To abandon a cherished political saying, just because Fraser Nelson believes it doesn’t mean it’s nonsense. But if Cameron can be accused by the Speccie of conning the voters about the pain to come, then Gordon Brown’s offence is much worse: he at least has the numbers at hand, some of the responsibilty, and a huge team to help him work his way through.
Despite this the Prime Minister is again denying that cuts are coming. But the public are not fools: if cuts were needed to turn around a 7% deficit in the 1990s, they are doubly necessary with the gap at twice the size. It is shades of June 2009 again, when he denied the truths generated by a little discipline called ‘mathematics‘. From the Guardian:
the prime minister stuck to the same three areas of policy earmarked in November’s pre-budget report for increased spending – education, health and policing – he dismissed analysis by the Institute for Fiscal Studies that the ringfencing of these areas meant other non-ringfenced policy areas would see cuts between 15% and 20%.
Dismissing the IFS, in policywonkworld, is really very bad form. Brown is not just off-centre on this debate, he is off the page. In an excellent survey of economists (which by some clerical error managed to include me, and quite rightly included Tim Leunig, a regular commenter here), the FT of course finds division about fiscal timing. Unlike with 2008 or 2009, there are genuine concerns about whether cutting should start soon; the economy is no longer in freefall, and bond markets are surely beginning to look elsewhere for investment. Half of the economists favour 2010, half 2011 or later. When the debt markets choke, or the private sector races up again, or China and Germany start to spend, are all great imponderables. Anyone claiming to know is a charlatan.*
But no-one takes the Brown view: that you can make no plans at all for cutting. Furthermore, his error is double: for he mistakenly assumes that by parroting the word “investment” like it’s 1996 he’ll somehow be put on the side of the good guys, and win votes. But all the impartial voters will hear is a one-trick pony: a man good at disbursing funds flowing freely from an endless economic/asset-boom, rather less good at taking tough decisions during a time of genuine economic constraint.
Unlike Ken Clarke, who has experience of doling out pain, and is willing to discuss tax rises. As Vince observes, there is a ‘jarring contrast’ between what Brown says and what is happening already. This does not scream “Vote for me: your economy is in safe hands”.
(PS: the answer is not, as Guido seems to imply when quoting Friedman, to cut spending always. The lamentably high public spending that so worried Friedman also coincided with the strongest global growth ever. You can have 40% government and a growing economy, actually . ..)
There! One of my New Year’s Resolutions being demonstrated: a greater degree of impartiality in my economic criticism, because, to be frank, it has been much more about bashing the illiberal nonsense of the Right as opposed to the wishywashy reality-denialism of the Left. To the disappointment of a few, not all the answers in the next 12 months come from the Fabian Playbook.
Why has there been this bias? Trying to step outside myself, I think the major causal factors have been:
- the Right got economic policy wrong in 2008-9. Recapitalising banks, letting the deficit rise, and initiating QE, were all the right thing to do, and by opposing them, the likes of John Redwood, Policy Exchange, and others provided serious ammo to any objective economist.
- The Right dominates the blogosphere, despite the growing force of LibCon and bloggers like Paul, Chris, Paul Dave and the others at TCF, and Duncan. Every wrongheaded view by Guido (who gets 300-500 times the readers here) filters into the idiotosphere, and needs refutation more than the occasional Left Wing nonsense. (Though I did murder nef, didn’t I). I normally support underdogs.
- Miserabilists tend to be right wing – though don’t have to be.
- Climate deniers tend to be right wing – and why is an interesting question.
*though my views in this Guardian article remain the same: there is a great risk in starting too early on tightening, owing to false signals from a temporary blip in inflation, and revisiting something similar to 1937 (see Krugman on this).