Sorry, I am in a sunny mood.

Martin Wolf is also infected with the sun, because he comes out with a surprisingly generous verdict on The economic legacy of Mr Brown. The general theme is that his mistakes were shared by most of the economic policymaking world, and Wolf makes this telling point:

“In retrospect, the government also trusted too readily in the stability of contemporary finance. Would a Tory government have been much more distrustful? If you believe that, I have a bridge to sell you.”

And on the spending splurge myth (see posts, passim), Wolf gladdens my heart again:

“The jump to a ratio of 48.1 per cent, forecast for this year in the 2010 Budget, is due to the recession. Nominal spending is currently forecast at 3.5 per cent higher in 2010-11 than forecast in the 2008 Budget.  But nominal GDP will be 10.3 per cent lower and tax revenues 16.4 per cent lower.”

Yes, spending is too high.  Yes, the deficit has leapt up.  But no, the high spending and the deficit leap are not the same thing.

A fantastically Euro-intellectual column about the Euro being the right side of history.

The euro remains on the right side of history, Tommaso Padoa-Schioppa

“Over many months, a mighty army has advanced on the citadel of the European currency with the cry: “It will never work””

“Their reasoning was as follows: the euro area is not a political union and can never become one, because Europeans have no appetite for it and nation-states will not relinquish power …the advent of the euro is just an episode – a most significant one – in the building of a post-Westphalian order… In this battle, the citadel emerged as the winner because it finally set aside hesitation, prejudice and division. But in a deeper sense it lost, too. It was mistaken in its belief that the euro and full national sovereignty are compatible. The attackers saw the incompatibility, but were mistaken in their belief that it was the euro, rather than the Westphalian dogma, that would emerge most damaged.”

Beautifully written.  Doesn’t make it right, of course.

And a letter repeating my point in yesterday’s post (I really ought to have written to the FT) about German monetary orthodoxy.

“Sir, John Taylor (“Central banks are losing credibility”, May 12) makes a number of interesting points, but several are erroneous ….  he criticises the European Central Bank for not buying distressed government debt, arguing that it is not conventional monetary policy. Having the financial system teetering on the edge of collapse with interest rates already close to zero is hardly a conventional position and the ECB should be applauded for what it has done. This is no time for mindless orthodoxy … Or perhaps he is thinking what a triumph has been achieve in Japan since the 1990s”

Finally, a hugely entertaining short piece from Gideon Rachman about the day he interviewed George Osborne for a job at the Economist.

I had just been appointed editor of the paper’s Britain section and we were looking to recruit a new reporter. Osborne had been working as a political adviser to the Conservative Party, which had just gone down to a crashing defeat at the hands of Tony Blair and New Labour. Self-deprecatingly, Osborne explained that his job had been to try to “destroy” Tony Blair – but, as he pointed out, “I obviously didn’t do a very good job of it.” His frank admiration for Blair’s skills as a politician was obvious.

Finally, under Aren’t Americans Extraordinary, this League Of Ordinary Gentlemen piece debates a piece of legislation. Boy, am I glad that we have never reached the point in this country that this even needs debating.

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12 thoughts on “Some stuff to add learning and entertainment to a sunny weekend

  1. “In retrospect, the government also trusted too readily in the stability of contemporary finance. Would a Tory government have been much more distrustful? If you believe that, I have a bridge to sell you.”

    In the revisionist history the Tories have conveniently forgotten that they were calling for more deregulation. Moreover, so have the LibDems revised somewhat their own views on regulation.

    During the Commons debate on the Financial Services and Markets Bill, Vince Cable endorsed “the liberal market”approach to the regulation of financial services. “No one,” he said, “is arguing for an increasingly severe, more onerous and dirigiste system of regulation.” Any regulation, he said, should be “done on a light-touch basis” June 1999.

    The academic economists continually fret about what is conventional and what is not. Moreover, the lectures about moral hazard is like badgering someone about healthy eating while they are suffering a heart attack. Unfortunately, central banks are full of them. What we need is pragmatism and less theory.

    Incidentally, what happened to the Cameron bounce in financial markets? The right-wing media told us during the campaign if Dave was ensconced in Downing Street then markets would soar. The pound and equities have pretty much fallen in each session since Dave became Prime Minister, with little mention of it in the MS press. Could you imagine the hysteria if it had been a LAB-LIB coalition. I thought the stronger sterling argument if the Tories were in government was bollocks. However, even I expected a short-term bounce.

    1. I would say that Cable’s position was a bit more nuanced than that:

      http://hansard.millbanksystems.com/commons/1999/jun/28/financial-services-and-markets-bill#S6CV0334P0_19990628_HOC_184

      And he has claimed that he changed his mind a year after that:

      http://services.parliament.uk/hansard/Commons/ByDate/20090318/mainchamberdebates/part004.html

      See section 961.

      (I must say that the motion that opened that debate doesn’t give me confidence in our new Chancellor)

      Hansard seems to back Cable up:

      http://hansard.millbanksystems.com/commons/2000/jun/19/cruickshank-report

      Also, here is Cable calling for a windfall tax on banks in 2001:

      http://hansard.millbanksystems.com/commons/2001/mar/22/universal-bank#S6CV0365P0_20010322_HOC_73

      Reading this exchange between Cable and Brown is interesting too:

      http://hansard.millbanksystems.com/commons/2002/mar/14/banking-services-small-businesses#S6CV0381P0_20020314_HOC_112

      ****

      Giles, this may interest you. People have claimed that a Tobin-type tax would raise lots of money before:

      http://hansard.millbanksystems.com/commons/2002/mar/14/banking-services-small-businesses#S6CV0381P0_20020314_HOC_112

      1. What an extraordinary treasure trove of a comment. I hope others can, if I can’t get through all the links. I need to find a way to stop the spammachine automatically doing this to you….

        a splendid example of evidence used to back up an argument, on a blog ….

    2. Yeah, what was the FTSE about today? It looked like a global movement Fortunately, it can’t be blamed on LibLab

  2. Meanwhile, I see you (in a professional sense, as in Centre Forum) are referred to somewhat disparagingly in a CiF piece about schools today. Any comeback?

    1. Andrew, would you mind putting in a link? I am not sure of the one you have in mind.

      But I am not surprised. The Guardian is full of assertions that loosely link the ideas of Academies to Neoliberalism, Orange Bookery, Privatisation, the wholesaling children’s organs …. I tend to see the freeing up of schools from too much conformity to state rules as intrinsically good, but also having strong evidence of working which I think past CF publications try to air more widely.

      I ought to leave the come back to Julian, some time. But the Depart of Ed will be on this now – the need for a quiet life and no divorce in the next few months is encouraging me not to try now ….

      1. I have found the article:

        http://www.guardian.co.uk/commentisfree/2010/may/14/disturbing-new-schools-policy

        She seems to obsess about the role that sponsors play – one is tempted to imagine her thinking of them as white cat stroking capitalists, or perhaps religious loons determined to teach creationism. The people I know who are behind Academies – like Paul Marshall – are simply passionate about education. And the key figure that matters is the headmaster – just as it is with private schools.

        I know that private schools have a funding advantage. But as son of a public school head (Ryde, Cheltenham) and grandson/great grandson of others, as well as a governor at a prep school, I do wish the attitude was more positive – wondering what lessons might be learned from how they operate, rather than infering that ‘private’ and ‘wicked, unaccountable’ are near equivalents. Having just listened to my sister in law – a teacher in primary schools – complaining about how maddening local authority control can be in determination of her lessons, I am surprised by Millar’s complacency on that point too.

        But, as you know, not my area. …

  3. “Incidentally, what happened to the Cameron bounce in financial markets? ”

    Well they have bigger fish to fry at the moment. But also probably because – as Chris Giles said in the FT – the coalition so far has promised big tax cuts (or preventing tax increases*) and additional spending. Which is not deficit friendly.

  4. It may well be the case that the political leaders muddle through into a post-Westphalian order (I thought we got that when the post-WW2 global institutions were created, but whatever) but it is does not follow from that that the skeptics were wrong and the euro has “worked”. A future Post-Westphalian order does not change the fact that the euro hasn’t worked for the citizens of the PIIGS who are basically stuck on the new Gold Standard.

    (By the way, a comment of mine with lots of links is caught in your spam filter)

  5. The most bizarre thing about that Gentleman agument is that it’s exemplary in terms of cogency. It’s just that it starts from a baseline premise that it’s ok and normal people to be walking around with guns in the first place.

    What a silly, silly country.

  6. It’s quite interesting reading old hansard. And I think it’s one of the great failures of our media that we barely hear any of these debates in the news (never mind the European Parliament).

    “perhaps religious loons determined to teach creationism”

    Well to be fair, that does happen:

    http://www.angelfire.com/nb/lt/docs/creationists.htm

    The there’s also the Steiner school (something Gove is a fan of) in Herefordshire.

    In a secular society, no public money should go to religious organizations, and religion and the state should be separate, including in state-funded classrooms, like in the US. This is, I believe, a liberal principle.

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