 

2 May I draw to your attention a recently published book “”Austerity – the History of a Dangerous Idea” by Prof. Mark Blyth  (publ.  OUP) ?  Mark Blyth is a Scot who currently teaches in the USA but has a strong link to Europe.   He is good at differentiating between the “specific policy positions in particular countries” as your own letter puts it.  His book is depressing in that he concludes that austerity is counter-productive but has an inevitability about it which makes escape  difficult.

3 You state “The world is not in slump”  but an article by   Ha-Joon Chang of Cambridge University (“Guardian”  26^th July) points out the degree of slow-down in the last two years.  To quote:  “The other two biggest "emerging" economies, Brazil (second largest) and India (third), have both seriously slowed down in the last couple of years. India's growth rate fell from 10.5% in 2010 to 6.3% in 2011, and then to 3.2% in 2012. The equivalent figures for Brazil were 7.5%, 2.7%, and 0.9%.  There is nothing here to be complacent about – I am sure you are not.

4 I take several of your points in your second substantive paragraph including your analysis of the southern periphery  Eurozone countries and the impact of “German reluctance”.  Most especially I agree wholeheartedly with your estimate of the significance of the trio of UK ailments.  Whilst my thinking remains essentially Keynesian, I do not regard myself as a “facile Keynesian”.  I think my earlier letter indicated an awareness of the difficulties of enacting a full-blown Keynesian reflation.   Like you, I have to balance.

5 There is a possibility I might make it to Glasgow for the Federal Conference, particularly for the debate on macro-policy.  The leadership of the Party looks like being in for a rough ride if it attempts to major on supporting the Osborne “Fiscal Mandate” of his Mais Lecture.  Put another way, Danny Alexander would be well advised to become more nuanced on that topic.  There are other elements of the motion for debate which are more palatable and likely to get widespread Conference support.

Again, thank you for your time and consideration   

Yours sincerely,

John Cole