Robert Skidelsky
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Conservative Election Manifesto
Robert Skidelsky
Wednesday, April 15, 2015

The Conservatives have continued to spin their familiar yarn of having rescued Britain from ‘Labour’s Great Recession’. This, as they must know, is the mother of all lies. The Great Recession was caused by the banks. Governments, the Labour government included, by bailing out the banks and continuing to spend, stopped the Great Recession from turning into a Great Depression. Yet practically everyone seems to believe that the Great Recession was manufactured by Gordon Brown.
The Conservatives claim that ‘by halving the deficit we have restored confidence to the economy’. This cheerfully ignores the near academic consensus that their deficit-reduction policies over the last 5 years have made the British economy between 5 and 10% smaller than it would have been with more sensible policies.
According to the Conservative manifesto ‘more borrowing – and the extra debt interest that brings – means that there is less money to spend on schools and hospitals’. But if less borrowing reduces the size of the economy – and therefore of government revenues – there will be even less to spend on schools and hospitals.
‘More spending means higher taxes for hardworking people’ – not if it causes the economy to grow more than the spending.
Failure to control the national debt would be a ‘moral failing’ by ‘leaving our children or grandchildren with debts that they could never hope to repay’. How many people realise that over 60% of the holders of British government debt are British residents, for whom it will be an asset to leave to their children and grandchildren?
The Conservative narrative has become the Overton Window of our day, outside of which policies are unthinkable. But sooner or later reality will break in, and what is now unthinkable will become sensible again. But not in this election.
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By Chris Humphries (London) on Tue 21 Apr 2015 - 18:53

It is true that Brown didn’t crash the economy. But he created the fiscal position that makes short term recovery impossible.

It is economically illiterate to say that the banks caused the crash. What inflates a credit bubble to bursting is - guess what - credit. The Fed. caused the crash by lowering interest rates 1% in the wake of “9/11” and keeping them there. Second in the line of blame was US govt intervention in the housing market (Freddie and Fannie; Communities Reinvestment Act). Third: Chinese govt intervention in currency markets, causing huge global capital imbalances. Starting to see the common factor? Yep: govt and its proxies.

As for “academic consensus”, well the would-be 10% difference is a Keynesian counterfactual. The ridiculous Keynesian theory (or at least its ridiculous contemporary version) was comprehensively discredited in the 1980s and has been discredited over again in just the same way, with Balls and Blanchard saying that recovery could not happen without “stimulus”, only for precisely that impossibility to happen shortly afterwards.

Academic economists discussing Keynesian theory and the “Keynesian multiplier” is like engineers discussing perpetual motion machines and a “momentum multiplier”. The something-for-nothing logical form is the same. No engineer that did this would get an academic job. Economists who do the counterpart are in line for Nobel prizes. Sorry, but economics isn’t a proper academic discipline. If you want to understand economics, read “City AM”.

By JanetTT on Sun 19 Apr 2015 - 13:07

The ramblings of an old, old man - nothing of substance - pure supposition.

By annie morris (United Kingdom) on Fri 17 Apr 2015 - 10:41

Thank you. That no-one else dares speak the truth is worrying but also misleading the British people. Best wishes, Anne Morris.

By alex on Thu 16 Apr 2015 - 22:05

Rubbish, complete rubbish in every way something can be rubbish. Do NOT VOTE LABOUR please please don’t do it

By David H Smith (Weymouth UK) on Thu 16 Apr 2015 - 19:12

The BBC bears some responsibility for defining the Overton Window.

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