Sunday, September 27, 2009

Economically illiterate or just irresponsible?

Osborne's planned cuts could cost us a generation of the unemployed.

Professor David Blanchflower used to advise the Monetary Policy Committee of the Bank of England. He is currently a professor of economics at Dartmouth College in the US. He is, by any measure, an economic expert.

So, when he says that
The time for cutting public spending is not now, not next year and not the year after... Unemployment is going to continue to rise this year and may keep on rising. If spending cuts are made too early and the monetary and fiscal stimuli are withdrawn, unemployment could easily reach four million. If large numbers of public sector workers, perhaps as many as a million, are made redundant and there are substantial cuts in public spending in 2010, as proposed by some in the Conservative Party, five million unemployed or more is not inconceivable. They could be our lost generation.

Anyone else remember the early 1980s and Thatcherism's powerful medicine - not unlike weedkiller in its effects? Osborne is completely bereft of ideas and so incompetent, he's planning to revive that, as it worked so well last time.
It is not hard to work out that, with unemployment rising fast, it isn't the right time to cut public sector jobs, wages or public spending for that matter. Mr Osborne, I really don't know which economists are advising you on this brilliant strategy to increase unemployment, but feel free to give me a call. Unemployment makes voters unhappy.

Not that this will bother the Tories - they've never been afraid of making others unemployed. They've got their family money to see them through.

As Mandy put it
Frankly, those who advocate this course are either economically illiterate, or irresponsible, or both. We all recognise that the next few years are going to bring real constraints. I have no more time than you do for airy-fairy wish-list politics. But neither do I have any time for shallow analysis, short term headline grabbing or Bullingdon Club economics.

Three more reasons why Osborne is not intellectually fit to be Chancellor.


Bob Piper said...

I think Dominic Fisher had a few other reasons to support the fact that Osborne was not fit for office. (snort, snort)

Fergus said...

well, as my old Economics Professor used to say:"If you laid all the economists in the world end to end, they'd still point in different directions." One man's expert is another man's misguided theorist.

Put another way, unemployment is a lagging indicator of recession. What was so unusual about this recession (in the UK at least) was that unemployment started to rise very early in the cycle. Unemployment will continue to rise, even after recovery has set in. The extent to which that recovery will be slowed or delayed by the debt burden is, probably, the most important question that this country, especially, has to face.