I will always defend a big spender like J.M. Keynes

29 November 2008

Nancy Dell’Olio makes an impassioned case for Keynesian economics as the necessary remedy for the global crisis. It is to the Cambridge economist that we should turn once more

Keynes argued that when private citizens, banks and businesses lose confidence and hold on to their money, then the only way to avert depression is for government to step in. The consequences of doing nothing would only lead to a deeper and more painful recession. Few suspected the depth of the current financial crisis and the trauma to the banking system. The government and the taxpayer have acted to recapitalise the banking system but that recapitalisation process is not complete and the banks remain nervous. The Chancellor must go ahead with his fiscal boost and ease the flow of money, with the banks encouraged to open up lines of credit to business and to hard-pressed householders. Of course, this does not mean a blanket bail-out for the banks or for industry, but when confidence dries up and fear undermines the economy the credit market needs to be made to work so that people stay in jobs and the hard-pressed do not lose their homes or livelihood. It makes sense for government to support interest rate cuts with fiscal action and give real help to families and businesses now. My belief is that the public will judge both the government and the opposition on their response to the financial crisis, and this will be the ground over which the next election will be fought. And that day may be closer than we think. Keynes has been hailed as the saviour of capitalism and, once again, the liberal market philosophy needs salvation.

It was pleasing to see that following the PBR on Monday, the City vindicated my position with a positive response to fiscal boost. The score for today: Nancy Dell’Olio 1 – Andrew Roberts 0. Never underestimate a woman in an argument over money! I think we can all agree with the words of Keynes which will serve to sum up this piece when he wrote that ‘the ideas of economists and philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood’.

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Augustus

November 26th, 2008 4:47pm Report this comment

Yes, the more you spend, the more important you are!

Jim

November 27th, 2008 11:38am Report this comment

"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens" J.M.Keynes.
Your stimulus package is of course inflation. As you sit around fine tables, drinking finer wines, with fine friends, spare a thought for the old lady opening a tin of dog food for her dinner. As all her life savings have been confiscated by the state, in stimulus packages to save wealthy, incompetent, thieving bankers.
Keynes was immoral, and an evil genius.

Tim Calvert

November 27th, 2008 12:20pm Report this comment

Congratulations Mr D'Ancona.
You have achieved your ambition - a merger with Hello!

Must rush - Heat Magazine has an insightful ananlysis of the CDS market

Dwight Vandryver

November 28th, 2008 12:28am Report this comment

It's as if Labour is expecting a miracle, or some divine intervention, in a few years time to defray the debt it has, and will be, amassing. Perhaps Ms Dell'Olio would care to enlighten us as to the mechanism that will make this possible. Manufacturing is no longer the UK's forte and the financial services sector have taken a big hit. With the building industry at a standstill, we have become a nation of shopkeepers. The only secure employment appears to be in the public sector, which is non-productive and a constant drain on public spending. It is difficult to see how a 15% VAT rate will revive personal spending, and even if it did, the goods purchased would add yet more to the balance of payments deficit. Let us hope that these concerns live in a virtual world on databases, and that in practical terms, Ms Dell'Olio is correct, but do we live in a virtual world?

JohnAnt

November 28th, 2008 1:49am Report this comment

What next? Prescott on serialism?

Andrew Forbes

November 28th, 2008 10:32am Report this comment

This was actually written by Craig Brown, surely, and it's brilliant.

Helen Jackson

November 30th, 2008 2:02pm Report this comment

What a pointless article.

The Spectator is rapidly becoming a vehicle for a cosy clique, seemingly unable to write about issues of national significance unless refracted through the minor details of their everyday lives (Venetia Thompson's sock draw springs to mind), anecdotal evidence about what their mates think, and a heavy dependence on the 'I' key.

Please consider you have a readership which buys the Spectator hoping for quality insights into current affairs from people with superior knowledge, not the outpourings of people the editor has randomly met at dinner parties.

It is unprofessional journalism and hugely off-putting.

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