LONDON – The period since 2008 has produced a plentiful crop of recycled economic fallacies, mostly falling from the lips of political leaders. Here are my four favorites.
The Swabian Housewife. “One should simply have asked the Swabian housewife,” said German Chancellor Angela Merkel after the collapse of Lehman Brothers in 2008. “She would have told us that you cannot live beyond your means.”
This sensible-sounding logic currently underpins austerity. The problem is that it ignores the effect of the housewife’s thrift on total demand. If all households curbed their expenditures, total consumption would fall, and so, too, would demand for labor. If the housewife’s husband loses his job, the household will be worse off than before.
Lord Skidelsky recently debated with Maurice Glasman on the topic of 'Work as a Value' at the LSE - and it's now available to watch at the LSE Youtube channel.
On 13th November Martin Wolf gave the 2013 Wincott Lecture. Robert Skidelsky provided the comment. You can read Martin Wolf's lecture, and access charts for this comment, at www.wincott.co.uk/lectures/2013
I propose to comment on Martin’s excellent lecture under three heads which all point to the central issue of how sustainable is the welcome recovery now taking place.
First, Martin poses the important question of whether ‘the losses in output and productivity are permanent or temporary’ (p.3) and concludes that there is no convincing reason for them to be permanent, though restoration of the previous position will take a long time.
Two comments: first, this argument ignores the loss of productive capacity through hysteresis. InContinue reading...
Lord Skidelsky was interviewed before a recent debate at the LSE on 'Work as a Value' and the interview is now up on the LSE blog, here: Five Minutes With Robert Skidelsky
The folly of George Osborne
| Friday, October 25, 2013
The Chancellor has been celebrating the recent estimates showing that the economy has grown by 0.8 per cent in the third quarter of this year. However, these forecasts do not tell us anything about what is most important: well-being. National well-being is the only object of economic growth, but GDP data says nothing about it.
Well-being depends on a range of factors, including amount of leisure time, good health, security of income, sense of community, a clean environment, harmony with nature, respect for personality, and so on. It also includes sustainability of the ecological basis of human life. Either these things do not show up in GDP at all, or turn up as subtractions from GDP growth. For example, the more medicines peopleContinue reading...