Thursday 20 October 2011

Yet another vote of confidence in Keynesianism

My very good friend TGE John Cole, MLE, has pointed out via an Observer article by Bill Keegan on the 16th October (sorry,can't get the link ting to work)a pamphlet (hurray, it is now) by Oxford Professor Simon Wren-Lewis entitled "The Case Against Austerity Today." This pamphlet is only nine pages long, is highly readable and highly recommended for anyone who needs authoritative academic assurance (rather than taking Keynesian Liberal's word for it) that the government's present policies are misguided and dangerous, and that the alternative of a Keynesian fiscal stimulus in the UK is urgently needed, perfectly possible and, indeed, the only sensible thing to do.

Happily for those suffering the worst from the present ideologically motivated cuts, and particularly the near one million young unemployed, there are signs that at least the Liberal Democrat part of the government is beginning to see the light. Vince Cable now admits that a double-dip recession is more than possible and there is talk of expenditure on the infrastructure.

The reasons given for a possible change in policy are the problems of the eurozone and the "unexpected" rise in energy prices rather than an admission that the policy has been wrong from the start. However, we can forgive a face-saving formula if the correct policies are now implemented and hope that, although late, they are not too little.

1 comment:

  1. Peter - yes a very clear and convincing argument by Wren-Lewis. The current austerity policy makes sense only in terms of ideology and/or political tactics: deep cuts now to reduce the state and stimulus 2 years out from the next election. Or maybe our politicians simply don't understand Cameron's recent gaffe about paying off credit card debt suggests so. And I am perplexed by the rave-reviews in some quarters for the appointment of Chloe Smith to the Treasury. Just what is it in her CV that qualifies her?