Barber, Blanchflower and the fake debate on double dip

HJ

Ed:

"principle players"?

I don't think that people like Brendan Barber do principles, just self-interest.

Or did you mean "principAL players"?

Sally Chatterjee

And what about chance? What if Germany slips or the US rebounds, what if other factors are at play here?

Many things beyond our control can make or break the UK economy, it is sophistry to pretend to know for sure whether any budget will rescue, or damn, the British economy.

Jayu

Are you so economically illiterate, that you do not realise that extra spending stems mainly from the increase in the number of unemployment payments, and less tax revenue means increased borrowing?

The Maksed Marvel

This will explain why Blanchflower is the BBC's go-to academic on the economy when they want to scare the public.

Dorothy Wilson

Let's look at it another way. If the coming economic outcomes prove Osbourne to be wrong corrective action can be taken. Some money can be pumped into the economy again to stimulate things.

However, if Blanchflower is proved wrong the results will be little short grim. We would probably lose our credit rating, interest rates would go up, unemployment would increase etc etc.

David Smith, the Sunday Times' Economics Editor had a good piece on this in the Business Supplement a couple of days ago. It is worth reading. Pity you now have to pay to do so if you didn't buy the paper.

Jannie Geldenhuys

Blanchflower has no credibility. He is the man who resisted calls for interest rate hikes even at the height of the greatest credit fuelled bubble in history. Instead, he wanted to pour more fuel on the bonfire. The only reason anyone has ever heard of him is because Brown appointed him to the MPC and Brown did that because Blanchflower has the same world view as The Man Who Abolished Boom and Bust.

The opposition of Martin Wolf and Samuel Brittain to Osborne's policies is more concerning. I find them much more intellectually credible than Blanchflower.

Woody

Blanchflower is the BBC and Labour's 'straw man.' He is now working in American, yet we regularly see him via 'satellite link' How much does this cost?
Does he have a contract with the BBC?
The interview always ends with the BBC interviewer saying "it's always a great pleasure to talk to you" - I find this totally nauseating.
It's almost as though politicians are becoming irrelevant, the real politics are between these economists. Too many are becoming 'media tarts' and should just get on with the job they are paid to do.

JohnAnt

So Blanchflower thinks the cuts will hurt? Of course they will, but There Is No Alternative.
He and the others on the MPC could have raised interest rates to match inflation - but chose conveniently to ignore the latter and avoid the former.
As Karl Valentin once daringly said in a cabaret sketch in Munich during WWII: 'it would have been better if Hitler hadn't embarked on this war that was unavoidably forced on him'.
Similarly it might have been better if Gordon Brown (and Blanchflower and others) hadn't caused the financial disaster that came to us from America.

Will J

Except isn't a double dip basically inevitable, short of some economic miracle? How can a country which has printed so much money in the past year and kept interest rates so low not experience some contraction? We've created the short-term illusion of extra money in order to "keep things moving" - clearly what must happen next is reality to reassert itself. George Osborne must surely be aware of this, and to not say so for the sake of not wanting to talk down the economy is political suicide. He is digging his own grave.

Ben G

Oh dear. Back to school Mr Howker. I cannot quite believe that a Spectator writer has written such a breathtaking display of economic illiteracy. If only it was as simple as you think...

Man in a Shed

Of course the problem here is that there could well be a double dip whichever decision is made ! ( In which case George Osborne has allowed himself to be out manoeuvred ).

Its not if there's a double dip that matters but if we suffer the ongoing humiliation of Japan.

davidk

Will the author of this article please state his position on Robert Skidelsky's prognosis, which underscores Blanchflower's viewpoint that massive cuts will doom Britain to a double dip recession? Skidelsky is no leftist fellow traveller, far from it. Is his reputation on the line also?

TrevorsDen

jannie makes a good point - Blanchflowers opinion is only relevant because brown appointed him.

And that appointment gives the lie to the notion that brown gave 'independence' to the Bank of England.

BTW - Blanchflower lives in America and 'attended various monetary committee meetings by conference call.

Fiona

Is this the same Mervyn King who keeps having to write letters to the Chancellor explaining why his forecasts were wrong?

Perhaps there are two of them.

Liz Brown

Blanchflower? Remind me, wasn't he one of gormless' annointed (oops appointed) ones to the "independent" BoE...........say no more

Sally Chatterjee

Sadly Blanchflower's abilities as a clairvoyant have already been rumbled. 18 months ago he forecast unemployment could double to 4 million.

Fiona

Unfortunately I must have edited away the first sentence of my post above, which referred to the ongoing battles between Blanchflower and King - I realise that this article doesn't refer to that.

I'm sure you get the drift...

Naomi Muse

At the moment they protagonists are lobbing vegetable peelings over the wall at each other to frighten each other off.

We shall see, what we shall see, after the party conferences are done and dusted and the realities set in.

I remember the flying pickets for the miners strike in 1984 only too well.

ollie

Not many people take anything either Barber or Blanchflower says seriously. The twin evils of socialism - a union rabble rouser and an uber Keynsian. Nutters.

Simon Stephenson

What none of the anti-austerity brigade are ever mentioning is, just suppose that maintaining higher levels of fiscal spending helps maintain a higher level of economic activity in years 1 and 2, what does it do to economic activity in years 3 - 100, when it has to be paid back? Have any of them actually looked beyond the immediate short-term, and have any of them actually calculated the likely path of interest rates that would result from deferring addressing the deficit now?

It strikes me that their thinking is that continuing fiscal stimulus might just make things not quite so bad for a year or two, and we'll just have to hope that we don't regret this later. This is the sort of thinking that you are supposed to grow out of in secondary school.

robert williams

Dorothy Wilson 3:32
"David Smith, the Sunday Times' Economics Editor had a good piece on this in the Business Supplement a couple of days ago. It is worth reading. Pity you now have to pay to do so if you didn't buy the paper"

Not so. Mr Smith, perhaps miffed at the limitations caused by The Times paywall provides a lengthy extract from the article on his blog
http://www.economicsuk.com/blog/

Simon Stephenson

robert williams : 8.36pm

Thanks for the link.

I was delighted to read:-

"One of the papers presented at the Jackson Hole monetary conference last month made the point that governments can only get away with big borrowing if markets are convinced it is temporary, in other words if there is fiscal credibility. Labour lost that credibility and the coalition is trying to get it back."

particularly as it seemed to support a comment I made earlier this evening to Pete Hoskin's 4.27pm post

" ... consuming more than you produce is only sustainable if surplus countries are content to supply you, and this will only be the case if either in the past or in the future you are the surplus nation able and willing to supply them, so that they can temporarily over-consume. So ... fuelling our consumption with ever-increasing debt is unsustainable without it being pretty clear to our suppliers that we intend to reverse this flow in the future. Why would any foreign supplier with his brain in the right place believe this to be the sincere policy of the British Labour Party?"

This is the riposte to Mr Balls and his supporters - that he's not in control of the reactions of people elsewhere in the world to the actions he proposes should be taken. And, no matter how bizarre these reactions may appear to him and those who think like him, he can't control them, and he must build them as they are not as he would like them to be into his calculations. And then make his recommendations upon realistic, rather than idealistic, forecasting of outcomes.

PayDirt

Simon Stephenson maintains that eventually the debts will come home to roost. But when? And just how far can the market be pushed with ever more printing of pounds sterling, that surely is the debate. The FT today is complaining strongly about the weakness of the bank regulations a la Basle. The big banks caused the debt problem and they are still around to do the same again. We are all in hock to the likes of “investment” bankers who will take from the public purse again when their next big gamble fails. As for one dimensional thinkers like Jayu, the simple solution in his economics would be to stop, or reduce substantially unemployment benefit. Maybe for the next banking/public finance Crash this sort of worst case scenario will be played out and society will regress back to Victorian workhouses for the Poor etc etc.

Owen Morgan

Barber and Blanchflower probably also think that we are in imminent danger of drowning in melted polar bears, too.

Simon Stephenson

PayDirt : 9.14am

What are you seeking to achieve by asking "When"? To my thinking it's a fallacy of necessity if you are seeking to downplay the warning on the basis that it's impossible to give an exact timescale. It's like saying that it's not so bad to drive when drunk, because no one can give an exact time when doing this will cause you to have an unnecessary accident.

Maybe, on the other hand, you believe that although there is a risk, the likelihood is that any downside will be so far into the future as to be not really admissable into current considerations. I'd accept that this is a valid point, but the onus is on you to give some reason for believing that the downsides are unlikely to be felt in the near or middle future, and that therefore current policy should ignore the risk.

Paul Hillyard

Can we put the author and indeed George Osborne in the stocks for their incompetence?