There is astate of weary resignation amongst commentators today as though they were tired of ‘flogging a dead horse’ and trying to get the politicians of the world to concentrate on what matters. I know how they feel.
And then Osborne points out the obvious - as Darling also did today - that it it is a waste of time trying to cap bankers’ bonuses because such an idea is unenforceable.
Christina
SUNDAY TELEGRAPH
6.9.09
Stop using Keynes' name to justify wild fiscal experiments
Last week, I faced Professor Lord Skidelsky on BBC2's Newsnight – with some trepidation.
By Liam Halligan
Skidelsky ranks among the UK's most respected intellectuals. We were debating John Maynard Keynes – and given his towering three-part biography of the British inter-war economist, Skidelsky is a world authority.
On top of all that, Skidelsky is my former university tutor and one of my closest friends. Yet under the glare of the studio lights, I found myself disagreeing with him.
In his latest book – Keynes: the Return of the Master – Skidelsky argues that, in tackling the credit crunch, Western governments have been right to implement "Keynesian" policies. "Had we not followed Keynes' advice," he says, "we'd be in another Great Depression".
I disagree. In my view, Keynes' work is being used, as it was in the 1960s and 1970s, to justify wildly expansionary fiscal and monetary boosts which will prove to be counter-productive.
Back in 1976, then Labour Prime Minister Jim Callaghan told his own party conference: "We used to think you could spend your way out of recession … I tell you now in all candour that option no longer exists … In so far as it ever existed, it worked only to inject larger doses of inflation into the economy, followed by higher unemployment as the next step".
Those words marked the end of "Keynesian" economics. Now it's back. As before, it's being used to pander to powerful vested interests, propping up lame ducks while broader society bears the cost.
Forty years ago, it was deeply inefficient, heavily-unionized industries that needed "saving". Today, dodgy banks have bamboozled our leaders – and the media – into thinking that unless they're all bailed-out, the human race will cease.
Our current Keynesian adventure will end like all the others –in inflation and crippling government debt. Today, though, the boost has been bigger, the debt burden is much heavier and the world is no longer minded to keep lending to the UK.
I admire much of Skidelsky's new book. His description of the deregulation mania that preceded the credit-crunch is masterful. I share his conviction that Keynes' writings offer massive insights into how societies should be run.
The problem is that Keynes' name is being used for short-term political ends to which, in my humble opinion, the man himself would object. Because Keynes wasn't, in fact, a "Keynesian". It sounds crazy, but it's true.
BBC 1 ‘Andrew Marr Show’ 6.9.09
(Via Politics Home)
Osborne: Economy has not yet recovered
George Osborne MP, Shadow Chancellor of the Exchequer
Mr Osborne said he believed economic recovery was not yet secure and called the government's claim that Britain was well-placed to get out of recession "absolute nonsense".
Responding to the British Chambers of Commerce forecast GDP will grow by 1.1 per cent in 2010, he said: "I wouldn't say the recovery is secure, unlike France, unlike Germany, unlike Japan."
"Gordon Brown's claim that Britain was best placed to get out of the recession was one of those absolute pieces of nonsense," he added.
Mr Osborne then attempted to clarify the Tory position on capping bankers' bonuses.
"I'm not sure an actual cap on the amount works," he said, but the financial regulator should be tough when signing off bank pay structures.
He said that banks using taxpayers' money to award huge bonuses instead of shoring up their balance sheets to resume normal lending was "unacceptable" and "an affront to public policy"
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