We need economic commentators who can see there might be more than one factor influencing performance.

A number of economic and political commentators speak and write great sense. This is reassuring for two reasons: a) Britain seems to be a country less and less willing to listen to arguments if they contradict certain orthodoxies and presumptions, and, b) We need people to keep the flame burning for reason and balance, especially in economic affairs.

While certain economic principles do not need debating, because the theory underpinning them is as agreed as 2+2=4, choosing overall economic policy is largely a matter of opinion. Economics is not a natural science, it is a social science, which means it is all but impossible to test theories in laboratory conditions; in short, and for example, we cannot isolate the effects of a tax increase on the overall economy because we cannot shut off all other factors that affect economic performance.

This is why it is fatuous to claim, beyond doubt, that so-called ‘austerity’ in the Eurozone is proven to be the wrong course of action because unemployment continues to rise, especially in those southern countries most adversely affected. It might be, but we cannot know beyond doubt. And it is noticeable that those speaking out against reductions in spending are those who tend to ignore the malign effects of the Eurozone.

But I mentioned other commentators, and it is one in particular I want to highlight who tends to speak more sense than most: Jeremy Warner. Below is just one extract I think makes it clear that questioning so-called ‘austerity’ is fine, but to ignore the elephant in the room of the Euro is just plain dangerous:

The UK also has still relatively low levels of unemployment and one of the best labour participation rates in the G7. We can all guess why the IMF has got itself into such a colossal muddle over the eurozone crisis. Europeans are still the dominant force within the fund.

Desperate for explanations, they’ve begun to wonder whether the fiscal medicine they’ve been applying is too harsh. Yet they still cannot bring themselves to admit the true explanation, the one that stares them in the face – it’s the euro, stupid.

Read the rest of his article here.


Chutzpah and Labour’s Government Debt Clock.

The word Chutzpah, as Channel 4’s Economics Editor, Faisal Islam suggests, is not potent enough to describe the Labour party’s government debt clock. In fact, ‘the Labour party government debt clock’ is the actual word, or phrase, we should use instead when referring to something done or said with utter nerve.

The Oxford English Dictionary quotes, ‘Brazen impudence, gall,’ as its meaning, derived from the Yiddish. We might add ‘cheek’ and ‘audacity’ to our definition, but my favourite is from the usage references a little way down the page, citing, ‘You wanna be a crook…?’

But I’m sure Faisal Islam wasn’t meaning that now. He couldn’t! He wouldn’t! No, he’s got a career to worry about, and anyway, he said ‘chutzpah,’ which is good enough for me. Not that I’d say ‘crook.’ In fact, hold on there; I might say it, but I wouldn’t mean it, and I certainly wouldn’t direct it at the people behind this clock thing.

So what’s the point here? The point is this: I agree with Faisal Islam. I’ll explain.

The people from the Labour party, in their strategic wisdom, have put up a website showing government borrowing. They say how the Cameron/Osborne plan to get the deficit down ‘isn’t working,’ and they mention the ‘longest double-dip recession since the Second World War,’ and that ‘borrowing is £10.6 billion higher so far this year than last year.’

Now, I’m not going to quibble over the facts as they see them. This is mainly because I don’t have the inclination just now to dig out figures, but it’s also because the veracity (and we’re talking political veracity here: the sort of truth the Devil tells you when he want’s you for something) is irrelevant to the chutzpah point Faisal Islam is making, if I understand him right.

The Labour party might have forgotten the reason for the deficit: you know, the increase in government spending based on those synthetic GDP figures created by the credit bubble brought about in large part by Gordon Brown. They might also have forgotten the Keynesian idea of running budget surpluses in the good years to allow for deficits in the bad years, and that they ignored Keynes’ ideas when it suited them, and that they invoke his ideas now because it suits them also. But I’m not so sure.

It doesn’t seem credible that they just forgot, both then and now. It doesn’t seem credible that they don’t know that the legacy of their years in government, the problem in the Eurozone, and various other things that have nothing to do with the present government, form the foundations of our present debt, deficit and poor growth problems. They know all this, of course. But they thought up this wheeze of a debt/borrowing clock thing anyway. So, just to be clear, the galling bit is that Labour has the audacity to blame other people for the things they mostly did.

It’s also chutzpah-ish that they seem to have nicked the idea from their fiscal nemesis, the Taxpayer’s Alliance. But pilfering ideas seems in vogue lately.  Just last week it was the Conservative idea of One Nation politics used so brazenly (and perhaps a little cleverly) in Ed Miliband’s conference speech, and now this – the Taxpayer’s Alliance is hardly an ally of Labour.

But I suppose the leavening of the audacity, or boldness, is this: Labour does have a point. The present government is adding to debt, the deficit is not going down as they argued it would, and growth is rubbish. And stealing the very clothes the Conservatives – and this is who they are really directing their campaigns against – used to wear might well leave them feeling a little naked, not quite knowing where to put their hands.

In life, fortune favours the brave, but in politics, perhaps fortune favours the chutzpah. We shall see.