After forcing my office to put David Cameron’s speech on the radio, I found myself so irritated by the bit about poverty that I had to storm out to the gym, there to half-wreck the only proper exercise machine out there.
Remember, I’m not some sort of crazed Marxist, romantic denier of economic truths or tribal Labour supporter: here I try to play the ball, not the man. Like Cameron (I presume), I’m an economic liberal, optimistic about the ability of ordinary humans to improve their lot, given the right framework and a fair start.
But this is really annoying:
But also this year, in these difficult times, we’ve won the argument on the economy and debt
No you haven’t! You’ve been as wrong as you can be! Often macroeconomic policy involves making difficult nuanced decisions. Last year was not one of those times. And the Tories blew it. It’s not just left-leaning types who believe that a disorderly attempt at closing the deficit would be dangerous: read The Economist, or the Financial Times
David Cameron, Tory leader, is on thin ice when he calls for action to reduce the deficit to start now, much sooner than Labour plans. He claims intellectual backing for the policy, but the overwhelming view of economists and international policymakers is that the stimulus is still needed because the recovery is fragile and monetary policy remains impaired.
Saying “we’ve been proven right” is downright dishonest: it relies on the fact that the vast majority of the public cannot be bothered to read the more nuanced accounts of the problem, be they from Dillow’s excellent analysis or the FT or even the Independent:
What happens if governments – in the middle of rising unemployment – panic about debt and stop stimulating the economy? We don’t need to speculate. During the 1930s, Franklin Roosevelt launched a huge stimulus funded by debt, and the economy began to recover. Then, in 1935 and 1936, he was besieged by people offering the Cameron argument: the recovery will be stronger if we cut the debt now. The result was that the depression came back with a nasty slap
To properly explain the Augustine dilemma we facerequires Judgment. Which is what Osborne showed he did not have.
But the really irritating bit was about poverty:
Who made the poorest poorer? Who left youth unemployment higher? Who made inequality greater? No, not the wicked Tories. You, Labour: you’re the ones that did this to our society. So don’t you dare lecture us about poverty.
Excuse me? NOT the wicked Tories? Look at the figures from the IFS:
Inequality rocketed under the Conservatives (see figure 3.7 from that IFS document). Then Labour tried to hold it at bay. They introduced several expensive mechanisms to do this – notably tax credits. Underlying inequality was still really racing ahead, thanks to the asset boom. Inequality is a Conservative-born problem. The structural changes they needed to bring to the UK brought deep problems – problems they failed to fix because their mental model for how the economy and society works was faulty. Instead of spending surpluses on softening the impact of change, they frittered it on their core group.
Posted by The Bickerstaffe Record » Blog Archive » Come off it, Cameron on October 8, 2009 at 5:37 pm
[...] also Giles at Freethinking [...]
Posted by Paul on October 8, 2009 at 5:38 pm
Good post, Giles, which I’ve referenced at the end of my local evidence post.
Posted by leftoutside on October 8, 2009 at 6:58 pm
Also very impressed.
It is good to see an economist get angry. Actually, I’m sure there’s a movie in there somewhere.
Posted by freethinkingeconomist on October 8, 2009 at 7:23 pm
Look out, he’s angry. He’s reaching for his spreadsheet . . .
thanks both for the encouragement. And my colleague in the office pointed out this was not even the worst of it:
“Parties have been talking about raising the pension in line with earnings for years. But it never happens.
Well let’s be the party that finally makes it happen. Because of the difficult choice we’ve made on the pension age we’ll be able not just to deal with our debt but to raise the basic state pension in line with earnings.”
But they were the ones who broke that link! And he is definitely doublecounting – I’m no actuary but if he pays for this, he makes f___all dent in the debt .. .
I may have to do “How dare he, part II” at this rate . . .
Posted by The Bickerstaffe Record » Blog Archive » Top Ten Tory Conference Lies on October 9, 2009 at 1:42 am
[...] ‘Inequality rocketed under the Conservatives.’ (Giles Wilkes) See Figure 3.7 of this IFS [...]
Posted by Top Ten Tory conference lies « Though Cowards Flinch on October 9, 2009 at 4:26 pm
[...] ‘Inequality rocketed under the Conservatives.’ (Giles Wilkes) See Figure 3.7 of this IFS [...]
Posted by New Conservative policy on poverty? | ToUChstone blog: A public policy blog from the TUC on October 9, 2009 at 5:44 pm
[...] impact than we would have seen had poverty reduction been left to trickle down economics – as IFS analysis [...]
Posted by ian greenwood on October 10, 2009 at 11:42 pm
The big con is that the government does not have the money – see another post and
http://www.STEERglobal.org
giving an explanation of how globalisation needs adjusting and how an EnviroTax to solve this could be OFFSET by a credit creation charge which is “the simplest way of adjusting banking, with some of the features of a land value tax”
Posted by Selected Reading 11/10/09 « Left Outside on October 11, 2009 at 8:25 pm
[...] Wilkes asks of Cameron; how dare you? How Dare [...]
Posted by Thomas Byrne on October 11, 2009 at 8:33 pm
Who is it he claims to have backing by, by the way? I’ve not read Taleb for example, but I hear he’s an Austrian and I share their views on the crisis.
Posted by freethinkingeconomist on October 11, 2009 at 8:53 pm
Perhaps one of the monetarists? Congdon? Or a liquidiationist like Arnold Kling? But I can’t really think who. Taleb is hard to categorise.
Posted by That issue again « Freethinking Economist on October 12, 2009 at 10:55 am
[...] Conspiracy … on S&P – conspiracy or…freethinkingeconomis… on How dare he…Thomas Byrne on How dare he…Selected Reading 11/… on How [...]
Posted by Philip Collins on David Cameron’s Progressive Conservatism « Freethinking Economist on November 10, 2009 at 3:25 pm
[...] Tagged: Cameron, Conservatives, Philip Collins, Progressive Conservatism. Leave a Comment Remember my annoyance Cameron accusing Labour of being bad at poverty alleviation? Collins has gone for it here. For [...]
Posted by How dare they, part 3 « Freethinking Economist on March 29, 2010 at 10:09 am
[...] Economics. Tagged: Conservatives, Inequality. Leave a Comment Ultra-loyal fans will remember how infuriating I found Cameron’s assertion last autumn about poverty, and how bad for poverty reduction Brown [...]
Posted by Liberal Conspiracy » How much worse would inequality be without Brown? on March 29, 2010 at 1:31 pm
[...] remember how infuriating I found Cameron’s assertion last autumn about poverty, and how bad for poverty reduction Brown et [...]
Posted by What’s going on « Freethinking Economist on April 19, 2010 at 4:33 pm
[...] prevent fuel prices rising too high? How about lambasting the government for failing to deal with inequality, and then putting all their available cash into schemes that could only increase [...]
Posted by Here comes the future « Bad Conscience on May 18, 2010 at 11:55 am
[...] But it’s important to remember that Labour was “running up a down escalator“. And indeed, it’s not enough to simply point to the increase in inequality. We must instead ask the counterfactual: what would have happened if the Tories had remained in power and all Labour’s achievements in poverty-reduction via redistributive policies (as confirmed by the IFS) had not taken place?As Giles has angrily pointed out, what happened under Labour was that the gap between rich and poor increased. That’s not the same as saying Labour increased the gap. And indeed, it seems overwhelmingly likely that sans-Labour action on redistribution inequality would be even higher. [...]